Thursday, November 29, 2012

Bankruptcy Law, The Law of Debtors and Creditors Problem Set Answers, Warren Westbrook Sixth Edition - Problem Set 16

Problem Set 16, p.334

16.1
  • §1328(a)(4) even if he can file a petition under CH 13, he cannot be discharged from the restitution for damages as a result of willful or malicious injury by the debtor that caused personal injury to an individual. So what is the value for filing Ch 13? CH 13 does have the value: Automatic stay.
  • But is such filing in bad faith? No. He is entitled to the stay.
  • For CH 13, there is a dollar limit of the noncontingent liquidated claims in §109(e): $307,675. Here is a judgment debt, so it is a noncontingent and liquidated claim. It seems that it falls squarely in the limitation. So the way to solve is that he should first pay portion of the debt to lower it below the limitation, and then file for Ch 13.
  • And CH 13 applies to the regular wage earners under §109(e). Is the firefighter a regular wage earner? Yes, we judge it from a long term.
  • How about negotiating with the creditors?
  • What is the congress’ intent for the liquidated debt requirement? To know how much debt he owes and whether he falls within the limitation.
  • Question: appeal bond: to prevent the frivolous suits.

16.2
  • Under §109(e), the limit for noncontingent liquidated unsecured claims is $307,675; the limit for noncontingent liquidated secured claims is $922,975.
  • Is the guaranty a secured debt? Probably not. It is an unsecured debt.
  • Is the guaranty a noncontingent liquidated debt?
  • Still contingent; no definite debt yet.
  • Unliquidated; waiting for the judgment.
  • Since the guaranty debt is contingent and unliquidated, it should not be counted for the dollar ceiling for the filing under Ch 13, so she can file in Ch 13.
  • Is the guaranty dischargeable in the bankruptcy case? Is the contingent debt dischargeable? See §101 the claims include the contingent debts; so it is dischargeable.
16.3
  • File for Ch 13
  • Q: is he a regular wage earner?
16.4
  • First, can he file for CH 7?
  • Eligibility: the means test §707(b).
  • Would he fail the means test? Probably. He has consumer debt and business debt.
  • He may lose all his property though he can get the discharge
  • He can retain some property by redemption, reaffirmation and ride-through
  • Second, CH 11
  • Eligibility: below the median, the disposable income test §1129(a)(15); above the median, the means test or disposable income test
  • 5 years repayment plan or longer
  • need vote of creditor and approval of the court
  • Third, CH 13
  • Eligibility: below the median, the disposable income test 1325(b)(1); above the median with above $100 surplus, the means test; above the median but below $100 surplus, the disposable income test
  • 3 or 5 years repayment plan
  • can keep all his assets
  • Finally, general advice
  • Whether the debtor is an assisted person in §101(3).
  • As a lawyer, I am providing the bankruptcy assistance under §101(4A).
  • Abiding br the rules of §§526-528: Cannot advice the debtor to take more debts; to advice the debtor to make untrue statement or disclosure, etc.
  • For Ch 11 and Ch 13: 1115(a) and §1306(a): The property of estate includes the property acquired and the earnings from services after the commencement of the case before the case is closed, dismissed or converted.
If his income and debt are too high, so he should go to CH 11. CH11 has no 5-yr cap, and you can repay over 10 years.

Problem Sets: Table of Contents

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