All posts tagged Abuse

Rule 9011 is Applied Much More Harshly to Bankruptcy Cases than its Rule 11 Counterpart!

At this month’s Southern California Bankruptcy Inn of Court meeting, now called the James T. King Inn of Court, we had a lively discussion regarding whether attorneys may engage in litigation for the purpose of harassing the other party.

The room was fairly evenly split with half saying absolutely not while the other half focused on whether the litigation was meritorious.

It turns out the issue is more complicated than that. In summary, if the litigation is engaged in and proceeds under Bankruptcy Law, then the litigation cannot proceed if brought for an improper purpose such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. Read more…

Pop Quiz! How Long After Entry Of Order Confirming A Plan Can The Order Be Revoked? Hint: It’s Not What You Thought!

If an order confirming a Plan of Reorganization is procured by fraud, how many days from entry of order does one have to ask the court to revoke the order?

The answer depends on which chapter of the Bankruptcy Code we’re talking about! In a Chapter 12 or Chapter 13 case, one would have up to the 180th day after the date the order was entered to seek revocation of the discharge. In a Chapter 11 case, one would have up to the 179th day after the date the order was entered to seek revocation. That is a pretty tough lesson to learn the hard way.

Read more…

New Median Income Numbers and IRS Charts Starting May 1, 2012

There will be new median income figures beginning May 1, 2012.  The median income for the debtor’s household size determines whether he has to even do the means test in a chapter 7 and determines whether the chapter 13 plan has to be 3 years or 5 years.  Starting May 1, the median income in California is 49,188 for a one person household; 63,481 for two; 68,135 for three; 77,167 for four; and $7,500 for each person after that.  You can find the amounts for all states here.  Also, the new IRS tables are effective May 1, 2012.  They can be found here.

Judge Ted Albert Tentative on Abuse, 707(b) Motions

The Central District Insider thanks Christina Wilton for this tentative ruling and hopes she lets us know what happened.  (I think Judge Albert got it right by the way.  There has to be something more than the UST thinks the house payment is too high).

Tentative Ruling

This is the motion of creditor for dismissal under 11 U.S.C. §707(b)(3)(A) or (B). This requires the court to evaluate alternatively whether the filing of this bankruptcy was in good faith, or if in the totality of the circumstances abuse is demonstrated. The standard is not as the debtor has argued. Just because under the “means test” a presumption of abuse does not arise, the converse is not necessarily true, i.e. a case where the presumption is not triggered may still be determined under all of the circumstances to have been in bad faith or an abuse. Otherwise subsection (b)(3) would be superfluous. See e.g. In re Reed, 422 B.R. 214, 215, 230 (Dist. C.D. Cal. 2009). The real question is whether under these circumstances the various expenses claimed by the debtor make this case abusive. There are several expenses which have provoked comment. For example, the debtor pays for both his home mortgage and for an RV for another $2,745 per Read more…