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Consumer Bankruptcy Law and Practice: 12.9.3.3 Credit Insurance

Another common type of contract that could be considered executory is the purchase of credit insurance that accompanies many consumer loans.545 More often than not, credit insurance is a very bad bargain for the consumer.546 Rejection of the contract and termination of its benefits results in very little loss of real protection.

Consumer Bankruptcy Law and Practice: 12.9.4 Procedure and Tactics

In a chapter 13 case, the debtor is not normally required to choose assumption or rejection until the time of confirmation of the plan.548 However, the other party may force an earlier election by requesting the court to set a specified earlier date by which the choice must be made.549 Additionally, although courts are split on this point, a lessor might seek relief from the stay prior to a decision on assumption or rejection, arguing that its interest in the property is not adequately protected

Consumer Bankruptcy Law and Practice: 10.2.2.1 Generally

The property that can be claimed as exempt under the federal bankruptcy exemptions (in states that have not opted out) is listed in section 522(d) of the Code. The list itself, adopted originally by the Bankruptcy Commission, was later generally followed in the Uniform Exemptions Act.54 Although Congress made some changes in drafting the Code and in later amendments, the commentary to the Uniform Act, therefore, is a good place to look for interpretive assistance.

Consumer Bankruptcy Law and Practice: 10.2.2.5 Jewelry—§ 522(d)(4)

Each debtor is allowed to exempt up to $1875 worth of jewelry, as long as it is held primarily for personal, family, or household use of the debtor or a dependent.91 As with the household goods exemption, unused exemptions applicable to “any property” may be used to increase this amount. For example, a jewelry item worth $2000 may be exempted using the $1875 jewelry exemption plus $125 worth of the exemption applicable to any property (sometimes referred to as the “wild card” exemption).

Consumer Bankruptcy Law and Practice: 10.2.2.6 Any Property—§ 522(d)(5)

One of the most important of the federal exemptions is the exemption that can be applied to “any property,” sometimes called the “wild card.” The amount of this exemption is $1475 per debtor,95 plus any unused amount of the homestead amount from subsection (d)(1) up to $13,950 per debtor.96 The applicability of the unused homestead exemption to any property, sometimes called the “homestead pourover,” was originally intended to equalize home owners and renters but was significantly reduced when a lim

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.