Tuesday, July 26, 2005

Can we file this case already?

We have made our disclosures, the client has completed credit counseling performed by an approved organization, the client has retained us... Lets see what else we need prior to filing their case. Section 521, Debtor's Duties, includes; a list of creditors, a schedule of assets and liabilities, current income and expenses, statement of financial affairs (nothing new here). The client should have a certificate for completing the credit counseling course, this must be filed along with and debt repayment plan generated during the counseling. We now must also have a certificate indicating that the attorney delivered the notice required under section 342(b)(this notice is substantially similar to the current notice to consumers of available chapters of bankruptcy). Except under section 342 it states that the clerk shall give the notice. Not a real problem, we already do this anyways. We will also need copies of check stubbs or other evidence of income for the past 60 days prior to filing, this is only slightly different from what is currently required by trustees Helen Burris and Randy Skinner, so this should not have much effect on practice. We also need a statement of the amount of monthly net income, itemized to show how it was calculated. This requirement seems redundant, we already provide this information on schedule I. I am guessing that this will be an additional document. Another additional statement disclosing any "reasonably anticipated increase in income or expenditures" within the next year. OK, we would normally place this information on schedule I as well, but now we have a separate document ("No your honor, I strenuously object" A Few Good Men). Got all that? Now you can file the case, but don't let the client take off to Tahiti yet.
The debtor's statement of intentions must be filed with the court within 30 days of the petition date. Here is the new twist, the stated intention must be performed with 30 days of the 341 hearing. Since there is no more "pass through" all purchase money security interests must be either surrendered, reaffirmed or redeemed. Under section 521(d) lease agreements must also be reaffirmed or redeemed. It would seem to be the prudent course of action to have these documents prepared and signed by the client prior to filing of the case, if possible.


At 5:36 PM, Anonymous Anonymous said...

Mark...Peggy-Sue Here..!!

Wanted to say great info! I have a few questions on the last paragraph. First, is the 30 days to perform the intention mean within 30 days after the 341? This didn't read clear to me. Just wanted to check. Also, on the NPMSI's...after reading your paragraph on NPMSI's I'm assuming that Motions to Avoid NPMSI"s will no longer be needed (YES!!..LESS STUFF TO FILE!) bacause the debtor isn't going to surrender and give up the their household goods (well, maybe if the stuff they have is junk and the lien to too large) they will most probably always reaffirm which will illiminate the necessity to file the Motion. Am I understanding this correctly? Also, what if the lien is too large, say $4,500 and they can' t afford the payments to reaffirm, then they will be have to give up the household goods?? Or will the reaff be allowed at a lowered claim amount to reflect the value of that particular debtors household goods??

I checked the Archives...wanted to read everything so far. Is what's showing everything so far? Thanks for your time..Peggy-Sue

At 8:13 PM, Blogger Mark W said...


The timing is a bit unclear in the statute, I think it is within 30 days after the 341 hearing. All intentions must be performed with the time frame, that sounds like we still have to file LAV's but also now have to file reaff's. More paperwork, not less. We have no power to "cram down" a lower value for a reaff, creditors can demand that the full balance be reaffirmed. I can't see the court minding if a creditor agrees to a lower amount. Another issue with these HHG liens is that only certain items qualify... one TV's, one VCR...(522(f)4(A)) it's no longer a blanket statement as to what is a household good.

At 8:52 AM, Anonymous Anonymous said...

Mark: Thanks for the response...But I still don't understand why we would still have to file LAV's. If the debtor has to reaffirm, the household goods would remain as collateral right? (Unless they are surrendering household goods..but that doesn't make sense because what debtor would do that?)

Are you saying that the new law states that we "have no power to cram down reaffs? Because I've been doing just that for 3 years but not on household MPMSI's (because they don't reaffirm these, LAV's take care of this) only on vehciles or other property that secures the loan, But, of course, I've had a barganing chip: the threat of surrender of the property. Now that I am writing this I realize that there is no barganing chip any longer. The reaff has to be filed if the dentor wants to keep the collateral. Thanks for your info! Good stuff! Peggy-Sue

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