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Posted:
May 16, 2013
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Bankruptcy Cases in the News

Bankruptcy Cases in the News

             The 6th Circuit Court of Appeals (which covers Michigan) issued a very important decision in Richardson v. Schafer, 689 F.3d 601 (6th Cir., 2012). The case is noteworthy because it is of assistance to debtors in their bankruptcy case by allowing them to retain more property.

In this case, the debtor elected to exempt property under the Michigan State Bankruptcy Exemptions instead of the Federal Exemptions. The selection was probably because the debtor had a great deal of home equity protectable as tennants by the entireties (marital home) laws and little joint debt. The trustee, to unlock value for unsecured creditors argued that the Michigan Bankruptcy Exemptions were unconstitutional and that the debtor was only allowed the lesser exemptions provided by the general exemptions statute in Michigan.

The 6th Circuit Court of Appeals disagreed. It held that Michigan debtors were allowed to use either set, i.e., the general exemptions under MCL 600.6023 or the Bankruptcy Exemptions under MCL 600.5451. Generally speaking the latter is more generous to debtors. This allows the debtor to retain more property for his/her fresh start. The bottom line was that the Michigan Legislature did not violate the Constitution by intruding in a Federal law.

Proper exemption planning is critical to a successful outcome in a bankruptcy case. If you or a loved one would like information concerning protection from creditors and obtaining a fresh start, just call Guy Vining. Guy Vining is pleased to discuss your situation confidentially, and without initial charge.

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
April 26, 2013
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Personal Injury Cases in the News

Personal Injury Cases in the News

 

     The Morning Sun newspaper recently reported that the estate of a Michigan man killed in a fatal crash has filed suit against the negligent driver and two bars at which the driver was earlier a patron. The suit alleges that the driver’s blood alcohol content exceeded the lawful limit by almost three times, being at .20, and the primary cause of his personal injury.

     In Michigan, a statute allows an injured person, or the estate of their decedent, killed by an intoxicated person to bring suit against the intoxicated person and the business that furnished the alcoholic drink.  See: MCL 436.1801. There are many features to the statute which can be troublesome. First, there is a mandatory notice requirement and a shortened statute of limitations. Also, the injured person has a huge burden of proof in establishing that alcohol was sold when it should have been apparent that the person was already visibly intoxicated.  Competent legal assistance is needed to meet these challenges.

     If you, or a loved one, has been injured by an intoxicated driver, or the many other contexts that entail a personal injury, you may have a claim against the establishment that sold him or her alcoholic drinks. Guy Vining will be pleased to have a consultation with you at no charge to discuss your circumstances. Please feel free to call.

Guy Vining practices personal injury law from his Metro-Detroit office in Taylor, Michigan. He has represented clients in personal injury actions for over 25 years in such areas as: car, boat, motorcycle, and truck accidents; slip, trip, and falls including black ice and defective design; medical and dental malpractice, denial of insurance benefits for wages, medical and home assistance to automobile accident victims.

Posted:
April 26, 2013
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Bankruptcy Cases in the News

Bankruptcy Cases in the News

     Judge Walter Shapero recently issued a written opinion which is instructive to higher income folks considering bankruptcy and their legal counsel. In In re: Rebecca Weinert, the debtor had a monthly gross income which was above the “means test.” Under these circumstances, the debtor would ordinarily not be entitled to relief under Chapter 7 but required a Chapter 13 plan. However, debtor argued that her monthly income, when reduced by monthly payments to her employer to repay personal savings plan loans, was under the local mean income and qualified for relief. Judge Shapero disagreed, ruling that her case would either have to be dismissed or converted to a Chapter 13 for a repayment plan. In his analysis, the Judge stated:

“A case can be dismissed for abuse under §707(b)(1). Abuse is presumed by application of the formula in §707(b)(2)(A)(i), part of which takes into account a debtor’s “currently monthly income” and “monthly expenses.” Incident to that determination, Debtors are required to file the means test form, which shows current income and expenses and the calculations that determine whether or not the presumption arises. “Monthly expenses” are defined in §707(b)(2)(A)(i)(I), (II), (III), (IV), and (V).  However, “current monthly income” is not itself defined in §707(b)(2), but the means test form utilizes income as set forth in Schedule I for these purposes. If a presumption of abuse arises it may only be rebutted by “demonstrating special circumstances,” such as are defined and determined under §707(b)(2)(B)(i), (ii), (iii), and (iv). If a presumption of abuse does not arise or is rebutted, the case may still be dismissed for abuse. In determining abuse in that circumstance, the Court considers (1) whether the case was filed in bad faith and (2) whether the “totality of the circumstances” of the debtor’s financial condition demonstrates abuse.”

     Turning his analysis then to whatever the loan repayment was “another necessary expense,” he concluded that it was not. The repayment was neither a condition of employment, nor did it arise from some unique circumstances. While it was beneficial to debtor to make the repayment to avoid taxes and penalties on an early distribution, the repayment was not mandatory and therefore did not qualify as an appropriate deduction for the calculation of disposable income. As such, the §707(b)(2) trigger for presumption of bankruptcy abuse was pulled, which equals disqualification from eligibility. The court then went on to determine whether there were any unique circumstances to rebut the presumption of abuse. Finding none, the debtor was give the option to dismiss her case or convert to Chapter 13. If you or a loved one are considering whether bankruptcy relief would be helpful for you, please make sure to consult a qualified debt relief agency/attorney. Guy Vining is available for a no-charge initial bankruptcy consultation and would be pleased to meet with you.

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
April 25, 2013
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Bankruptcy Cases in the News: Federal and State Exemptions

Bankruptcy Cases in the News

Federal and State Exemptions

     Under the Bankruptcy Court, a debtor may elected between two sets of exemptions in a Chapter 7 case, the Federal exemptions, or (in Michigan) the Michigan exemptions. Generally, the Federal exemptions give the greatest coverage of property to the debtor. Exempt property is property that the debtor gets to keep from creditors and the trustee, which forms the basis of his or her fresh start going forward.

     In certain interesting circumstances, however, the Michigan exemptions are more favorable to the Chapter 7 debtor and should be elected. For instance, under the Federal exemptions, exemptions about $42,000.00 in home equity can be exempted by a married couple. However, if the home is jointly owned as entireties property (husband and wife) either may file individually a bankruptcy and exempt their entire equity, no matter how great, from all individual creditors.

     That is because the historical purposes of the state law favors protecting an innocent spouse from the debts of his or her spouse to preserve their primary residence. This concepts has been explored and defined in several published court decisions. For instance, see: In re: Trickett, 14 Br 85 (Bank W.D. Michigan) 1981; and, In re: Grosslight, 757 F2d 773 (6th Cir. 1985).

     One of the keys to this relief is the absence of joint indebtedness. So, if the non-filing debtor is jointly responsible on some of the incurred debt, the trustee may argue that it should be allowed to administer the estate (sell the martital home) to the extent of the joint obligations. Still, this type of harsh relief must be examined on a case-by-case basis as noted by Judge McIvor in In re: Edwin Harlin, 325 BR 184, 189 (Bank E.D. Mich) 2005:

“As a general rule, courts have been very reluctant to apply 11 USC §363 (h) to allow the sale of entireties property owned by the debtor, and a non-debtor spouse. The case law is well summarized in Collier on Bankruptcy as follows: Disputes over the applicability of a section (h) to tenancies by the entireties have created the largest number of reported cases under section, perhaps because of the unique nature of the ownership interest, the variations among the states as to the nature of the interest and the rather draconian remedy that section 363(h) gives the trustee, contrary to the deep historical roots of the form of title, which is supposed to protect each spouse from the unilateral action of the other… Thus, although generally speaking property held by the debtor as tenant by entirety is subject to sale under section 363(h), courts have erected various obstacles to such sale.”

     This suggests, of course, that married couples should strongly consider never co-signing for the other and avoid all joint debt. Also, they might consider making sure to concentrate payments to reduce and eliminate joint debt as a priority over individual debt, in the ordinary of their payments.

     If you or a loved one are considering whether bankruptcy relief would be helpful for you, please make sure to consult a qualified debt relief agency/attorney. Guy Vining is available for a no-charge initial bankruptcy consultation and would be pleased to meet with you.

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
February 18, 2013
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Bankruptcy Cases in the News

Bankruptcy Cases in the News:

 

     On February 5, 2013 the 6th Circuit Court issued an interesting opinion concerning creditors’ rights after mortgage foreclosures in In re: Richard K. Miller, No.: 11-2357 (unpublished). The question before the court was whether the Bank’s credit bid at a Michigan Sheriff’s sale (after foreclosure by advertisement) extinguished the debtor’s debt to the bank. The bankruptcy court determined that it did and the 6th Circuit Court of Appeals affirmed/agreed with that decision.

 

     After the bank foreclosed against the the debtor’s home it bid the full amount of it’s mortgage at the sheriff’s sale and acquired the title, subject to debtor’s rights of redemption. When debtor did not redeem the  bank subsequently sold the home for less than the amount debtor owed and then claimed the difference against the debtor. The court would not allow this action based upon Michigan cases. Specifically holding:

 

     In Bank of Three Oaks v. Lakefront Properties, 444 N.W. 2d 217, 553 (Mich. Ct. App. 1989)(per curiam), the mortgagee bank bid $147,129.42, constituting the full amount of the debt plus the cost of foreclosure and statutory attorney’s fees, at the foreclosure sale following a Michigan foreclosure by advertisement. When the sheriff’s deed became operative at the conclusion of the redemption period, the bank became the titled owner of the property. Thereafter, the bank sold the property for $150,000.00. The bank filed suit against the mortgagors to collect an alleged deficiency for the interest, taxes, and insurance premiums accrued between the date of the foreclosure sale and the date the redemption period expired. Id. at 554-55. The Michigan Court of Appeals held that “[w]hen property is purchased at a foreclosure sale for an amount equal to the amount due on the mortgage, the debt is satisfied.” Id. at 555 (citing Guardian Depositors Corp. v. Hebb, 287 N.W. 796 (Mich. 1939), and Powers. v. Golden Lumber Co., 5 N.W. 656, 657 (Mich. 1880)). Because the debt was extinguished at the foreclosure sale, the court held that the bank could not pursue any deficiency where the mortgagor did not redeem the property. Id. at 556-557.

 

     The same legal principals have been applied in other Michigan cases. See Smith v. Gen. Mortg. Corp., 261 N.W. 2d 710, 712-13 (Mich. 1978)(per curiam); Kennedy v. Brown, 15 N.W. 498, 499-500 (Mich. 1883); New Freedom Mortg. Corp. v. Globe Mortg. Corp., 761 N.W. 2d 832, 836 (Mich. Ct. App. 2008); Emmons v. Lake States Ins. Co., 484 N.W. 2d 712, 714 (Mich. Ct. App. July 1, 2008) (unpublished per curiam). Similarly, the Second Circuit applied Michigan law in Chrysler Capital Reality, Inc. v. Grella, 942 F.2d 160 (2d Cir. 1991), to hold that a mortgagee who successfully bid the entire amount of the debt at a foreclosure sale could not thereafter maintain an action for damages against the mortgagor, despite the mortgagee’s allegations that the actual value of the property at the time of the foreclosure sale was far less than the debt and that the mortgagee had been fraudulently induced into making the transaction.

 

     If you or a loved one have questions concerning your rights or obligations with creditors you should immediately seek a qualified bankruptcy attorney.

 

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
September 5, 2012
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Bankruptcy Cases in the News: 11 USC § 522: The Residence Exemption

Bankruptcy Cases in the News

11 USC § 522: Residence Exemption

    This past August has had a bumper crop of interesting cases. In re Demeter, Case no.: 12-44593 local Bankruptcy Court Judge, (Easter District of Michigan) Thomas J. Tucker, decided a very interesting and helpful case to individual debtors. In this case, he was called upon to decide because of a trustee’s objection to the debtor’s exemptions whether a second home could qualify as a residence under the federal exemption, giving this debtor couple, up to $53,250.00 in exempt property or whether the exemption could only be applied to a so-called “primary” residence. Although, this other home was in foreclosure and had no equity, whatsoever.

 

In the end, Judge Tucker over ruled the trustee’s objection because the statute did not have a requirement that the residence exemption had to apply to a “primary” residence. In the blog which follows, we will look at some of the rules of statutory construction, employed by Judge Tucker. For our purposes here it is sufficient to say that Judge Tucker found that the debtors did have a significant connection with both houses, used both year round and never rented out. In addition, he reasoned that because 11 USC § 522 (d)(1)(d) did not use the word “primary” that he would not read it into the statute, as the statute only spoke of “real property…that the debtor uses as a residence…”

 

Also, in reaching his decision the Judge noted that his construction of the statute was also consistent with major purposes of the Bankruptcy Court. In doing so, the Court noted:

 

    “Under the Bankruptcy Code, there is an overriding federal interest in providing Debtors with “a fresh start.” See, e.g., In re W.R. Grace & Co., No. 11-199, 2012 WL 2130991, at *72 (D. Del. June 11, 2012)(listing a “fresh start” for a debtor as one of the important countervailing federal interests that could override state contract law); In re Buckley, 404 B.R. 877, 887 (Bankr. S.D. Ohio 2009)(citations and internal quotation marks omitted)(stating that “the overriding goal of the Bankruptcy Code [is] to provide a “fresh start” for the debtor”); In re Spears, 308 B.R. 793, 825 (Bankr. W.D. Mich. 2004) rev’d on other grounds, 313 B.R. 212 (W.D. Mich. 2004)(“Providing an individual debtor with a “fresh start” is a fundamental objective of the Bankruptcy Code.”) By providing debtors with the right to exempt certain property from the claims of creditors so that debtors have basic necessities to begin again, the exemption scheme under § 522 (d) is crucial to, and an integral part of a debtor’s “fresh start.” Schwab v. Reilly, 130 S. Ct. 2652, 2667 (2010)(“We agree that ‘exemption in bankruptcy cases are part and parcel of the fundamental bankruptcy concept of a “fresh start.”); Spears, 308 B.R. at 825 (“Congress enacted the exemption scheme set forth in Section 522 in order to provide an individual debtor with the fresh start it contemplated.”); 4 Collier on Bankruptcy ¶522.01[5], at 522-14 (Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2012) (“A fundamental component of an individual debtor’s fresh start in bankruptcy is the debtor’s ability to set aside certain property as exempt form the claims of creditors.”).

 

This determination is therefore good news for debtors looking to get their fresh start and retain as much property as is provided by the federal exemption. As Judge Tucker stated in Demeter: “Thus, §522(d)(1) permits a debtor to exempt a residence that is not the principal residence. And this interpretation is consistent with the requirement that bankruptcy courts must construe exemption liberally in favor of the debtor.”

 

If you have any questions about bankruptcy law or exemption planning please feel free to call bankruptcy attorney Guy Vining of the Vining Law Group. All initial telephone conference and office meetings are free of charge.


[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 29, 2012
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Bankruptcy Cases in the News: State Exemptions #2

Bankruptcy Cases in the News

State Exemptions #2

In a recent blog which discussed that in the Schafer case (6th Cir., 11-1340) that the Michigan bankruptcy statute was approved by the appellate court as passing constitutional muster. Their decision not only is of assistance to Michigan debtors but was a blessing to the local bankruptcy attorneys and judges as it clarifies the law and resolves conflicting opinions. Now bankruptcy attorneys can give their client more definitive advice on exemption planning. It also assists the debtors and bankruptcy attorneys by avoiding litigation within the Bankruptcy Court, in relation to exemptions saving financial and judicial resources.

 

All of this, however, begs the question of what the important distinctions are with respect to exemption planning. This is a deep subject and well beyond the scope of a blog posting. However, there are some immediately apparent benefits for Michigan debtors that they can discuss with their bankruptcy attorney. First, across the board it appears that for unmarried Michigan debtors, who have home equity to be sheltered/exempted, that more can be accomplished under the Michigan Statute. See: MCL 600.5451 and compare to 11 USC § 522(d)(1). In addition, if the Michigan debtor is also a handicapped or elderly individual, the exemptions increase even higher.

 

If you are a Michigan resident contemplating a bankruptcy you should discuss these matters in detail with your bankruptcy attorney. Exemption planning is essential for you to receive the very best outcome in your case. As noted in the Schafer case (citing Grogan v. Garner, 589 U.S. 279 (1991)), the so-called Michigan bankruptcy exemptions statute’s broader exemptions will allow “bankruptcy debtors in Michigan…(to be better met) to achieve a fresh start and to obtain a new opportunity in life with a clear field… unhampered by the pressure and discouragement of preexisting debt.”

 

If you have any questions about exemption planning please feel free to call Guy Vining for a free consultation or another qualified bankruptcy attorney.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 29, 2012
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Bankruptcy Cases in the News: State Exemptions #1

Bankruptcy Cases in the News
State Exemptions #1

The 6th Circuit Court of Appeals decided a very interesting and debtor friendly case recently. In re: Steven M. Schafer, Case No.: 11-13401387, the 6th Circuit Court reversed lower court holdings that had determined that Michigan’s so-called “bankruptcy exemptions” were unconstitutional.

This is pretty esoteric stuff, but the bottom line is that Michigan has a general exemption statute and the so-called bankruptcy exemptions statute, the latter of which provide more generous exemptions for debtors. In filing a case a debtor in a state like Michigan (which has it’s own statute) must elect to proceed under federal or state exemptions. Earlier rulings struck down the so-called state bankruptcy statute holding in essence that it was an impermissible conflict of state and federal law for Michigan to have “bankruptcy” exemptions because only the U.S. Congress could create these laws as it is to do so under the U.S. Constitution and controls the entire bankruptcy field. One of the main arguments advanced for federal control was to give uniformity and not create conflicts from state to state.

The 6th Circuit disagreed, holding:

    Indeed, on an as-applied basis, the Michigan statute actually furthers, rather than frustrates, national bankruptcy policy. As the Supreme Court has repeatedly noted, the goal of the Bankruptcy Code is to provide debtors in bankruptcy with a fresh start. Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367 (2007) (“The principal purpose of the Bankruptcy Code is to grant a fresh start to the honest but unfortunate debtor.”) By permitting debtors in bankruptcy a higher homestead exemption than either the general state exemption statute or the federal exemption statute allow, bankruptcy debtors in Michigan are better able to achieve a fresh start and to obtain “a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Grogan v. Garner, 498 U.S. 279, 286 (1991). Accordingly, Michigan’s bankruptcy-specific exemption statute frustrates the full effectiveness of national bankruptcy policy no more than other statutory frameworks that have survived our scrutiny.

As noted in Schafer the so-called bankruptcy exemptions under MCL 600.5451 are substantially more generous to the debtor than it’s federal counterpart in 11 USC 522 (d)(1) or the general exemption statute MCL 600.6023. Indeed, with respect to home equity for an individual debtor (or homestead) it is double the federal statute for a 65 year old debtor or handicapped debtor. This is pretty good news for the debtor but makes things more difficult for the Trustee whose compensation is largely contingent upon the amount of money collected.

The bottom line is that elderly and handicapped debtors are really aided by this decision. These honest but unfortunate individuals will get a larger nest egg to embark on their fresh start with.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 28, 2012
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Bankruptcy Cases in the News

Bankruptcy Cases in the News

Early in August 2012, local Bankruptcy Court Judge Walter Shapero decided an interesting case that sheds light for lay-persons interested in debt relief and for local practitioners, too. This case is In re Kenneth C. Farkas and may be found at Case No.: 11-59772.

In this case a young-ish debtor with a sizeable 401(k) had taken loans against his 401(k) which required payments of around $850.00 to repay the 401(k) loans. On his Schedule I, debtor scheduled monthly loan repayment and that the net income after this and other expenses was less than $20.00. According to debtor therefore he was qualified for Chapter 7 relief – but, the Trustee objected and argued that under 11 USC 707(b)(3) and the totality of the circumstances that this deduction was unfair and should be considered disposable income to be shared with all creditors. Judge Shapero on the facts of this case agreed with the United States Trustee, noting:

    “Disposable income” is defined under the Bankruptcy Code as income received by the debtor which is not reasonably necessary for the maintenance or support of the debtor or a dependent of the debtor. 11 U.S.C. §1325(b)(2)(A)(i). This Court has explicitly rejected adopting a per se rule requiring the inclusion of 401(k) contributions in disposable income. In re Beckerman, 381 B.R. 841, 848 (Bankr. E.D. Mich. 2008). Instead, as is required by the plain language of §707 (b)(3) and this Court’s interpretation of the Sixth Circuit precedent, the reasonableness of the debtor’s expenses, including payments made into a 401(k), must be determined on a case-by-case basis looking at the totality of the debtor’s individual circumstances. Id at 848. In this case, the amount of Debtor’s existing retirement savings, as well as his age and time left until retirement, persuades the Court that his 401(k) loan repayments are not reasonably necessary for his maintenance or support, and are therefore includable in his disposable income.

Since the debtor had a sizeable retirement account and many years before his retirement the inclusion of the loan as a form of monthly disposable income was determined to be unfair to other creditors. Judge Shapero calculated that in a Chapter 13 plan the creditors would be more fairly treated and would receive about an 18% dividend. He noted that the Sixth Circuit Court of Appeals in re Behlke, 358 F.3d 429, 434 (6th Cir. 2004) had earlier determined that even a 14% dividend was a meaningful dividend.

Therefore, it was determined that the case must be dismissed – for ability to pay – or converted to a Chapter 13. It, again, bears nothing that the Bankruptcy Rules are designed to provide equitable treatment to all the actors. Therefore, where disposable income is being spent is fanciful ways or ways which discriminate against other creditors a discharge may be challenged as abusive. In such ceases, the debtor’s fresh start and discharge may be conditioned upon providing some disposable income via a Chapter 13 plan to all unsecured creditors over a period of 60 months.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Posted:
August 27, 2012
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Bankruptcy Cases in the News

Bankruptcy Cases in the News

In a case just decided by the 6th Circuit Court of Appeals the conviction of a physician for violation of 18 USC 152 (1) and (2) was upheld. The physician, or debtor, filed a bankruptcy, and failed to schedule as an asset an extensive and valuable collection of collector wines. When the wines were discovered by the trustee a referral was made to the United States Department of Justice for prosecution. Please see USA v. Joseph Carver, Case No.: 12-3026.

On appeal the Court found that:

        To be convicted of concealing assets in bankruptcy, in violation of 18 U.S.C. §152(1), the evidence must show that a bankruptcy proceeding existed under the Bankruptcy Code, the defendant concealed interests in property from the bankruptcy trustee or creditors, such interest in property belonged to the bankruptcy estate of the defendant, and the defendant acted knowingly and fraudulently. Wagner, 382 F.3d at 607. A conviction for making a false oath in bankruptcy, in violation of 18 U.S.C. §152(2) requires proof that there was a bankruptcy proceeding, the defendant made or caused to be made a false declaration or statement under penalty of perjury in the proceeding, the declaration related to some material matter, the declaration was false, and the defendant made the declaration knowingly and fraudulently. Sixth Circuit Pattern Criminal Jury Instructions § 10.01 (2011) (mail fraud) (adapted); cf. United States v. Spurlin, 664 F.3d 954, 962 (5th Cir. 2011). Carver’s convictions for these crimes are amply supported by the evidence.

Accordingly, Dr. Carver will have to spend the next 24 months or so in a federal prison for making a false oath in his bankruptcy case. As discussed in other blogs, the trade-off for a fresh start is disclosure of all assets and turn over of non-exempt assets for creditors. Failure to do so can lead to the dismissal of your bankruptcy and even time in prison.

[Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

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