Skip to main content

Search

Consumer Bankruptcy Law and Practice: 18.5.2.4 Consumers’ Right to Recoupment

The consumer creditor is often subject to an obligation to pay money to a debtor in bankruptcy. This payment obligation can arise from a loan, a lease, a sales finance agreement, a service contract, or a variety of other transactions. The existence of such an obligation owed to the debtor may trigger the consumer’s right to seek recoupment.

Consumer Bankruptcy Law and Practice: 12.2.1 Overview

A threshold issue, which can occasionally be troublesome, concerns eligibility to file a chapter 13 case. In addition to section 109(a) and the section 109(h) credit counseling requirement, which are applicable to cases under all chapters filed by individual debtors, the key chapter 13 eligibility provision is section 109(e) of the Code. That section provides that to be a chapter 13 debtor, the debtor must:

Consumer Bankruptcy Law and Practice: 12.2.2 Individuals with Regular Income

Probably the most common issue for low-income debtors is whether the debtor is an “individual with regular income.” This phrase is defined in section 101(30) as an “individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13.” The legislative history makes clear that the intent of the statute is to include others besides wage earners, and to expand eligibility to recipients of public benefits such as welfare and Social Security, small business proprietors, and those supported by other income such as alimony or pensions

Consumer Bankruptcy Law and Practice: 18.7.2.5 The United States Trustee

In 1986, after a period of experimentation, Congress established a permanent United States trustee system, covering every state except Alabama and North Carolina.526 The United States Attorney General appoints United States trustees for twenty-two regions around the country, each region composed of one or more judicial districts.527 Assistant United States trustees may also be appointed.528

Consumer Bankruptcy Law and Practice: 18.7.4.2 General Standards

Section 1104 permits the court on the request of a party in interest or the United States trustee to order the appointment of a trustee “[f]or cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management either before or after the commencement of the case, or similar cause”; or in the (best) interests of the creditors.565

Consumer Bankruptcy Law and Practice: 18.7.4.4 Grounds for Appointment of a Trustee Under Section 1104(a)(2)

Even absent a finding of cause under subsection 1104(a)(1), the court may appoint a trustee if it is in the best interests of the parties.589 Subsection 1104(a)(2) provides a flexible standard for the appointment of a trustee,590 allowing the court to exercise equity powers to appoint a trustee to protect the interests of creditors, equity security holders, and other interests in the debtor’s estate.591 Unlike the “cause” standard, the “be

Consumer Bankruptcy Law and Practice: 18.7.4.7 Practice and Procedure

An application for appointment of a trustee or an examiner is by motion and may be made by any party in interest or by the United States trustee.611 A trustee may also be appointed by the court sua sponte.612 Although the motion can be filed at any time, the court may be reluctant to appoint a trustee or an examiner based on prepetition mismanagement. It may therefore, be preferable to wait for evidence of postpetition misconduct.

Federal Practice Manual for Legal Aid Attorneys: 2.8.6 Pullman Abstention

When federal constitutional claims arise from unsettled issues of state law, federal courts have discretion to abstain from exercising jurisdiction. When they do so, the federal courts avoid predicting what state courts would decide and permit the state courts the first opportunity to interpret state law. Doing so may also dispose of the need of the federal court to decide the federal constitutional issue later.

Federal Practice Manual for Legal Aid Attorneys: 2.8.7 The Pullman Doctrine

The Supreme Court announced this aspect of abstention, known as Pullman abstention, in Railroad Commission v. Pullman Co. In Pullman, the railroad sued a state regulatory agency. The railroad challenged on Fourteenth Amendment grounds the requirement that all trains in Texas have a conductor in each sleeping car. Employment in the railroad industry was racially segregated; whites were employed as conductors, while African Americans performing similar work were employed as porters. Thus, the regulation had a discriminatory impact on African Americans.

Federal Practice Manual for Legal Aid Attorneys: 2.8.8 England Reservations

Once a federal court invokes Pullman abstention, it generally should not dismiss the action, but instead should retain jurisdiction and stay proceedings regarding the federal constitutional issues while the plaintiff litigates the unclear question of state law through the state courts.477 An important step to remember in the event the federal court abstains is that, in the state court action, the plaintiff must not only present the state law question, but must also ask the state court to construe it in light of the federal issue, whi

Federal Practice Manual for Legal Aid Attorneys: 2.8.9 State Certification as a Pullman Alternative

If the forum state has a procedure by which its highest court answers state law questions a federal court certifies to it, a federal court can potentially obtain an authoritative ruling on ambiguous issues of applicable state law. Although certification procedures vary widely among the states, most states accept certified questions from the U.S. Supreme Court, any federal court of appeals, or any U.S. district court. Other states accept certified questions from specified federal courts.

Federal Practice Manual for Legal Aid Attorneys: 2.8.10 Burford Abstention

In Burford v. Sun Oil Co., the Supreme Court ordered the dismissal of a federal suit challenging the reasonableness under Texas law of a state commission’s decision to grant a permit to drill oil wells.489 The Court created what has become known as Burford abstention to avoid the potentially disruptive impact that federal court intervention would have on the state’s efforts to maintain a unique and complex administrative structure to regulate a vital state activity.

Federal Practice Manual for Legal Aid Attorneys: 2.8.12 Specific Applications of Burford

The classic example of Burford abstention remains a challenge to a state utility regulatory system.506 Burford abstention has also been upheld, however, in varied settings such as workers compensation, insurance, zoning, and related land use issues.507 Of particular interest to legal aid advocates, Burford abstention has additionally been upheld in challenges involving Medicaid contract funding as well as food stamp eligibility,508

Federal Practice Manual for Legal Aid Attorneys: 2.8.14 The “Parallel” Requirement

Colorado River abstention is inapplicable unless there is parallel litigation.527 Thus, generally, in the absence of simultaneous proceedings that are sufficiently parallel, the abstention factors (discussed below) should not be reached. The Circuits have used different analyses to determine whether parallel proceedings exist, which are summarized below.

Federal Practice Manual for Legal Aid Attorneys: 2.8.16 Colorado River And Declaratory Judgment Actions

The Supreme Court held in Wilton v. Seven Falls Co., a diversity action, that a standard of substantial discretion, rather than the Colorado River “exceptional circumstances” standard, governed a district court’s decision to stay a declaratory judgment action on grounds of a parallel state court proceeding.572 This discretion is conferred upon the federal courts by the permissive language of the Declaratory Judgment Act.573 The Court reaffirmed Brillhart v.