All posts tagged chapter 7

Chapter 11 Debtors Are Prohibited From Paying Taxes… Without a Notice and Hearing!

Before people worry too much, this is not as bad as it sounds but it is still pretty awful.

Under Bankruptcy Code section 102, “notice and hearing” is a due process safeguard: “after such notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the particular circumstances.” In other words, there are circumstances where notice and hearing means just notice or notice and an opportunity to object. Hopefully local bankruptcy rules are modified to make these notice only requests.

Read more…

Bankruptcy Filings in the Central District Exceed all of Texas AND all of New York in February, 2012

Total bankruptcy filings in February in the Central District of California was 9,307, up 1% from January but 12% lower than the previous February.  To put the total into context, the TOTAL filings in February, 2012 for all four districts in Texas AND all four districts in New York was 7,830.  Of the total here, 2,256 were chapter 13s or about 24% of the total.  This means each trustee received about 450 new cases in February.

Central   District of California
2008 2009 2010 % 2011 2012
Jan 3,694 6,004 9,013 50% 10,868 21% 8,835 -19%
Feb 3,787 6,971 9,659 39% 10,631 10% 9,307 -12%
March 4,381 8,529 12,840 51% 13,543 5%
April 5,023 8,512 12,114 42% 12,087 0%
May 5,177 8,967 11,906 33% 11,669 -2%
June 5,351 9,595 12,190 27% 11,718 -4%
July 5,983 9,894 12,737 29% 10,418 -18%
Aug 6,195 9,748 12,720 30% 11,496 -10%
Sept 6,290 9,214 12,412 35% 10,006 -19%
Oct 6,364 10,322 11,753 14% 9,887 -16%
Nov 6,029 9,462 10,900 15% 9,099 -17%
Dec 6,615 9,864 10,925 11% 9,089 -17%
64,889 107,082 139,169 30% 130,511 -6%
% of total 0.059 0.075 0.089 0.095


Prof. Katie Porter’s Analysis of the Financial Management Program

I have been as big a critic as anyone about the silliness of the pre and postpetition counseling requirements.    The prepetition counseling is completed 99% of the time after the decision to file bankruptcy has been made and is usually done immediately prior to the actual filing.  A study by Prof. Katie Porter however has turned my eye a little about the postpetition financial management course.  You can find her analysis on the blog Credit Slips.  Here is a portion of the post.

Evaluating Mandatory Financial Education in Bankruptcy

posted by Katie Porter
Dr. Deborah Thorne and I have a new study that looks at how debtors themselves feel about the mandatory financial education course. It is a chapter in this book, Consumer Knowledge and Financial Decisions (ed. Douglas Lamdin, Springer, 2012) and available to read here. In the 2007 Consumer Bankruptcy Project, we asked debtors whether they believed that the information from the financial education class 1)would what they learned in the financial education class have helped them avoid bankruptcy originally, and 2) would help them avoid financial trouble in the future. While only 33% thought a financial instruction course similar to the one required of bankruptcy debtors could have helped them avoid filing, 72% thought it would help them avoid future financial trouble.  As we report in detail in the chapter, some demographic groups were much more positive about the value of financial education than others.
About half (48.7%) of minority persons who filed bankruptcy, for example, thought the course would have helped them avoid bankruptcy; for whites, the response was 27.6%, a little more than half.  Similarly, there significant differences in the perceived value of financial education–both to have helped prevent their bankruptcy and to help them keep out of future financial trouble.  Those without a college degree, those aged under 25 years or 65 years or over, and those who less familiar with their household finances believed the course had more value.  Note that the point is not that the course actually would have or will help debtors; the measure here is debtor’s perception of value, which I think is well worth evaluating in a system that is designed to rehabilitate debtors.