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Client Notice Regarding Bankruptcy Rule Amendments and Objecting to Discharge by Motion

Published on December 1, 2010 in Federal Rules of Bankruptcy Procedure. 0 Comments

Effective December 1, 2010, several amendments to the Federal Rules of Bankruptcy Procedures will become effective.  Most of the amendments are procedural in nature and will only have a direct impact on the debtors.  However, one amendment that is worth noting is the change to Rule 4004 which pertains to objecting to discharge due to the debtor receiving a prior bankruptcy discharge.

Previously, Rule 4004 stated that you can only object to the Debtor’s discharge under 11 U.S.C. §727 by filing an adversary complaint within sixty (60) days of the first meeting of creditors in both Chapter 7 and Chapter 13 cases. The rule is being amended to read that debtor’s Chapter 7 discharge may be objected to by adversary complaint or by motion within sixty (60) days of the first meeting of creditors, if the debtor has been granted discharge already under Chapter 7 or Chapter 11 within eight (8) years of the filing of the bankruptcy petition. (11 U.S.C. §727(a)(8)). The rule has also been amended to read that debtor’s Chapter 7 discharge may be objected to by adversary complaint or by motion within sixty (60) days of the first meeting of creditors, if the debtor has been granted discharge already under Chapter 12 or Chapter 13 within six (6) years of the filing of the bankruptcy petition.  (11 U.S.C. §727(a)(9)).

Rule 4004 has also been amended to allow Chapter 13 objections to discharge.  A motion objecting to a Chapter 13 discharge may be filed within sixty (60) days of the first meeting of creditors if the debtor had received discharge in bankruptcy in a prior Chapter 7, 11, or 12 during the four (4) year period preceding the bankruptcy filing, or a discharge from a Chapter 13 two (2) years prior to the bankruptcy filing. (11 U.S.C. §1328(f)).

Amended Rule 4004 did not alter the requirements for objecting to discharge on other grounds.  Those objections must still be raised through the filing of an adversary complaint.

While objections to discharge based upon these grounds are not commonly filed by creditors, the rule amendments give creditors an option to file a motion instead of an adversary complaint to oppose debtor’s discharge in certain instances. Thus, creditors can save money by filing a simple motion rather than incurring the time and expense that goes into filing and prosecuting an adversary proceeding. In most cases, the United States Trustees’ Office or the Chapter 7 or Chapter 13 Trustee assigned to the case will likely file the adversary complaint or the motion. However, this is also a tool for the Creditor should the government not act.

Recap- Rule 4004 Revision:
 
- Adversary Complaint can be filed to oppose discharge in all Chapters of bankruptcy

- Adversary Complaint or Motion Opposing Discharge can be filed in Chapter 7 cases where:
     o Debtor granted discharge under Chapter 7 or Chapter 11 within eight (8) years §727(a)(8); or
     o Debtor granted discharge under Chapter 12 or Chapter 13 within six (6) years §727(a)(9).

- Adversary Complaint or Motion Opposing Discharge can filed in Chapter 13 cases where:
     o Debtor granted discharge under Chapter 7, 11, or 12 within four (4) years §1328(f); or
     o Debtor granted discharge under Chapter 13 within two (2) years §1328(f).

A brief summary of the other amendments are listed below.  As stated above, these amendments have no direct impact on creditors, but Weltman, Weinberg & Reis Co., LPA is providing a brief summary for your review.

Bankruptcy Rule 1007:  Amended to shorten the time for a debtor to file a list of creditors after the entry of an order for relief in an involuntary case and also extends the time for Chapter 7 debtor to file a statement of completion of course in personal financial management.

Bankruptcy Rule 1014:  Amended to include Chapter 15 cases in the rule that authorizes the court to determine where cases should go forward when multiple petitions involving the same debtor are pending.

Bankruptcy Rule 1015:  Amended to include Chapter 15 cases in the rule that authorizes the court to order consolidation or joint administration of cases

Bankruptcy Rule 1018:  Amended to reflect the enactment of Chapter 15 in 2005.

Bankruptcy Rule 1019:  Amended to impose a new time period to object to a claim of exemption when a case is converted to a Chapter 7 from Chapter 11, 12, or 13.

Bankruptcy Rule 4001:  Amended to conform the computation of time to prior amendments.

Bankruptcy Rule 5009:  Amended to require the clerk to provide notice to debtors in Chapter 7 and 13 cases that their cases may be closed if they fail to file a statement of completion of financial management course.

Bankruptcy Rule 5012:  New rule added to establish procedures in Chapter 15 cases for obtaining approval of an agreement regarding communications and coordinating of proceedings with cases involving the debtor pending in other countries.

Bankruptcy Rule 7001:  Amended to correspond to Rule 4004 allowing objections to discharge under §§ 727(a)(8), (a)(9), and § 1328(f) to be commenced by Motion.

Bankruptcy Rule 9001:  Amended to add § 1502 to the list of definitions.

If you have any questions on this issue, please contact Mr. Stephen F. Franks, Esq. or Mr. Milan Kubat, Esq. Stephen and Milan are both attorneys in the Bankruptcy department of Weltman, Weinberg & Reis Co, LPA (WWR). Stephen can be reached directly at 216.739.5645 or via email at . Milan can be reached directly at 216.739.5647 or via email at .

The New Congress and Its Effect on Bankruptcy

Published on November 29, 2010 in Bankruptcy Filings and Homeowners Affordable Modification Program. 0 Comments

November 2010 saw a change sweeping through Washington and the country. Republicans regained the majority in the House and made some major gains in the Senate. With new faces in both chambers, new leaders in the House and a steady number of Bankruptcies being filed in the United States, what effect will these changes have on Bankruptcy?

Through the end of September 2010, there were approximately 1.1 million bankruptcy filings in the United States and its Territories according to the United States Bankruptcy Court. A look back at the 12-month period from September 2009 to 2010 shows that approximately 1.6 million cases were filed.  Compared to the 12-month period from September 2008 to 2009, that was an increase of nearly 200,000 filings.  Projections indicate that the number of filings for 2011 may decrease by a small margin. Will the reshaped Congress have any effect on the number of filings? Time will tell, but the chances of seeing the oft talking about change in the Bankruptcy law as to the cram down of mortgages is not likely.

Home Affordable Modification Program (HAMP) was another hot topic in 2010. However, the number of homeowners who were able to qualify for the program to receive permanent modifications and stay current on the modified payments remains low. Although this is a Treasury Department initiative, will we see any changes to the program in 2011? Will there be a Congressional Directive?  Will the investigations that the State Attorney Generals are spearheading lead to rules in individual states that then will carry over into Bankruptcy? These are questions that we hope to find answers for in early 2011.

Change is typically a good thing. However, how the waves of change affect creditor’s accounts in Bankruptcy is like the outcome of a good mystery novel: “To Be Determined.” 

Weltman, Weinberg & Reis will continue to keep you updated on what is occurring in Washington and its effect on Bankruptcy.

If you have any questions on this matter, please contact Alan C. Hochheiser, Esq. Alan is the Managing Partner of the Bankruptcy Practice Group of Weltman, Weinberg & Reis Co., LPA located in the Brooklyn Heights, Ohio office. He can be reached directly at 216.739.5649 or .

Bankruptcy Filings Up in 2010 When Compared to 2009

Published on June 23, 2010 in Bankruptcy Filings. 0 Comments

Bankruptcy filings for the year through May 2010 are up over 9% nationwide as compared to filings through the same time last year.  From January 2010 to May 2010 there were 136,142 consumer bankruptcy filings nationwide as compared to 124,838 at the same time last year.  The increase is likely attributed to the high unemployment rate and tight credit restrictions of banks.  Although filings have increased when compared to last year’s numbers, there was an overall decline nationwide in filings from April 2010 to May 2010.  Filings in April were approximately 145,000 as compared to 137,000 in May 2010.  The two states with the highest filings are Nevada and Georgia.  Some states have experienced a decrease in filings when compared to last year.  States such as Tennessee, South Carolina, Alabama, and West Virginia have all seen the number of filings drop.  However, states such as Arizona and California have seen an increase in filings this year by 43% and 36% respectively.  Filings for the year are projected to reach the records set in 2005 when over 2 million households filed for bankruptcy.

If you have any questions, please contact David Yunghans directly at 513.723.2211 or via email at .

Bankruptcy Filings Continue to Rise

Published on March 23, 2010 in Bankruptcy Filings, Chapter 11, Chapter 13 and Chapter 7. 0 Comments

2009 brought us increased bankruptcy filings. The number of filings approached the levels of 2004. 2009 saw 1.4 million consumer filings. Approximately 71% of the filings were Chapter 7’s and 28% were Chapter 13’s. Less than 1% were Chapter 11 filings.  The first two months of 2010 has seen a continuation in the increased number of cases. According to the American Bankruptcy Institute, over 111,000 filings were made in February. That represented a 14% increase over February of 2009. It also represented an increase of over 9,000 filings from January 2010. March may well be a signal of what we can expect during the rest of the year.

2009’s statistics continue to show the trend where the majority of Bankruptcy cases are being filed. The 9th circuit, which includes California, Arizona and Nevada, saw 324,000 filings. The 6th Circuit, which includes Ohio and Michigan, was second with close to 214,000 consumer filings. The 11th Circuit, which includes Florida and Georgia, was third, with 198,000 filings. When looking at specific states, California led the way, followed by Florida, Ohio and Michigan. These are the states that are seeing the highest number of foreclosure filings. Of the 50 United States, Alaska had the fewest followed by Wyoming.

As the number of foreclosures increase, so should the number of bankruptcies. WWR will continue to monitor the trends and keep you updated as to the status of filings across the country.

If you have any questions, please contact Alan C. Hochheiser, Esq. Alan is the managing partner of the Bankruptcy Practice Group and is located in the Brooklyn Heights office of Weltman, Weinberg & Reis Co., L.P.A. He can be reached at 216.739.5649 or via email at .

New Bankruptcy Relief from Stay Forms to Take Effect in Northern District of Ohio

Published on February 26, 2010 in Bankruptcy Filings, Chapter 11, Chapter 13 and Chapter 7. 0 Comments

On February 23, 2010, it was announced that the Bankruptcy Court for the Northern District of Ohio will begin utilizing new forms for the filing of Relief from Stay Motions in Chapter 7, Chapter 13 and Chapter 11.  The forms will need to be used for any motions filed on or after April 1, 2010.

The Bankruptcy Courts affected include:  Cleveland, Toledo, Akron, Canton and Youngstown.  The new forms will require much of the same information as had been provided by creditors previously.  However, the forms will require greater specificity as to the calculation of the total balance and arrears owing on a loan, as well as a more structured and detailed analysis of a creditor’s right to enforce the Note, Mortgage or Security Agreement.

No new forms will be required by creditors filing only for Abandonment.  In addition, no new forms were created for the submission of agreed or stipulated orders.

The Bankruptcy Department at WW&R is reviewing the new forms and will provide a more detailed analysis in the coming weeks. If you have any questions, please contact Mr. Scott Fink, Esq. Scott is an Associate in the Bankruptcy department of the Brooklyn Heights office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 216.739.5644 or via e-mail at .