Skip to main content

Search

Consumer Bankruptcy Law and Practice: 10.2.2.10 Health Aids—§ 522(d)(9)

A debtor may exempt an unlimited amount of professionally prescribed health aids for the debtor or a dependent of the debtor. This exemption clearly covers such items as wheelchairs and artificial limbs. Arguably, it is much broader, and could include specially equipped automobiles, or even normal automobiles essential to receiving medical treatments.115 It is also possible that property prescribed for therapy, such as swimming pools, could be included.116

Consumer Bankruptcy Law and Practice: 12.2.3.1 Determining Whether Debts Are Secured or Unsecured

Issues may also arise concerning the dollar-amount limitations on claims against debtors who file chapter 13 cases, limitations designed to exclude large businesses from evading the requirements of chapter 11.29 However, the discussion in this section will not be applicable for cases filed when a temporary amendment to section 109(e) remains in effect, which eliminates the distinction between secured and unsecured debt for purposes of the debt ceiling.30 If this amendment is not extended or made per

Consumer Bankruptcy Law and Practice: 12.2.3.4 Strategies for Avoiding Eligibility Problems

For the debtor, it is essential to avoid eligibility issues when possible. This may sometimes be accomplished simply by filing separate cases for a husband and wife rather than filing a joint petition. Because the debt limitation amounts would then apply separately to the debts of each, rather than to their combined debts as in a joint case,66 the total amount of combined debt permitted can be increased to the extent that the debts owed are not joint obligations.

Consumer Bankruptcy Law and Practice: 12.3.1 Overview

No single question under the Code stirred more debate in the statute’s early years than the issue of how much the debtor must pay to unsecured creditors in a chapter 13 plan. Hundreds of courts debated the question, coming to a fairly consistent, if vague, result. That result was codified by the enactment of section 1325(b) in 1984, and the legal issue receded, except in occasional cases.

Consumer Bankruptcy Law and Practice: 12.3.4.3 Full Payment Test

Obviously, the full payment test is met if all unsecured claims are to be paid in full. It may also be met if the objecting claimant can be separately classified and paid in full, even if other creditors will not receive full payment.127 Occasionally, it may be worthwhile to amend the plan to add such classification to satisfy the troublesome creditor, especially if the debtor anticipates difficulty in meeting the alternative disposable income standard.

Consumer Bankruptcy Law and Practice: 18.7.15.2 Employee Priority Claims

Section 507(a) provides that certain prepetition employee wage and benefit claims will be treated with priority. Section 507(a)(4) gives fourth priority to claims for wages, salaries, and commissions earned within 180 days before either the petition filing date or the date of cessation of the debtor’s business, whichever occurs first.809 To ascertain the longer time period that may apply based on the date of the debtor’s cessation of business, courts look to several key facts.

Consumer Bankruptcy Law and Practice: 18.7.15.3.1 Introduction

When a major employer files for protection under chapter 11, employees and members of the local community will be primarily interested in the prospects for continued operation of the debtor’s business. Even employees with wage and benefit claims will usually be more concerned with whether they will have a job to go back to than with whether their prepetition claims will be fully paid. The job retention strategies available to employees and other interested parties in a chapter 11 proceeding will vary according to the circumstances of each case. A few possibilities are discussed below.

Consumer Bankruptcy Law and Practice: 18.8.1 Overview

When real estate markets decline, owners of private housing871 occupied by low-income tenants may file bankruptcy. Often, tenants receive no official notice. They may come to their lawyer to complain that the building is no longer receiving services such as utilities, trash pick-up and repairs and also to report that no one is collecting the rent. A call to the landlord or the landlord’s attorney reveals that the landlord has filed a petition in bankruptcy.

Consumer Bankruptcy Law and Practice: 18.8.2.4 Steps to Take

The clients’ immediate concern will be to assure themselves of services to the building. Ordinarily, in a chapter 7 case in which the building has been privately developed, there is no reason to oppose foreclosure and sale.901 The major concern will be to ensure that services continue in any interim period and perhaps to assist in the smooth transfer of ownership.

Consumer Bankruptcy Law and Practice: 18.4.2 Class Proofs of Claim

The filing of a class proof of claim should be considered when large numbers of consumers are involved, such as in the bankruptcy of a retailer, a lender, or a large apartment building.153 A class claim may also be particularly appropriate when employees have priority wage claims.154 Class proofs of claim have been approved by the Fourth,155 Sixth,156 Seventh,157

Consumer Bankruptcy Law and Practice: 18.5.2.1 Generally

If property held by the entity in bankruptcy is treated as being held in trust for the consumer, it will not be part of the bankruptcy estate, nor will it be subject to the Code’s distribution rules. Instead, the consumer can recover the property directly. Trust theories apply not only to property subject to a formal trust agreement, but also in situations in which the court may impose a trust, such as when a debtor holds deposits from a consumer or when the debtor has obtained the property by fraud.186