# Presentation: 362658

## Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

- Referred to in this presentation as the “2005 Act”
- Enacted on **April 20, 2005**
***General effective date***: **October 17, 2005** for *most* provisions
***Other effective dates****: Some* provisions take effect on other dates, *such as* the date of enactment (April 20, 2005) *or* 18 months from the date of enactment (October 2006)
- Mark Diamond, Rev. 10/24/05

## Importance of Date of Case Filing

- Since much of the 2005 Act will apply *only to* cases filed *on or after* October 17, 2005, for a significant period of time after that date there will still be cases – filed *before* that date – to which most of the amendments will *not *apply.
- Going forward, always check the **date of case filing** to determine which set of provisions should apply (for example, whether to apply the provisions applicable to cases filed *prior to*, or *on or* *after,* October 17, 2005).

## Scope of the Amendments

- Makes major changes to both consumer and business bankruptcy cases.
- Replaces § 304 ancillary proceedings with *new *Chapter 15, “Ancillary and Other Cross-Border Cases.”
- Makes chapter 12 permanent and now permits family fishermen to obtain relief under ch. 12.
- Amends all chapters of title 11(the “Bankruptcy Code”) as well as making selected amendments to other relevant titles of the United States Code (*e.g.*, the title 28 provisions regarding jurisdiction, venue, appeals, US Trustees, and bankruptcy fees).

## Application of the Amendments

***Refer to the Amended Code***: Within a section of the amended Code, applicability can vary from *one subsection to the next subsection* (or from *one paragraph to the next*).  *Always refer to the amended Code to check the applicability of each specific provision. *
***Examples***:
*The provision would most likely ****not ****apply to ch. 7 ****business ****debtors if it reads*: “*individual *debtors in cases filed under chapters 7 and 13 . . . .”
*The provision would most likely ****not ****apply to ch. 7 involuntary debtors if it reads*: “debtors in *voluntary* cases filed under chapters 7 and 13 . . . .”  However, such a provision would presumably apply to ch. 7 ***business**** *debtors in voluntary cases (since there is no reference to “individual debtors” in this example).

## Changes to Existing Provisions

- The **2005 Act** makes numerous changes to existing provisions as to relevant *time periods*, *dollar amounts* and other key components.  *Always refer to the amended Code to check for these changes*.
***Example of a Change in Time Period***:
***“******Look Back” for Applying State Exemption Laws***: To determine which state’s exemption laws are to apply to an individual debtor’s exemptions, the determination will be based on where the debtor’s domicile was located for the ***730 days*** immediately preceding the date of the filing of the petition.  ***However***, if the debtor’s domicile was *not* located in a single state for such 730-day period, the determination will be based on where the debtor’s domicile was located for the **180 days** immediately preceding such 730-day period *or* for the *greater portion of* that 180-day period. [§ 522(b)(2)(A)]

## Future Clarification of Amendments

- The new and amended statutory provisions will be clarified over time by:
- Judicial interpretation.
- Technical and substantive amendments made by Congress.
- The Interim Rules (to apply during the approx. 3 years it will take to amend the FRBPs).
- New and revised Official Forms.
- Administrative Office guidelines (*e.g.*, guidelines pertaining to the confidentiality of tax documents filed with the court).
- Local rules and general orders.

## Changes Other Than Those Made by the 2005 Act

**September 20, 2005**: Fee for filing a complaint commencing an adversary proceeding to increase to **$250.00**.
**December 1, 2005**: Amendments to the FRBPs to take effect (assuming no congressional action taken before that date).  One rule being amended is FRBP 1007 (described below).
***FRBP 1007, as of 12/01/05*****: List of creditors** must be filed with the petition and must include those listed (or to be listed) in Schedules G* and H.**  At the time of the filing of the petition, a schedule of liabilities can no longer substitute for the filing of a list of creditors.
-   *	**Schedule G**: *Executory Contracts and Unexpired Leases*.
- ** **Schedule H**: *Schedule of Codebtors*.

## Quick Tour of Key Provisions of 2005 Act

*The rest of this presentation provides a quick tour of some of the key provisions and terms in the 2005 Act, with references to the Interim Rules and Official Forms.  Due to space limitations, other sources will need to be consulted for a more complete description of the amendments. *

## Budget and Credit Counseling:All Cases of Individual Debtors

- To file a case under ***any***** **chapter of the Code, an individual debtor must have received **budget and credit counseling** from an approved non-profit agency within the 180 days prior to filing the petition. [S*ee* §§ 109(h) and 521(b); Interim Rule 1007(b)(3) and (c).]
- A debtor may receive a **30-day exemption** (with an additional **15 days** if ordered by the court for cause) by filing a **certification** describing exigent circumstances meriting a waiver of this requirement and stating that the debtor was unable to obtain counseling within the 5 days after making the request (to receive this exemption, this certification must be satisfactory to the court). [§ 109(h)(3)]
- This counseling requirement does *not *apply to a debtor residing in a district for which no budget and credit counseling agency has been approved by the US Trustee. [§ 109(h)(2)]
- This counseling requirement does *not *apply where the court determines (after notice and a hearing) that the debtor cannot complete the requirement due to incapacity, disability or active military duty in a combat zone. [§ 109(h)(4)]

## Personal Financial Management Course: Individual Debtors (Chs. 7 and 13 Only)

***Completion of Course Required***: To receive a discharge in a chapter **7** or **13** case, an **individual debtor** must have completed the required **personal financial management** course. [*See* §§ 111; 727(a)(11); and 1328(g). *See also* Interim Rule 1007(b)(7).]
- Entry of discharge may be delayed by the debtor’s failure to provide the Clerk’s office with proof of completion of the course.
**Chapter 7 Cases**: Pursuant to **Interim Rule 4004(c)(1)(H)**, the court cannot grant a discharge in a ch. 7 case where the debtor has *not *filed with the court a statement regarding ***completion of the personal financial management course*** required by Interim Rule 1007(b)(7).
- “If a debtor fails to file the required statement . . . the clerk will close the bankruptcy case without entry of a discharge.”  Advisory Committee Note to Interim Rule 4004.  *See* **Interim Rule 4006** (clerk must promptly give notice where an individual debtor’s case is closed without the entry of a discharge).
***Debtors Must Certify That They Completed the Course****: *Debtors are to use* ***Official Form 23** (“Debtor’s Certification of Completion of Instructional Course Concerning Financial Management”).

## Means Testing: Chapter 7 Cases

- Applies only to ***individual***** ch. 7 debtors whose debts are *****primarily consumer debts***.
**Abuse under § 707(b)(1)**: Court may dismiss or, with the debtor’s consent, convert to ch. 13 where granting relief under ch. 7 would be an **abuse **of that chapter.
***Presumption of Abuse***** under § 707(b)(2)**: The court must *presume that abuse exists* where the calculation under the means test yields a specific dollar threshold; this threshold appears to be the amount that Congress has determined is needed to fund a ch. 13 plan.  *After deducting monthly expenses from “****current monthly income****” *[defined in § 101(10A)*],* how much money would remain to pay nonpriority, unsecured creditors on a monthly basis under a ch. 13 plan over five years?*
- *[**NOTE**: Under the § 101(10A) definition, the debtor must compute the ***average monthly income*** (from *all *sources and regardless of whether it is taxable income) ***earned during the six months*** ending on the last day of the month immediately preceding the date of commencement of the case (*e.g*., for a case filed on October 17th, it would be an average of what was earned during the six months from April 1st through September 30th).]

## Means Testing (continued)

**Formula**: Calculation of the means test must be made pursuant to the complex formula outlined in § 707(b)(2)(A).
- This formula substitutes **IRS standard expenses*** for certain real expenses of the debtor while permitting other specified real expenses *such as* school tuition (up to $1,500 per year for each child) *or* expenses paid by the debtor for the care of an elderly or sick family member.
- The formula also includes deducting from income the monthly payments made for ***secured debt*** and for ***priority claims***.
*See* Official Form 22A and Interim Rule 1007(b)(4).
- *[**NOTE**: For the **IRS standard expenses**, debtors are required to use a combination of: 1) **Local Standards** (which vary, depending on the cost of living where the debtor resides) for certain expenses like housing and transportation, and 2) **National Standards** (having *no *local variation) for other expenses (such as food and clothing).

## Means Testing (continued)

*Calculation would look something like this*:
_*First*_:
- + 	current monthly income [§ 101(10A)]
- – 	monthly IRS standard expenses
- – 	monthly specified real expenses 	[*e.g*., tuition, up to $1,500 per child]
- – 	monthly payment on secured claims [total amount divided by 60]
- _–__	__monthly payment on priority claims_ [total amount divided by 60]
- 	*net monthly amount* (that could be used to pay nonpriority, unsecured 			claims)
_*Then*_:
*net monthly amount* (from above) **x** 60 months =  *5-year total amount*
- [*Compare* this resulting total amount *with* § 707(b)(2)(A)(i).  That section states, in part, that the court should *presume that abuse exists* where the amount is “ . . . not less than the lesser of –
- 		(I) 25 percent of the debtor’s nonpriority unsecured claims in the case, or $6,000, whichever is greater; or
- 		(II) $10,000.”]

## 		Means Testing (continued) If the amount resulting from the calculation is at the level considered by Congress as being sufficient to fund a ch. 13 plan, the presumption of abuse exists.If the net monthly amount (i.e., the amount before multiplying by 60 months) is:

| Less than $100:  
 | Between $100 and $166.66  | $166.67 or More |
| --- | --- | --- |
| – Assume that an amount under $100 would be insufficient.
– No presumption of abuse exists.  | – A presumption of abuse exists if the amount would be sufficient to pay (over 60 months) at least 25% of the debtor’s nonpriority, unsecured claims.  | – Assume that an amount that is $166.67 or greater would be sufficient. 
– There is a presumption of abuse in the case.
 |

## Means Testing (continued)

***Exemption from Means Test Where Income Is At or Below the Median Income***: Where the combined income of a debtor and his or her** spouse** – *either* a **debtor spouse** *or* a **non-debtor spouse **–** **is *at or below* the median income in that debtor’s state (for a family of similar size), **the means test will *****not *****apply**.
- Note that, for this calculation, the spouse’s income will be taken into account *even where the spouse has ****not ****sought bankruptcy relief*.  The *exception *would be where the debtor and spouse are *legally separated* [under applicable nonbankruptcy law] or are living “*separate and apart*” [other than for the purpose of evading the provisions of § 707(b)(7)(A)].

## Means Testing (continued)

***Debtor May Rebut the Presumption***: Where the presumption of abuse has arisen, the debtor may rebut the presumption by furnishing evidence that demonstrates special circumstances.
***Court May Still Find Abuse Where There Is No Presumption***: Where the presumption does not arise* *or* is successfully rebutted, the court – in determining whether abuse exists under § 707(b)(1) – shall consider the *totality of the circumstances* of the debtor’s financial situation *or *whether the debtor filed the petition in *bad faith*. [§ 707(b)(3)]
- * [NOTE: The presumption does not arise where, for example, the combined income of the debtor and spouse is at or below the median income for that state (for a family of that size).]

## Means Testing (continued)

***Standing***:
***No One Has Standing – § 707(b)(7)***: Where the *current monthly income* of the debtor and debtor’s spouse (including the income of a non-debtor spouse) *combined* is ***at or below*** the median income, the means test does ***not*** apply *and* **no one** [*no**** ****judge, US Trustee, trustee nor any party in interest*] would be permitted* *to raise an issue relating to the ***presumption of abuse**** *under the means test set forth in § 707(b)(2); thus, no one would be able to bring a presumptive abuse motion.
***Judge or US Trustee Has Standing – § 707(b)(6)***: Where the *current monthly income* of the debtor or, in a joint case, the debtor and debtor’s spouse, is ***at or below*** the median income, ***only***** **the **judge **or** US Trustee** may file a motion under § 707(b).
- Thus, under § 707(b)(6), US Trustees could bring an abusive filing motion under § 707(b) in the case of a debtor whose income is at or below the median, but trustees and parties in interest could ***not ***bring such motion.

## Dismissal or Conversion of Ch. 7 Case for Abuse

***Role of US Trustee***: Under § 704(b), the US Trustee, after reviewing the ch. 7 debtor’s filed documents, must:
*Not later than 10 days after the date of the first meeting of creditors*, file a **statement **as to whether the presumption of abuse exists [the **clerk** must provide (by mail) **notice **of this statement *not later than* 5 days after receiving it, pursuant to § 704(b)(1)(B) and Interim Rule 2002(f)(10) – this notice is in addition to the notice that the clerk must send (under § 342(d) and Interim Rule 5008) earlier in the case as to the debtor’s statement regarding the presumption]; and
*Not later than 30 days after the filing the statement*, either 1) file a **motion** to dismiss or convert the case to ch. 13, or 2) file a **statement** setting forth why the filing of such motion would be inappropriate.
***Time for Motion to Dismiss***: Interim Rule 1017(e)(1), while expressly excepting from its provisions the time requirements imposed on US Trustees under § 704(b)(2) (*see above*), provides that a motion to dismiss a ch. 7 case for abuse under § 707(b) or (c) may be filed only *within 60 days* after the first date set for the § 341(a) meeting of creditors.
***Dismissal or Conversion under § 707*****: **Under Interim Rule 1017(e), the court may **dismiss** **or, *****with the debtor’s consent*****, convert** a case for abuse under § 707(b) only on motion and after a hearing on notice to the debtor, the trustee, the US Trustee, and any other entities as the court directs.** ** **NOTE that both § 707(b) and Interim Rule 1017(e) require the debtor’s consent for conversion to ch. 13!**

## Debtor’s Duties under § 521 

***New *****Filing Requirements under § 521(a)(1)(B):**
**Certificate** must be filed in cases** **filed by* ****individual debtors whose debts are primarily consumer debts****.  *The debtor should file either:
*Certificate of attorney or bankruptcy petition preparer* (whose signature appears on the petition) indicating that the ***notice required by § 342(b)*** was delivered to the debtor; *or*
*Certificate of debtor* (who filed a petition without the assistance of an attorney or petition preparer) indicating that the debtor received and read the ***§ 342(b) notice***.

## Debtor’s Duties: New Filing Requirements under § 521(a)(1)(B)

*All *debtors* must file:
- Copies of all **payment advices** (pay stubs) or other evidence of payment received by the debtor from any employer within 60 days prior to filing. *See* IR 1007(b)(1)(E), which permits redaction of the debtor’s social security number.
- A statement of the amount of ***monthly net income***, itemized to show how the amount is calculated. This requirement appears to be addressed by revised Schedules I and J [*see, e.g*., lines ## 14 (new) and 15 (revised) of Schedule I and line # 20(c) (new) of Schedule J.]
- This requirement should be distinguished from the *statement of current monthly income* that is required to be filed in cases under chapter 7 [Official Form 22A], individual debtors’ cases under chapter 11 [Official Form 22B] and cases under chapter 13 [Official Form 22C].
- A statement disclosing *any reasonably anticipated increase* in income or expenditures over the 12-month period following the date of filing. ***Official Forms***: This requirement appears to be addressed by line # 17 (revised) of **Schedule I** and line # 19 (new) of **Schedule J**.
- * [NOTE: Amended statute does *not* expressly limit these filing requirements to individual debtors only.]

## Debtor’s Duties: New Filing Requirements (continued) 

- § 521(b) & IR 1007(b)(3): Individual debtors must file with the court:
- A **certificate** – from approved nonprofit budget and credit counseling agency – indicating debtor’s completion of budget and credit counseling course.
- A copy of the **debt repayment plan** developed as part of budget and credit counseling.
- § 521(c) & IR 1007(b)(1)(F): Debtors must file with the court a record of any interest that the debtor has in an **education individual retirement account** (as defined in Internal Revenue Code) or under a qualified state tuition program.
- § 541(b)(5) excludes from property of the estate certain education individual retirement accounts.

## Debtor’s Duties: New Filing Requirements (continued)

- Interim Rule 1007(b)(1): Unless the court orders otherwise, the debtor (except ch. 9 debtors) must file – in addition to the schedules and statements that are already required – the following documents:
- Copies of all **payment advices** or other **evidence of payment**, if any, ***with all but the last four digits of the debtor’s social security number redacted***, received by the debtor within 60 days prior to filing; [Interim Rule 1007(b)(1)(E)]
- A **record** of any interest that the debtor has in an account or program of the type specified in § 521(c) [*i.e*., **education individual retirement account*** (as defined in Internal Revenue Code) or under a qualified state tuition program]. [Interim Rule 1007(b)(1)(F)]
-  	Filings under IR 1007(b)(1) must be prepared as prescribed by the appropriate Official Forms (if any).
- * [**NOTE**: Certain **education individual retirements** accounts may be ***excluded*** from **property of the estate** under the provisions of § 541(b)(5).]

## Debtor’s Duties: New Filing Requirements (continued)

- Interim Rule 1007(b)(3): Unless the US Trustee has determined that the § 109 credit counseling requirement does not apply in the district, the debtor must file:
- As required by § 521(b), the **certificate **and **debt repayment plan**, if any, from *an approved credit counseling agency* that provided such counseling to the debtor;
- A § 109(h)(3) **certification **that describes *exigent circumstances* meriting a waiver of the credit counseling requirement (where debtor was not provided with counseling within the 5-day period after requesting such counseling); or
- A **request **for a *determination by the court* [under § 109(h)(4)] that the debtor is unable to complete the requirement due to ***incapacity***, ***disability*** or ***active military duty in a combat zone***.
**Official Form 1**:  *See* the new box in the middle of the second page of the petition as to the required certification [“Certification Concerning Debt Counseling by Individual/Joint Debtor(s)”].

## Debtor’s Duties: New Filing Requirements (continued)

**Statements of Current Monthly Income**** ****Under ****Interim Rule 1007(b)(4), (5) & (6)**:
**Chapter 7 – IR 1007(b)(4)**: Unless the provisions for disabled veterans under § 707(b)(2)(D) apply, an ***individual ch. 7 debtor with primarily consumer debts*** shall file a **statement of current monthly income** (using the appropriate Official Form) and, if the debtor’s currently monthly income *is greater than* the applicable median family income (for the applicable state and household size), **the “means test” calculations** under § 707(b) (using the appropriate Official Form). ***See***** Official Form 22A.**
**Chapter 11 – IR 1007(b)(5)**: An ***individual ch. 11 debtor ***shall file a **statement of current monthly income** (using the appropriate Official Form). ***See***** Official Form 22B. **
**Chapter 13 – IR 1007(b)(6)**: A*** ch. 13 debtor ***shall file a **statement of current monthly income** (using the appropriate Official Form) and, if the debtor’s currently monthly income *is greater than* the median family income (for the applicable state and household size), **a calculation** **of disposable income** under § 1325(b)(3) (using the appropriate Official Form). ***See***** Official Form 22C.**

## Debtor’s Duties: Time Requirements Under Interim Rule 1007(c)

**VOLUNTARY CASES:**
***File With the Petition***: The documents pertaining to the new credit counseling requirement – filed under IR 1007(b)(3) – must be filed with the petition.
***File Either With the Petition or Within 15 Days***: The following documents must be filed *within 15 days of filing* (if not filed with the petition):
- Documents required under IR 1007(b)(1), *i.e.*, *all* schedules, the statement of financial affairs, payment advices (pay stubs), and any records of an interest in education individual retirement accounts. [In an **involuntary case**, these documents must be filed within 15 days of the entry of the order for relief, along with the list required under FRBP 1007(a)(2).]
- Documents required under IR 1007(b)(4), (5) or (6), *i.e.*, the statements of currently monthly income (where required to be filed in ch. 7, 11 and 13 cases) and any required calculations for means testing (ch. 7) or disposable income (ch. 13). *See *Official Form 22A for ch. 7; Official Form 22B for ch. 11; and Official Form 22C for ch. 13.

## Debtor’s Duties: Time Requirements Under Interim Rule 1007(c) (continued)

***Filing of Statement under IR 1007(b)(7)***: The debtor must file the **statement **pertaining to the debtor’s completion of a course in ***personal financial management*** (*see* Official Form 23) –
***In a chapter 7 case***: *within 45 days* after the first date set for the § 341(a) meeting of creditors.
***In a chapter 13 case***: *no later than* the last payment made by the debtor as required by the plan *or *the filing of a motion for entry of a “hardship” discharge under § 1328(b).

## Debtor’s Duties as to Property Securing Claims

**Statement of Intention under § 521(a)(2)**: The 2005 Act makes several changes to the provision requiring ***individual debtors*** to file a ***statement of intention***; *among the changes are*:
- Deletion of the word “consumer” indicates that the statement must be filed where the schedules include ***any ***debt (consumer or otherwise) which is **secured **by property of the estate.
- Debtors now must perform their intention within **30 days** *after *the first date set for the § 341(a) meeting of creditors (*no longer 45 days after the filing of the notice of intent, as the pre-amended provision permitted*).
**Termination of Automatic Stay under § 362(h)**: The § 362(a) automatic stay is ***terminated*** with respect to **personal property** ***securing ***in whole or in part a claim, or ***subject to an unexpired lease***,*** ***and such property shall no longer be property of the estate, where the debtor ***fails*** to comply with § 521(a)(2) by ***filing the statement of intention*** and ***performing the debtor’s intention*** within the time constraints provided in § 521(a)(2).
**Official Form 8** has been revised to reflect the relevant amendments.

## Debtor’s Duties as to Property Securing Claims (continued)

**Duty to Redeem or Reaffirm Under New § 521(a)(6)**: Under new § 521(a)(6), ***individual ch. 7 debtors*** must – *not later than* **45 days** after the first meeting of creditors – either **redeem **(§ 722) or **reaffirm** (§ 524) debt where the creditor has an allowed claim for the **purchase price** ***secured ****(in whole or part)**** by an interest in personal property*** (otherwise, the debtor cannot retain possession of the personal property).
- Pursuant to § 521(a)(6), failure to act within the 45-day period results in the **termination** of the § 362(a) automatic stay with respect to that personal property (also results in the property no longer being property of the estate) [*unless* there is a determination by the court on motion of the trustee filed within the 45-day period].

## Debtor’s Duties: New Filing Requirements (continued) 

**Court’s Duties under § 521(e)(1) and (3)**: If a creditor files with the court (at any time) a *request *to receive: 1) a copy of the petition, schedules and statement of financial affairs filed by an ***individual debtor in a ch. 7 or 13 case***, or 2) a copy of the plan filed by a ***chapter 13 debtor***, the court shall make a copy of the requested documents available to that creditor [where the request is to receive a ch. 13 plan, the plan must be made available *not later than* 5 days after the request is filed].
**Debtor’s Duty under § 521(e)(2) and Interim Rule 4002(b)(3) and (4)**: The debtor must provide 1) ***to the trustee*** – *not later than 7 days prior to* the date first set for the first meeting of creditors – a copy of the Federal income tax return (or a transcript of such return) for the most recent year ending prior to case commencement; and 2) at the same time, a copy of such return (or transcript) ***to any creditor*** ***that has made a timely request*** for such copy.

## Debtor’s Duties: New Filing Requirements (continued)

**§ 521(f)**: An individual debtor – at the *request of* the court, US Trustee or **any party in interest in a ch. 7, 11 or 13 case** – must file with the court:
- A copy (or transcript) of each **Federal income tax return** required with respect to each tax year ending while the case is pending;
- A copy (or transcript) of each **Federal income tax return** that had not been filed with the tax authority prior to the filing of the petition, and that was subsequently filed for any year ending within 3 years prior to the filing of the petition;
- A copy of each **amendment** to any Federal income tax return or transcript already filed; and
- A **statement** – in a ch. 13 case – of the debtor’s income and expenditures during the tax year most recently concluded, and of the debtor’s monthly income, filed: 1) on the date that is either 90 days after the tax year’s end or 1 year after case commencement, whichever is later, if a plan is not confirmed before the later date; and 2) annually after plan confirmation and until case closing.
**§ 521(g)(2)**: The tax returns, amendments, and statement of income and expenditures – described in § 521(e)(2)(A) and (f) – shall be available to the UST, the trustee or any party in interest for inspection and copying, subject to § 315(c) of the 2005 Act.

## Debtor’s Duties – Automatic Dismissal

**§ 521(i)**: An **individual debtor’s voluntary case under ch. 7 or 13** shall be ***automatically*** ***dismissed*** on the **46****th**** day** after filing where the debtor has failed to file ***all ***of the information required under **§ 521(a)(1)** ***within 45 days*** after the date of filing of the petition.
- If, within the 45-day period, the debtor makes a request for more time, the court may permit the debtor an *additional *period (*but not exceeding 45 days*) to file the information [required under § 521(a)(1)] if the court finds justification for granting the extension.
- On or after the 46th day, the court must enter an **order of dismissal** *not later than* 5 days after a request is made by any party in interest to enter such order.
- On the **trustee’s **motion filed *before* the expiration of the applicable period (*either the initial 45-day period or any granted extension*), the court may decline to dismiss the case if the court finds 1) the debtor attempted in good faith to file the required information and 2) the best interests of creditors would be served by administering the case.

## Notice Under § 342

**§ 342(b) –** ***Changes to Pre-Commencement Notice***: The clerk’s pre-commencement notice to an individual debtor whose debts are primarily consumer debts must now include:
- A brief description of: 1) chapters 7, 11, 12 and 13 and the general purpose, benefits, and costs of proceeding under each chapter, and 2) the types of services available from credit counseling agencies; and
- Statements specifying that: 1) a person who knowingly and fraudulently conceals assets or makes a false oath or statement in connection with a bankruptcy case shall be subject to fine, imprisonment, or both; and 2) all information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General.
***Certificate***: Where § 342(b) applies, one of the following certificates must be filed:
*Certificate of attorney or bankruptcy petition preparer* (whose signature appears on the petition) indicating that the ***notice required by § 342(b)*** was delivered to the debtor; *or*
*Certificate of debtor* (who filed a petition without the assistance of an attorney or petition preparer) indicating that the debtor received and read such notice. [§ 521(a)(1)(B)]

## Notice Under § 342 (continued)

- § 342(c) – ***Updated*** ***Requirements for Debtors When Providing Notice to Creditors***:
- Where the debtor* is required to give notice to a creditor, such notice must contain the debtor’s name and address and the **last four digits** of the debtor’s taxpayer identification number.
- When sending notice after adding a creditor to the schedules, the debtor shall include the ***full *****taxpayer identification number** in the notice sent to the newly-added creditor, but the version of the notice that is filed with the court should include the ***last four digits**** only*.
- If – within 90 days prior to a voluntary case filing (or prior to 90 days if the creditor would be in violation of nonbankruptcy law by sending a communication within 90 days) – a creditor supplies the debtor – in at least 2 communications – with the account number and the address to which the creditor is requesting to receive notice, any notice required to be sent by the debtor to such creditor **shall be sent to such address and include such account number**.
- * [NOTE: § 342(c)(1) does ***not*** appear to limit to individual debtors only the right of debtors to redact their taxpayer identification numbers.]

## Notice Under § 342 (continued)

**§ 342(d) & Interim Rule 5008** – ***Clerk’s Duty to Send Notice***: Where the § 707(b) ***presumption of abuse*** arises in a ch. 7 case of an individual debtor, the clerk must give notice – to all creditors *not later than* 10 days from the date of filing of the petition – that the presumption of abuse has arisen.
- Notice (with respect to the presumption) will be based on which of the two boxes is checked (by the debtor) at the top of Official Form 22A, indicating whether the presumption arises (or does not arise).
- Notice (with respect to the presumption) will be provided as part of Official Form 9 (*i.e.*, the notice of case commencement often referred to as the “§ 341(a) notice”).  *For an example of this notice, see the middle of the first page of Form B9A.*

## Notice Under § 342(d) & Interim Rule 5008 – Clerk’s Duty to Send Notice (continued)

**Interim Rule 5008**: Where, on filing, the debtor does ***not ***file a statement indicating whether the presumption has arisen [*e.g.*, the debtor did *not *file Official Form 22A with the filing of the petition]:
- The clerk’s notice will state that the debtor did not file a statement* *and that further notice will be given if a later filed statement indicates that the presumption has arisen*.*
- The clerk must send a ***second notice*** where the debtor later files a statement indicating that the presumption has arisen.
**Interim Rule 5008** states that the notice must be in accordance with Rule 2002**.  ***See ***Interim Rule 2002(f)(9)**, requiring notice by mail.** **
***Clerk’s Duty***: In addition to the clerk’s duty to provide notice of the debtor’s statement under § 342(d) and IR 5008, the clerk also has a duty (*as discussed in a prior slide*) – pursuant to § 704(b)(1)(B) and IR 2002(f)(10) – to provide notice of the **US Trustee’s statement **as to whether** **the debtor’s ch. 7 case would be presumed to be an abuse under § 707(b).

## Notice Under § 342 (continued)

- § 342(e) – ***Creditor’s Choice of Address for Receiving Notice in Specific Case***:
- In an **individual debtor’s ch. 7 or 13 case**, a creditor (at any time) may file with the court *and* serve on the debtor a ***notice of address*** to be used to provide notice in the case (to that creditor).
- Both the **court** and the **debtor** must use the address provided in the ***notice of address*** when sending notice to that creditor, for any notice required to be sent *later than 5 days* after receipt of the ***notice of address***.

## Notice Under § 342 (continued)

- § 342(f) – ***Entity’s Choice of Address for Receiving Notice in the Ch. 7 and 13 Cases of ******All****** Courts or ******Selected****** Courts***:
- An entity may file with *any* bankruptcy court a ***notice of address ***– to be used by *all *bankruptcy courts or *selected *bankruptcy courts – to provide notice to such entity in all pending ch. 7 and 13 cases in which such entity is a creditor.
- Where notice is to be provided to such entity *later than 30 days* after the filing of the notice of address, the address provided in the notice of address must be used to send notice to such entity, unless, in a particular case, such entity filed – under § 342(e) – a notice of address to be used in that particular case.
***Compare***** application of § 342(e) *****with***** that of § 342(f)**:
- Based on its language, § 342(e) applies to the ch. 7 or 13 cases of ***individual debtors*** (*see previous slide*).
- § 342(f), however, provides that it applies to ch. 7 and 13 cases, ***without*** making any reference to individual debtors.

## Notice Under § 342 (continued)

**§ 342(g) –** ***Consequences of Noncompliance With the Provisions of § 342***:
- Where the court or the debtor does not provide notice in accordance with the provisions of § 342(a) through (f), the notice shall not be effective notice until it is brought to the attention of the creditor.
- Where a creditor designates a person or organizational subdivision to receive notice and establishes reasonable procedures for receiving notice, any notice that is ***not ***sent in accordance with the provisions of § 342(a) through (f) shall not be considered to have been brought to the attention of that creditor until received by the designated person or organizational subdivision.
**Consequences**: A monetary penalty may ***not*** be imposed on a creditor for ***violation of the § 362(a) automatic stay*** or for ***failure to comply with the turnover provisions of §§ 542 and 543**** *unless the conduct (on which the violation or failure is based) occurs ***after ***the creditor receives notice – effective under § 342 – of the order for relief.

## Notice to Foreign Creditors

**§ 1514** applies in cases under *all *chapters of title 11 [*see *§ 103(k)(1)] and provides, in subsection (d), that any procedural rule or court order as to ***notice of the filing of a proof of claim*** must provide ***additional time***** **to **creditors with foreign addresses **(as is reasonable under the circumstances).
**Interim Rule 2002(p)(2)** provides that – unless the court orders otherwise – a **creditor with a foreign address** to which notices under Rule 2002 are mailed shall be given ***at least 30 days’ notice*** of the time fixed for filing a proof of claim under Rule 3002(c) or 3003(c).  According to the Advisory Committee Note, “*the court may also shorten this additional notice time if circumstances so warrant*.”
- Pursuant to **Interim Rule 2002(p)(1)**, the court may order that the notice may be *supplemented *by other means or that the prescribed time for the notice by mail be *enlarged *where the court finds a notice mailed within the prescribed time to be insufficient in terms of providing reasonable notice.
**Application of Interim Rule 3002(c)(6) in Ch. 7, 12 and 13 Cases**: Where notice of the time for filing a proof of claim was mailed to a creditor at a foreign address, the court – on motion filed by the creditor *before or after* the expiration of the time – may extend the time by ***not more than 60 days*** (if the court finds the notice to be insufficient in providing reasonable time to file).  **Interim Rule 3003(c)(3)** makes these provisions applicable to **ch. 9 and 11 cases**.
- Information for foreign creditors has been added to **Official Form 9**.

## Designated Addresses of Taxing Authorities

***Clerk to Maintain List***: Under new § 505(b), the clerk shall maintain a list under which a governmental unit – Federal, State or local – responsible for the collection of taxes within the district may:
- Designate an address for service of requests under § 505(b); and
- Describe where further information concerning additional requirements for filing such requests may be found.
***Statement Designating Address***: Under **Interim Rule 5003(e)**, a governmental unit – US, state, territory or local – responsible for the collection of taxes *within the district in which the case is pending* may file a **statement **designating an address for service of requests under § 505(b).
- The designation shall describe where further information concerning additional requirements for filing such requests may be found.
- The register maintained by the clerk must include the mailing addresses designated under Interim Rule 5003(e) (but the clerk is *not* required to include more than one mailing address for each taxing authority).

## § 341 Meeting of Creditors

**Required Documentation for *****Individual Debtors***** at the § 341 Meeting –****Interim Rule 4002(b)****:**
***Personal Identification***:** Photo ID** issued by a governmental unit (or other personal identifying information establishing identity) PLUS **evidence of debtor’s social security number** (*or a written statement that the documentation does not exist*).
***Financial Information***:
- Evidence of current income** (***e.g.*, most recent pay stub),
- Statements for each depository or investment account, and
- Documentation of monthly expenses claimed by the debtor [when required under § 707(b)(2)(A) or (B)].
***Tax Return ***(*subject to the Administrative Office’s procedures for safeguarding confidentiality*):
***To the Trustee***: A copy of the **Federal tax return** (and any attachments) or a transcript of the return [*or a written statement that the documentation does not exist*] must be provided to the trustee ***at least 7 days*** prior to the first date set for the § 341 meeting.
***To a Creditor***: Where a creditor requests *at least 15 days prior to* the first date set for the § 341 meeting, the debtor must provide that creditor with a copy of the **Federal tax return** (and any attachments) or a transcript of the return [*or a written statement that the documentation does not exist*] ***at least 7 days*** prior to the first date set for the § 341 meeting.

## Chapter 7 Discharge

- § 727(a)(8) – ***Revision of Existing Ground for Denying Discharge***: Under § 727(a)(8), as amended, an individual debtor may not receive a ch. 7 discharge if the debtor had been granted a ch. 7 or 11 discharge in a case commenced within **8 years*** before the date of filing of the petition in the present case.
- * [NOTE: The amendment changes the “look-back”  from 6 years to 8 years. Official Form 1 has been amended – at the top of the second page – to reflect this change; debtors must now list on the petition any prior bankruptcy case filed within the last 8 years.]

## Chapter 7 Discharge (continued)

***New Exception to Discharge Added to § 727(a)***:
**§ 727(a)(11) & Interim Rule 4004(c)(1)(H)**: A discharge will **not** be granted where the debtor fails to complete the **personal financial management course** described in § 111, *unless*: 1) the debtor is a person described in § 109(h)(4) [court determines that failure to complete course is due to incapacity, disability, or active military duty in a combat zone]; or 2) the debtor resides in a district for which no budget and credit counseling agency has been approved by the US Trustee.
**Interim Rule 4004(c)(1)(H)**:** **Discharge cannot be granted where the debtor has *not *filed with the court a statement regarding completion of the financial management course. [The debtor must file* ***Official Form 23** (“Debtor’s Certification of Completion of Instructional Course Concerning Financial Management”).]
**Interim Rule 4006**: ***The clerk must promptly give notice*** to all parties in interest where an individual debtor’s case is closed without the entry of a discharge. This will occur where, for example, the debtor fails to complete the course or, instead, the debtor does complete the course but fails to file the statement (certifying completion).

## Chapter 7 Discharge (continued)

***New Exception to Discharge Added to § 727(a)***:
**§ 727(a)(12)**: A discharge will **not** be granted where the court – after notice and a hearing held *not more than 10 days before the date of entry of the discharge order – *finds that there is reasonable cause to believe that: 1) § 522(q)(1) may be applicable to the debtor; and 2) there is a pending proceeding in which the debtor may be found guilty of a felony [of the kind described in § 522(q)(1)(A)] or liable for a debt [of the kind described in § 522(q)(1)(B)]. [**NOTE**: *This provision applies in cases commenced on or after the date of enactment, April 20, 2005*.]
**Interim Rule 4004(c)(1)(I)**: Discharge cannot be granted where there is a pending motion to delay or postpone discharge under § 727(a)(12).
- The time for filing a § 522(q) objection to an exemption is governed by **Interim Rule 4003(b)(2) **(the objection must be filed before the case is closed).

## Chapter 7 Discharge (continued)

**Interim Rule 4004(c)(1)(J): **Discharge cannot be granted where a ***presumption ***has arisen that a reaffirmation agreement is an ***undue hardship*** under § 524(m).
**§ 1228(a) of 2005 Act and Interim Rule 4004(c)(1)(K) – *****A New Ground for Not Granting Discharge***: Although not amending § 727, the 2005 Act – in § 1228(a) – provides that the court shall *not *grant a discharge in an individual debtor’s ch. 7 case *unless *requested tax documents have been provided to the court.  Pursuant to **Interim Rule 4004(c)(1)(K**), a discharge should *not *be entered where a pending motion to delay discharge is based on the allegation that the debtor has not filed with the court all tax documents required to be filed under § 521(f).
**§ 727(d)(4) –** ***A New Ground for Revoking Discharge***: Under new paragraph (4) of § 727(d), the court – on request and after notice and a hearing – shall revoke a ch. 7 discharge where the debtor has failed to explain satisfactorily 1) a material misstatement in an audit [28 U.S.C. § 586(f)], or 2) a failure to make available for inspection accounts, papers, documents, files, etc. – belonging to the debtor – that are requested for such audit.

## Chapter 13 Discharge

***New***** Exceptions Added to § 1328(a) Reduce the Scope of a Ch. 13 Discharge**: In addition to what is excepted from discharge under the *pre-amended* version of § 1328(a), ***new***** exceptions** are:
- Certain tax debts having a priority under § 507(a)(8)(C);
- Debts excepted under the following paragraphs of § 523(a): (1)(B), (1)(C), (2), (3) and (4)*; and
- Debts for **restitution** or **damages** awarded in a civil action against the debtor as a result of **willful *****or***** malicious injury** by the debtor that **caused personal injury** to, or the **death** of, an individual.
- * [NOTE: The paragraph numbers of § 523(a) listed above are *in addition to* the § 523(a) paragraphs already excepted from discharge in the pre-amended version of § 1328(a), that is, paragraphs (5), (8) and (9) of § 523(a). Also, the exclusion from discharge still applies to certain long-term debts {under § 1322(b)(5)} and debts for restitution, or a criminal fine, included in a sentence on the debtor’s criminal conviction.]

## Chapter 13 Discharge (continued)

- § 1328(a) – ***New Condition to Receiving Discharge***: To receive a discharge under § 1328(a), a debtor required (*by statute or judicial or administrative order*) to pay a **domestic support obligation** must **certify **that all amounts *payable* (under order or statute) and *due* on or before the date of certification have been paid (including prepetition amounts, but only to the extent provided for by the plan).
- This new condition to obtaining a discharge also applies in chapter 12 cases; *see* § 1228(a).
- For individual debtors in chapter 11, a similar condition now exists as a requirement for confirmation of the plan; *see* § 1129(a)(14).

## Chapter 13 Discharge (continued)

***Three New***** Grounds for Not Granting a Ch. 13 Discharge**:
**1.**** § 1328(f) – Repeat Filers**: The court shall *not* grant a discharge if the debtor has received a discharge 1) in a case filed under ch. 7, 11 or 12 during the **4-year** period preceding the date of the order for relief under ch. 13; or 2) in a case filed under ch. 13 during the **2-year** period preceding the date of such order.
**2.**** § 1328(g) – Personal Financial Management Course**: The court shall *not* grant a discharge unless the debtor, after filing, has completed the **personal financial management** course described in § 111.  However, *two exceptions exist*: 1) the debtor is a person described in § 109(h)(4) [court determines that failure to complete course is due to incapacity, disability, or active military duty in a combat zone]; or 2) the debtor resides in a district for which no budget and credit counseling agency has been approved by the US Trustee.

## Chapter 13 Discharge (continued)

***Three New***** Grounds for Not Granting Discharge (continued):**
**3.**** § 1328(h) – Pending Proceeding Related to § 522(q)**: A discharge will **not** be granted *unless* the court – after notice and a hearing held *not more than 10 days before the date of entry of the discharge order – *finds that there is *no reasonable cause* to believe that: 1) § 522(q)(1) may be applicable to the debtor; and 2) there is a pending proceeding in which the debtor may be found guilty of a felony [of the kind described in § 522(q)(1)(A)] or liable for a debt [of the kind described in § 522(q)(1)(B)].
**NOTE**: *This provision applies in cases commenced on or after the date of enactment, April 20, 2005*.
- Similar amendments have been placed in the discharge provisions for ***chapter 7 debtors*** [*see* § 727(a)(12)],*** chapter 12 debtors*** [*see* § 1228(f)] and ***individual debtors in chapter 11*** [*see* § 1141(d)(5)(C)].
**Interim Rule 4003(b)(2)**: A party filing a § 522(q) objection to an exemption must do so *before the case is closed*. If an exemption is first claimed after a case is reopened, an objection must be filed before the reopened case is closed.

## Delay of Discharge in a Ch. 12 or 13 Case or the Ch. 11 Case of an Individual Debtor [§ 522(q)]

**Statement Must Be Filed Under Interim Rule 1007(b)(8)**: Where a ch. 11, 12 or 13 individual debtor’s claimed exemption [under § 522(b)(3)(A)] exceeds the $125,000 amount [§ 522(q)(1)] in property of the kind described in § 522(p)(1), the debtor shall file a **statement **as to whether there is a pending proceeding in which the debtor may be found guilty of a felony [of the kind described in § 522(q)(1)(A)] or found liable for a debt [of the kind described in § 522(q)(1)(B)].
***Interim Rule 1007(c)***:  The debtor must file the 1007(b)(8) statement by *not earlier than* the date of the last payment made under the plan or the date of filing of a motion for entry of a discharge under §§ 1141(d)(5)(B), 1228(b) or 1328(b).
**Clerk Must Send Notice Under Interim Rule 2002(f)(11)**: The clerk must give notice by mail [to the debtor, all creditors and indenture trustees] of the time to request a delay in the entry of a discharge under §§ 1141(d)(5)(C), 1228(f) or 1328(h).
**Discharge Delayed Under Interim Rule 4004(c)(3)**: If the debtor is required to file a statement under Rule 1007(b)(8), the court shall not grant a discharge earlier than 30 days after the filing of the statement.

## Chapter 11 Discharge of Individual

*Several changes to the Ch. 11 Discharge of an Individual Debtor*:
**§ 1141(d)(5)(A) –** **No** **Discharge Until Individual Debtor Has Completed Making *****All *****Payments**: Plan confirmation does *not* discharge any debt (provided for in the plan) *until* the court grants a discharge **on completion of *****all***** payments** under the plan [unless the court – after notice and a hearing – orders otherwise for cause].
**Official Forms 9E and 9E(Alt.)** have been revised to state that an individual debtor’s discharge is not effective until the completion of all payments under the plan (unless the court orders otherwise).
**§ 1141(d)(5)(B) – Where Individual Debtor Has *****Not *****Completed Payments: **The court – at any time after plan confirmation and after notice and a hearing – may grant a discharge to an individual debtor who has *not *completed payments under the plan if 1) the distribution under the plan to unsecured creditors ***is not less than ***what they would have received in a chapter 7 liquidation, and 2) plan modification is not practicable.

## Chapter 11 Discharge of Individual (continued)

*Several changes to the Ch. 11 Discharge of an Individual Debtor *(continued):
**§ 1141(d)(5)(C) – Pending Proceeding Related to § 522(q)**: A discharge will **not** be granted to an individual debtor *unless* the court – after notice and a hearing held *not more than 10 days before the date of entry of the discharge order – *finds that there is *no reasonable cause* to believe that: 1) § 522(q)(1) may be applicable to the debtor; and 2) there is a pending proceeding in which the debtor may be found guilty of a felony [of the kind described in § 522(q)(1)(A)] or liable for a debt [of the kind described in § 522(q)(1)(B)]. [**NOTE**: *This provision applies in cases commenced on or after the date of enactment, April 20, 2005*.]
*See* **Interim Rules 1007(b)(8) and (c)** [debtor must file statement], **2002(f)(11)** [clerk must send notice] and **4004(c)(3)** [discharge delayed].
- The time for filing a § 522(q) objection to an exemption is governed by **Interim Rule 4003(b)(2)**.

## Confirmation of Ch. 11 or 13 Plan of Individual Debtor

**§ 1228(b) of 2005 Act – *****A New Condition to Confirming a Plan***: Although not amending § 1129 or § 1325 of the Bankruptcy Code, the 2005 Act – in § 1228(b) – provides that the court shall *not *confirm a plan in an **individual debtor’s ch. 11 or 13 case** unless requested tax documents have been filed with the court.
**Document Retention under** **§ 1228(c) of 2005 Act: **§ 1228(c) states that “[t]he court shall destroy documents submitted in support of a bankruptcy claim not sooner than 3 years after the date of the conclusion of a case filed by an individual under chapter 7, 11, or 13 . . . .  In the event of a pending audit or enforcement action, the court may extend the time for destruction of such requested tax documents.”
*See *the prior slide on ***Chapter 7 Discharge*** regarding the provisions of **§ 1228(a) of the 2005 Act** (prohibiting the court from granting a ch. 7 discharge where requested tax documents have not been filed).

## Chapter 11 – Other Provisions Affecting Individual Debtors 

***Individual Debtor’s Modification of a Ch. 11 Plan After Confirmation*****:*** See* **§ 1127(e)** and **Interim Rule 3019(b)** pertaining to an individual debtor’s ***modification*** of a plan *after *confirmation.
**Interim Rule 3019(b)**: After the debtor makes a request to modify, the clerk must give *not less than* 20 days’ notice by mail of the time fixed for filing an objection and, if an objection is filed, the hearing to consider the proposed modification.
***Property of the Estate***: Pursuant to new Code § 1115, property of the estate – in an individual debtor’s ch. 11 case – includes:
- All property specified in § 541 acquired after case commencement but prior to the case’s closing, dismissal or conversion (to ch. 7, 12 or 13), whichever occurs first.
- Earnings from services performed by the debtor after case commencement but prior to the case’s closing, dismissal or conversion (to ch. 7, 12 or 13), whichever occurs first.

## Chapter 13 – Other Provisions

**New § 1308 – *****Filing of Tax Returns with Taxing Authorities***: Chapter 13 debtors are now required to file their Federal, State and local tax returns *with the appropriate taxing authorities*, pursuant to the provisions contained in *new* § 1308.
**Interim Rule 3002(c)(1)**: To be considered timely filed, a proof of claim filed by a governmental unit for a claim resulting from a tax return filed under § 1308 must be filed *not later than* **180 days** *after* the date of the order for relief ***or *****60 days** *after* the date of the debtor’s filing of the tax return, ***whichever is later***.
**New § 1324(b) – *****When To Hold Confirmation Hearing***: The confirmation hearing “may be held not earlier than 20 days and not later than 45 days after the date of the meeting of creditors under section 341(a), unless the court determines that it would be in the best interests of the creditors to hold such hearing at an earlier date and there is no objection to such earlier date.”
**Amended § 1322(d) – *****Length of Plan***: Where the ***combined income*** of the debtor and the debtor’s spouse is:
***Not less than***** the applicable median income**: The plan may *not* provide for payments over a period that is longer than 5 years.
***Less than***** the applicable median income**: The plan may not provide for payments over a period greater than 3 years (unless, the court, for cause, approves a longer period, but the court may not approve a period greater than 5 years).

## Reaffirmation Agreements

***Enforceability Dependent on Receipt of New Subsection (k) Disclosures***: § 524(c)(2) has been revised to make the reaffirmation agreement enforceable *only if* the debtor received – at or before the time of signing the agreement – the disclosures described in new § 524(k).
***§ 524(m) – Presumption of Undue Hardship***: For 60 days after the signing of the agreement (or such additional period as the court orders during the 60 days), a ***presumption of undue hardship*** will exist if the amount computed by *deducting *the debtor’s monthly expenses *from *the debtor’s monthly income *is less than* the scheduled payments on the reaffirmed debt.
- 	[monthly income – monthly expenses < payments on the reaffirmed debt]
**Interim Rule 4008**: The debtor’s statement under §524(k) shall be *accompanied by a statement* of the total income and total expense amounts as stated on Schedules I and J.  The *accompanying statement* shall include an explanation of any difference *if *the income and expense amounts stated on Schedules I and J differ from those appearing on the § 524(k) statement.

## Reaffirmation Agreements (continued)

***Rebuttal***: While the debtor may submit a written rebuttal of the presumption, the court may disapprove the agreement if the presumption has not been rebutted to the court’s satisfaction.
***Discharge***: No agreement shall be disapproved without notice and a hearing (to both the debtor and creditor), and such hearing **must be concluded *****before *****the entry of the debtor’s discharge**. *See* **Interim Rule 4004(c)(1)(J)** [**debtor cannot receive a discharge where the § 524(m) presumption of undue hardship has arisen**].
***Exception***: § 524(m) does not apply where the creditor is a ***credit union***.

## Automatic Stay

***Major Changes***: The 2005 Act changes the scope and effect of the automatic stay by extensively amending § 362 *and* by adding new provisions in ***other*** Code sections.  *Two examples of the latter are*:
- The language added as part of new § 521(a)(6) regarding ***termination of the automatic stay*** with respect to certain personal property where the debtor fails to either reaffirm or redeem within the 45-day period after the first meeting of creditors; and
- The provision in § 342(g) stating that a monetary penalty may *not *be imposed on a creditor for ***violation of the automatic stay*** unless the conduct (on which the violation is based) occurs after the creditor receives notice – effective under § 342 – of the order for relief.
- Many of the changes pertaining to the automatic stay appear to *limit *the scope of the stay by creating new or expanded exceptions and limitations.  *Several changes are outlined in the following slides.*

## Automatic Stay (continued)

**Repeat Filers**: *In a single or joint case filed by or against individual debtor(s) in a case under ch. 7, 11 or 13*:
**§ 362(c)(3)**: The stay **expires on the** **30****th**** day** after the filing of the later case – as to action taken with respect to a debt or property securing a debt or as to any lease – if a single or joint case of the debtor was pending *within the preceding year* but was dismissed [other than a case refiled under § 707(b)].  [However, the court, on request, can extend the stay – *see* § 362(c)(3)(B) & (C).]
*	**In a single or joint case filed by or against individual debtor(s) in a case under title 11*:
**§ 362(c)(4)**: The stay **shall not go into effect** *if* **two or more** single or joint cases of the debtor were pending *within the preceding year* but were dismissed [other than a case refiled under § 707(b)]. On request, the court shall promptly enter an order confirming that no stay is in effect. [However, the court, on request, can order the stay to take effect – *see* § 362(c)(4)(B), (C) & (D).]

## Automatic Stay (continued)

*Acts to enforce any lien against, or security interest in, real property are excepted from the stay as follows*:
**§ 362(b)(20)**: Where a signed order under § 362(d)(4) was entered in a *prior case*, the filing of the petition in the subsequent case does *not* operate as a stay with respect to such acts* for a period of **2 years from the date of entry of that order** [the debtor, however, may move for relief from such order in the subsequent case].
**§ 362(b)(21)**: Such acts* are excepted from the automatic stay where: 1) the debtor is ineligible under § 109(g) to be a debtor (due to a *prior* case pending *within 180 days* prior to filing new case); or 2) the new case was filed in violation of a bankruptcy court order (entered in a *prior *bankruptcy case) prohibiting the debtor from being a debtor in another bankruptcy case.
- * [*i.e.*, acts to enforce any lien against, or security interest in, real property.]

## Automatic Stay (continued)

***Exceptions to the Automatic Stay for Certain Landlord-Tenant Matters***:
**§ 362(b)(22) & (l)**: An eviction or similar proceeding against a debtor (involving a residential rental) is excepted from the automatic stay where the landlord had obtained a **judgment for possession** (in state court) *prior to* the filing of the debtor’s bankruptcy case.
- However, the debtor can delay the exception from applying for 30 days by: 1) filing with the petition a **certification** that, under relevant (state) law, the debtor would be permitted to cure the default; and 2) **depositing with the Clerk** the amount becoming due under the lease during the 30 days after filing.
- Additionally, the debtor can make the exception *inapplicable* by making the certification and deposit describe above **plus** filing a **second certification** indicating that the default has been cured.
- If the court upholds the landlord’s objections after a hearing, the **clerk** must serve on the landlord and the debtor a **certified copy of the court’s order**.
**Official Form 1**: *See *the new box – located at the bottom of the second page of the petition – pertaining to whether the landlord has obtained a judgment against the debtor for possession of the residence.

## Automatic Stay (continued)

***Exceptions to the Automatic Stay for Certain Landlord-Tenant Matters *****(continued)**:
**§ 362(b)(23) & (m)**: Excepts from the automatic stay an eviction proceeding against a debtor (involving a residential rental) based on *endangerment of such property* or the *illegal use of a controlled substance* on the premises, *but only if* the landlord files a **certification **that an eviction has been filed *or* that the debtor – during the 30 days preceding the filing of the certification – endangered such property or illegally used (or allowed to be used) a controlled substance on the premises.
- This exception does not begin to apply until *15 days* after the filing of the landlord’s certification.
***Exception Applies on Court Order***: If the debtor files an objection within 15 days, the exception does *not *apply *unless* the court so orders, in which situation the **clerk** must serve a **certified copy of the court’s order** on the landlord and debtor.
***Exception Applies Where Debtor Does Not Object Within 15 days***: If the debtor does not file an objection within 15 days, the clerk must serve a **certified copy of the court’s docket** indicating the debtor’s failure to object.

## In Forma Pauperis

***In Forma Pauperis*****:**
**28 U.S.C. § 1930(f): **The district court or bankruptcy court may *waive* the filing fee in an individual debtor’s chapter 7 case* if the court determines that such individual:
- Has income of ***less than 150%*** of the income official poverty line (applicable to a similarly-sized family), and
- Is unable to pay the fee in installments.
- “Filing fee” means filing fee required by 28 U.S.C. § 1930(a), or any other fee [prescribed by the Judicial Conference under 28 U.S.C. § 1930(b) and (c)] payable on commencement of a chapter 7 case [for example: the court would also waive both the $39 noticing fee and the $15 trustee surcharge that a ch. 7 debtor would normally pay on filing].
- The district court or bankruptcy court may waive for such debtors *other fees* prescribed by 28 U.S.C. § 1930(b) and (c).
- * [NOTE: *In forma pauperis* does **not **apply to chapter 13 debtors but, instead, to chapter 7 individual debtors *only*.  However, individuals filing under ch. 13 as well as under other chapters (7, 11 and 12) may still apply to pay by installment.  *See the next slide*.]

## In Forma Pauperis (continued)

***In Forma Pauperis***: Under Interim Rule 1006(c), an individual’s voluntary ch. 7 petition shall be accepted for filing if accompanied by the debtor’s application – prepared as prescribed by the appropriate Official Form – requesting a waiver of the fee.
***In Forma Pauperis***: Those seeking a waiver of the fee must complete and file new **Official Form 3B** (and check the appropriate box on the petition).
**Pay by Installment: **Those seeking to pay by installment should complete and file **Official Form 3A** (and check the appropriate box on the petition).
- The Interim Rules *eliminate* the prohibition on paying by installment where the debtor has already paid an attorney or petition preparer for services in connection with the case [*see *Interim Rule 1006(b)(1)]. Thus, for cases filed on or after October 17, 2005, **a debtor who has already paid a fee to an attorney or petition preparer is no longer barred from paying by installment**.
- However, under Interim Rule 1006(b)(3), once the application is granted, ***all*** installments must be **paid in full** *before* the debtor or chapter 13 trustee may make any *additional* payments to an attorney or any other person (*e.g.*, petition preparer) who renders services in connection with the case.

## Changes to Fees

***Effective September 20, 2005*****:**
***Complaint Commencing an Adversary Proceeding: *****$ 250.00.***
***Effective October 17, 2005*****:**
**Chapter 7: *****Increased***** to $ 274.00.**
- 				  220 ******	[increased from $ 155]
- 				    39 	[noticing]
- 				_+  15_	[trustee’s surcharge]
- 				  274
**Chapter 13: *****Decreased***** to $ 189.00.**
**	****	****	****	****  **150 	[decreased from $ 155]
- 				_+  39_ 	[noticing]
- 				  189
**Chapter 11: *****Increased***** to $ 1,039.00.**
**	****	****	****	**1,000 	[increased from $ 800]
- 				_+   39_ 	[noticing]
- 				1,039
***   **[NOTE:** **The Judicial Conference increased the amount to $250, as of 9/20/05 (*this* *increase was ****not ****included as part of the 2005 Act*).]
****** [NOTE: The resulting $ 220 amount is due to a technical correction that was signed into law on May 11, 2005 as part of appropriations legislation (Pub. L. No. 109-13); this $ 220 amount **replaces** the “$200” included in § 325(a)(1) of the 2005 Act.]

## Bankruptcy Petition Preparers

- The 2005 Act makes numerous changes to **§ 110** (“Penalty for persons who negligently or fraudulently prepare bankruptcy petitions”), *two of which are noted below*:
**§ 110((b)(2)**: The bankruptcy petition preparer – *before *preparing any document for filing or accepting any fees from a debtor – must provide the debtor with a **written notice** which shall be an Official Form.  This new form is **Official Form 19B **(“Notice to Debtor by Non-Attorney Bankruptcy Petition Preparer”).
**§ 110(h)**: The Supreme Court or the Judicial Conference may establish a **maximum allowable fee** to be charged by a bankruptcy petition preparer.
- The bankruptcy petition preparer shall **notify** the debtor of any such **maximum amount** *before* accepting any fee or preparing any document for filing.

## Bankruptcy Petition Preparers (continued)

***No Redaction of Preparer’s Social Security Number***: Bankruptcy petition preparers must continue to place on the petitions (that are prepared by them) their ***full (9-digit)*** **social security numbers** when signing the petitions. [*See *§ 110(c)(2)(A).]
- If a bankruptcy petition preparer is *not* an individual, the preparer should place on the petition the **social security number** of the officer, principal, responsible person or partner of the bankruptcy petition preparer.  [*See* § 110(c)(2)(B), as added by the 2005 Act.]

## New Chapter 15, “Ancillary and Other Cross-Border Cases”

*New* **chapter 15** ***replaces ***§ 304, which has been deleted by the 2005 Act.
**§ 1504**: A case under chapter 15 is commenced by the filing of a petition for **recognition*** of a foreign proceeding under § 1515.
**Venue Under ****28 U.S.C. § 1410**: A ch. 15 case may be commenced in the district court for the district in which:
- The debtor has its ***principal place of business*** or ***principal assets*** in the USA;
- There is pending against the debtor an **action *****or *****proceeding** in a Federal *or *State court (*if *the debtor does *not* have a place of business or assets in the USA); or
- Venue will be consistent with the interests of justice and the convenience of the parties (having regard to the relief being sought by the foreign representative), in a case *other than* those specified in **(1)** or **(2)** above.
- * [NOTE: “**Recognition**” means “the entry of an order granting recognition of a *foreign main proceeding* or *foreign nonmain proceeding*” under chapter 15. § 1502(7).
*See* § 1502 for the definition of “*foreign main proceeding,”* “*foreign nonmain proceeding*” and other terms used in chapter 15.  *See also* § 101(23) and (24) for the definitions of “foreign proceeding” and “foreign representative.”]

## New Chapter 15, “Ancillary and Other Cross-Border Cases” (continued)

**§ 1515**: A foreign representative may apply to the court for **recognition** of a foreign proceeding by filing a ***petition for recognition. *** The petition should be accompanied by:
- A certified copy of the decision commencing such foreign proceeding and appointing the foreign representative;
- A certificate from the foreign court affirming the existence of such foreign proceeding and of the appointment of the foreign representative; or
- In the absence of either of the above, any other evidence acceptable to the court of the existence of such foreign proceeding and of the appointment of the foreign representative.
**§ 1517**: The court will enter an **order **recognizing a foreign proceeding if certain criteria are met.
**§ 1520(a)(1)**: Upon recognition of a foreign proceeding that is a *foreign main proceeding*, the **automatic stay** under § 362 applies with respect to the debtor and the debtor’s property located within the territorial jurisdiction of the United States.

## New Chapter 15, “Ancillary and Other Cross-Border Cases” (continued)

**§ 1511(a)**: After obtaining a **court order** granting recognition, the foreign representative may commence either:
- an **involuntary case** under § 303 *or*
- if the foreign proceeding is a* ***foreign main proceeding,** a **voluntary case** under § 301 or 302.
- The filing of a case would be under one of the *other *operative chapters of the Bankruptcy Code (*e.g.*, ch. 7 or 11), assuming that the eligibility requirements (set forth in § 109) for that particular chapter are met.
- A case under another chapter may be commenced ***only if*** the debtor has **assets in the United States** [§ 1528].
***Presumption of Insolvency***: For purposes of commencing an *involuntary *case, **recognition of a foreign main proceeding** is proof that the debtor is *generally not paying its debts as they become* *due* (absent evidence to the contrary) [§ 1531].

## New Chapter 15, “Ancillary and Other Cross-Border Cases” (continued)

**Official Form 1**: The party filing a ch. 15 petition will check one of two boxes, depending on whether the petition is for recognition of a *foreign main proceeding* or a *foreign nonmain proceeding*.
**Interim Rule 1007(a)(4)**: Unless the court orders otherwise, a foreign representative filing a petition for recognition must file *with the petition* a **list **containing the name and address of:
- All administrators in foreign proceedings of the debtor,
- All parties to any pending litigation in the USA at the time of filing of the petition where the debtor is a party, and
- All entities against whom provisional relief is being sought under § 1519.
**Interim Rule 1010**: The clerk must promptly issue a summons on the filing of a petition for recognition of a **foreign *****nonmain *****proceeding**. The filer will then serve the summons with a copy of the petition on the debtor, any entity against whom provisional relief is sought under § 1519, and any other parties as directed by the court.
**Interim Rule 1011**: A party in interest to a petition for recognition of a foreign proceeding may contest the petition.

## New Chapter 15, “Ancillary and Other Cross-Border Cases” (continued)

**Interim Rule 2002(q)**:
- The clerk must promptly provide – to *all* parties listed in IR 2002(q)(1) – ***at least 20 days’ notice*** by mail of the hearing on the petition for recognition of a foreign proceeding and such notice shall state whether the filer seeks recognition of a *foreign main proceeding* or *foreign nonmain proceeding.*
- The clerk shall also give – to *all* parties listed in IR 2002(q)(2) – notice by mail of the court’s intention to communicate with a foreign representative as prescribed by **Interim Rule 5012**.
**Interim Rule 5012** requires ***at least 20 days’ notice*** and mandates that the notice shall identify the subject of the anticipated communication and shall be given in the manner prescribed by Interim Rule 2002(q). However, the rule excepts from the notice requirement any communications for scheduling and administrative purposes.

## Small Business Cases Under Chapter 11

- The 2005 Act makes a number of changes – including *new *requirements – for **small business debtors**.
- “***Small business case***” and “***small business debtor***” are defined in § 101(51C) and (51D).
- $2,000,000 debt ceiling remains (the 2005 Act did not raise it).
- Under the definition, “small business debtor” does *not* include any member of affiliated debtors having a combined debt that is above the $2,000,000 debt ceiling.
***Ability to “Elect” Eliminated***: The 2005 Act appears to have removed any statutory language indicating that the debtor may “elect” to be considered as a small business. Thus, the small business provisions added by the 2005 Act should apply to *all* debtors meeting the § 101 definition.

## Small Business Cases Under Chapter 11 (continued)

**Duties**: **§ 1116 **lists – in paragraphs (1) through (7) – a number of duties to be performed by the debtor in possession in a **small business** case under ch. 11 (if a trustee is appointed, these duties would be performed by the trustee).  Some examples of these duties are:
- Under **§ 1116(1)**, the debtor in possession must append to its voluntary petition [or, in an involuntary case, file *not later than* 7 days after entry of the order for relief]:
- The most recent balance sheet, a statement of operations, a cash-flow statement, and its Federal tax return; *or*
- A statement (under penalty of perjury) that no balance sheet, statement of operations or cash-flow statement has been prepared and no Federal tax return has been filed.
**§ 1116(3)** establishes the duty to file timely the schedules and the statement of financial affairs in a small business case.  The provisions of § 1116(3) are *excepted from* the provisions for extending time found in **Interim Rule 1007(c)**. *See also* **Interim Rule 9006(b)(3)** [court may enlarge the time for taking action under Rule 1007(c) with respect to the time to file schedules and statements in a small business case].

## Small Business Cases Under Chapter 11 (continued)

**Interim Rule 1020:**
**Voluntary Ch. 11 Case**: The debtor shall state in the petition whether the debtor is a small business [*see* the new box – “Chapter 11 Debtors” – on Official Form 1).
**Involuntary Ch. 11 Case**: The debtor shall file within 15 days after entry of the order for relief a **statement** as to whether the debtor is a small business.
**Interim Rule 1020(a)** states that, except as provided in IR 1020(c), the status of the case (as to whether it is a small business case) shall be in accordance with the debtor’s statement, *unless and until* the court enters an order finding the statement to be incorrect.
**Interim Rule 1020(c)**: Where the US Trustee has appointed an unsecured creditors’ committee, the case shall proceed as a small business case only if (and from the time when) the court enters an order determining that the committee “*has not been sufficiently active and representative to provide effective oversight of the debtor*” (and the debtor satisfies all other requirements for being a small business).

## Small Business Cases Under Chapter 11 (continued)

**Reporting Requirements**: **§ 308** requires small business debtors to file periodic financial and other reports containing information, including the information listed in paragraphs (1) through (4) of § 308(b).
*Other provisions pertaining to small business cases*:
**§ 1121(e)**: establishes time periods for plan filing – including the exclusive period during which only the debtor may file a plan – and for extending the time in which to file a plan or to have a plan confirmed.
**§ 1125(f), Interim Rules 3016(b) & 3017.1**: permit the court to determine that the plan itself furnishes adequate information and that a separate disclosure statement is unnecessary. [**Interim Rule 2002(b)**: 25 days notice must be provided.]
**28 U.S.C. §586(a)(3)(H) and (7)**: gives additional duties to the US Trustee in small business cases (conduct an initial debtor interview, visit the debtor’s business premises, ascertain the state of the debtor’s books and records, verify the filing of the debtor’s tax returns, and review and monitor diligently the debtor’s activities).

## Direct Appeals to the Court of Appeals

***District Court Is Bypassed***: Under a new provision, an appeal of a judgment, order or decree may *bypass* the district court (*or bankruptcy appellate panel**) and, instead, go *directly* to the court of appeals. [28 U.S.C. § 158(d)(2)]
- The new provision establishes *who must certify* the direct appeal, *what is the basis* for certifying the direct appeal, and *who must authorize* the direct appeal.
*Who must certify?* For a direct appeal, the appeal must be certified by:
- 	1) the bankruptcy court or district court (*or *bankruptcy appellate panel), acting on the court’s (or panel’s) own motion or on the request of a party to the judgment, order or decree being appealed*,* ***or***
*	*2)* ****all**** *the appellants and appellees (if any) acting jointly. [28 U.S.C. § 158(d)(2)(A)]
- *NOTE: The SDNY does ***not*** have a bankruptcy appellate panel.  In some districts, an appeal of a bankruptcy judge’s decision is made to a bankruptcy appellate panel in lieu of appealing to the district court.

## Direct Appeals to the Court of Appeals (continued)

*What is the basis for certifying the direct appeal?* Whoever is certifying the direct appeal – either the court *or ****all ***appellants/appellees – must certify that:
- A question of law is involved as to which no controlling decision of the court of appeals or Supreme Court exists, or a matter of public importance is involved;
- A question of law is involved requiring resolution of conflicting decisions; or
- An immediate, direct appeal may materially advance the progress of the case or proceeding in which the appeal is taken. [28 U.S.C. § 158(d)(2)(A)]
*Who must authorize the direct appeal?* After certification is made, **the court of appeals must authorize the direct appeal**. [28 U.S.C. § 158(d)(2)(A)]

## Direct Appeals to the Court of Appeals (continued)

*When is a court (or appellate panel) required to make the certification?* The bankruptcy court or district court (or appellate panel) *must* make the certification [*under subparagraph (A), as described in the last 2 slides*] *if*:
- the court (or panel) determines – on its own motion or at the request of a party – that one of the three grounds [*specified in clause (i), (ii) or (iii), as* *described in the last slide*] exists; *or*
- the court (or panel) receives a request made by a ***majority*** of the appellants and a ***majority*** of the appellees (if any) to make the certification. [28 U.S.C. § 158(d)(2)(B)]
- Any request for certification [*made under subparagraph (B),* *as described above in this slide*] must be made *not later than 60 days* after entry of the judgment, order or decree. [28 U.S.C. § 158(d)(2)(E)]

## Direct Appeals to the Court of Appeals (continued)

***Petition Requesting Permission to Appeal*****: **Pursuant to** ****§ 1233(b)(4) of the 2005 Act****, **a *petition requesting permission to appeal* – based on a certification [*made under 28 U.S.C. § 158(d)(2)(A) or (B)*] – must be filed with the circuit clerk *not later than 10 days after* the certification is entered on the docket of the court or panel from which the appeal is taken.
***Timely Appeal Required***: A certification to a court of appeals is *not *treated as a certification entered on the docket within the meaning of   **§ 1233(b)(4)(A) of the 2005 Act ***until* a timely appeal has been taken and the notice of appeal has become effective. [Interim Rule 8001(f)(1)]
*See* the Advisory Committee Note (to Interim Rule 8001), which states in part:
- 	“ . . . [S]ubdivision (f)(1) provides that entry of a certification on the docket does not occur until an effective appeal is taken . . . .”

## Direct Appeals to the Court of Appeals (continued)

***File Where Pending***: The certification should be filed in the court in which the matter is pending.
***Pending in Bankruptcy Court***: A matter is **pending in a bankruptcy court *****until*** the docketing [in accordance with Rule 8007(b)] of an appeal taken under 28 U.S.C. § 158(a)(1) or (2), or the grant of leave to appeal under 28 U.S.C. § 158(a)(3). [Interim Rule 8001(f)(2)]
***Pending in District Court***: A matter is **pending in a district court** [or bankruptcy appellate panel] ***after*** the docketing [in accordance with Rule 8007(b)] of an appeal taken under 28 U.S.C. § 158(a)(1) or (2), or the grant of leave to appeal under 28 U.S.C. § 158(a)(3). [Interim Rule 8001(f)(2)]
***Certification by Court***:
- While the matter is pending in bankruptcy court, *only* the bankruptcy court may make a certification on request (of parties to the appeal) or on its own initiative.
- While the matter is pending in the district court (or appellate panel), *only* the district court (or panel) may make a certification on request (of parties to the appeal) or on its own initiative. [Interim Rule 8001(f)(2)(A)]

## Direct Appeals to the Court of Appeals (continued)

***Certification by All Appellants and Appellees Acting Jointly***: A certification by ***all*** appellants and appellees, if any, acting jointly may be made by filing **Official Form 24** **(“Certification to Court of Appeals”) **with the clerk of court in which the matter is pending. [Interim Rule 8001(f)(2)(B)]
- The certification must be accompanied by a **short statement** of the **basis **of the certification. [Interim Rule 8001(f)(2)(B)]
***Parties Making a Request for Certification***: Interim Rule 8001(f)(3) outlines the procedure to follow when requesting that the court make the certification. *Some of these procedural requirements are*:
- The request should be *timely filed* with the clerk of the court in which the matter is pending. [Interim Rule 8001(f)(3)(A)]
***Notice*** of the filing must be served *as required for service of a notice of appeal*. [Interim Rule 8001(f)(3)(B)]
- For what must be included in the request, *see* clauses (i) through (v) of Interim Rule 8001(f)(3)(C).
- For other provisions, *see *Interim Rule 8001(f)(3)(D), (E) and (F).

## Direct Appeals to the Court of Appeals (continued)

***Certification on Court’s Own Initiative***: When the court is certifying on its own initiative (and *not *at the request of parties), the certification must be made in a ***separate document*** served on the parties and must be accompanied by an ***opinion*** or ***memorandum*** containing the information that would be included in a request for certification under clauses (i) through (iv) of Interim Rule 8001(f)(3)(C) [excluding clause (v)]. [Interim Rule 8001(f)(4)]
- A party may file a supplementary short statement of the basis for certification within 10 days after certification. [Interim Rule 8001(f)(4)]
***Satisfaction of Requirement for Leave to Appeal***: The **authorization** of a direct appeal by a court of appeals *shall be deemed to satisfy* the requirement for leave to appeal (*where leave to appeal is required but has not already been granted*). [Interim Rule 8003(d)]

## Ombudsman: Patient Care Ombudsman

**§ 333 & Interim Rule 2007.2**: Where the ch. 7, 9 or 11 debtor is a “**health care business**” [defined in § 101(27A)], the court shall order the appointment of a **patient care ombudsman** [on such order, the United States Trustee makes the appointment] *unless *the court – on motion of the US Trustee or a party in interest filed *not later than 20 days* after case commencement or a time fixed by the court – finds that the appointment of an ombudsman is not necessary for the protection of patients.
- If appointed, the ombudsman is required to *monitor the quality of patient care* and to *represent the interests of the patients*.
- The ombudsman is to report to the court – 60 days after appointment and at not less than 60-day intervals thereafter – regarding the quality of patient care and – on determining that patient care is significantly declining or is otherwise being materially compromised – file a motion or written report with the court.
**Interim Rule 2015.1(a)** requires the ombudsman to give notice before a report is made to the court and **Interim Rule 2015.1(b)** pertains to an ombudsman’s motion to review confidential patient records.

## Ombudsman: Patient Care Ombudsman (continued)

***Box for Health Care Business to Check on Official Forms 1 and 5***:
***Form 1 (“Voluntary Petition”)***: *See *underneath the heading “*Nature of Business*” in the middle of the first page.
***Form 5 (“Involuntary Petition”)***: *See *underneath the heading “*Information Regarding Debtor*” [under the subheading “*Type of Debtor*” on the right-hand side] in the middle of the first page.
**Interim Rule 1021**: In a ch. 7, 9 or 11 case, if a petition states that the debtor is a health care business, the case shall proceed as a case in which the debtor is a health care business (unless the court orders otherwise). [IR 1021(a)]
- The US Trustee or a party in interest may file a motion for a determination as to whether the debtor is a health care business. [IR 1021(b)]
**§ 704(a)(12) & Interim Rule 2015.2**: If the debtor is a health care business, the trustee may *not* transfer a patient to another health care business under § 704(a)(12) *unless* the trustee gives *at least 10 days’ notice* to the patient care ombudsman (if one has been appointed) and to the patient and any family member or contact person.

## Ombudsman: Patient Care Ombudsman (continued)

***Disposal of Patient Records***: **Interim Rule 6011** provides the procedures for the disposal of patient records in a health care business case.
- The rule establishes the requirements for ***notice by publication*** [*see *IR 6011(a)] and ***notice by mail ***[*see* IR 6011(b)].
***Proof of Compliance***: The trustee shall *not *file but, instead, shall maintain the ***proof of compliance*** with § 351(1)(B) for a reasonable time, *unless* the court orders the trustee to file the proof of compliance under seal. [Interim Rule 6011(c)]
***Report of Destruction of Records***: The trustee shall file – *not later than 30 days after* the destruction of patient records – a **report **certifying that the unclaimed records have been destroyed (and explaining the method used to destroy them). The report shall *not* identify patients by name or other identifying information. [Interim Rule 6011(d)]

## Ombudsman: Consumer Privacy Ombudsman

**§ 332**: The court shall order the United States Trustee to appoint a consumer privacy ombudsman where a hearing is required under § 363(b)(1)(B) [*the appointment of an ombudsman should be made not later than 5 days before commencement of the hearing*].
**§ 363(b)(1)**: *The trustee may not sell or lease “personally identifiable information” *[defined in § 101(41A)]* where*:
- The debtor, in offering a product or service to individuals, had disclosed a policy prohibiting the transfer of personally identifiable information to those not affiliated with the debtor; and
- Such policy is in effect on the date of case commencement;
***UNLESS***:
- The sale or lease is consistent with such policy; or
- The court approves such sale or lease after appointment of a **consumer privacy ombudsman** [pursuant to **§ 332**] and after notice and a hearing.  To approve such sale or lease, the court – after giving due to consideration to the facts, circumstances and conditions of such sale or lease – must find that no showing was made that such sale or lease would violate applicable nonbankruptcy law.

## Ombudsman: Consumer Privacy Ombudsman (continued)

**Interim Rule 2002(c)(1)**: The notice of a proposed sale or lease of ***personally identifiable information**** *[under § 363(b)(1)(A) or (B)] must state whether the sale is consistent with a policy prohibiting the transfer of the information.
**Interim Rule 6004(g)**:
***Motion***: A motion for authority to sell or lease ***personally identifiable information*** [under § 363(b)(1)(B)] shall include a **request **for an order directing the US Trustee to appoint a*** consumer privacy ombudsman*** under § 332.
***Appointment***: If a*** consumer privacy ombudsman*** is appointed under § 332, the US Trustee shall file a **notice** of the appointment (including the name and address of the person appointed), accompanied by a **verified statement** of the person appointed.
**Schedule B**: On line # 24 of Schedule B, the debtor must now furnish information pertaining to customer lists or other compilations containing ***personally identifiable information***.

## Other Privacy Concerns

**New § 112 – Prohibition on Disclosure of Names of Minor Children**: The debtor may be required to provide information regarding a **minor child** but may ***not ***be required to disclose the ***name ***of such child in ***public ***records in the case.
- The debtor may be required to disclose the name of such minor child in a ***nonpublic*** record that is maintained by the court and made available for examination by the US Trustee, the trustee and – if serving – the auditor.
- Where the name is maintained in the ***nonpublic*** record, this provision prohibits the court, US Trustee, trustee or auditor from disclosing the name.
- The **Official Forms** have been amended to instruct filers ***not*** to disclose the name of any minor child (*e.g*., Official Form 4 and 6, as amended).

## Debt Relief Agency

**§ 101(12A)**: “**Debt relief agency**” means any person who provides any “bankruptcy assistance” [defined in § 101(4A)] to an “assisted person” [defined in § 101(3)] in return for the *payment of money* or *other valuable consideration*, or* *who is a ***bankruptcy petition preparer*** under § 110.
*See* § 101(12A) for a list of those *not* considered to be a “debt relief agency” (*e.g*., tax-exempt, nonprofit organizations are *not* considered debt relief agencies).
**§ 526 ****imposes restrictions on debt relief agencies**.
- § 526(a) contains a list of prohibitions with respect to certain conduct.
- Under § 526(c), a written contract that is not in compliance with the requirements contained in § 526 shall be void and may not be enforced in any Federal or State court.
**§ 527**** describes the kind of disclosures that debt relief agencies must provide to assisted persons**.
- The assisted person must be provided with the written notice required under § 342(b) and, to the extent not covered in the § 342(b) written notice, a separate written notice containing the debtor’s responsibilities that are listed in § 527(a)(2).
- The assisted person must be provided with the statement that is quoted in § 527(b) (this multi-paragraph statement must be furnished to the assisted person in a separate document).

## Debt Relief Agency (continued)

**§ 528**** imposes certain requirements on debt relief agencies**.
- A written contract (between the debt relief agency and the assisted person) must be executed, with a copy furnished to the assisted person.
- The section requires that certain disclosures, descriptions and statements must be included in any advertisement of services.
***Provisions Applicable to an “Attorney”***: While the 2005 Act contains new provisions applicable to a *debt relief agency*, the 2005 Act includes other new provisions referring to an “*attorney*”* *(instead of referring to a* *“*debt relief agency*”).  The examples provided below pertain to the *signature of an attorney *(in a chapter 7 case):
- The ***signature of an attorney*** on a petition shall constitute a **certification **that the attorney has no knowledge after an inquiry that the information in the schedules filed with the petition is incorrect. [§ 707(b)(4)(D)]
- The ***signature of an attorney*** on a petition, pleading or written motion shall constitute a **certification** that an attorney has performed a reasonable investigation into the circumstances giving rise to the filing and has determined that the filing is: 1) well grounded in fact and 2) warranted by existing law – or a good faith argument for the extension, modification or reversal of existing law – and does not constitute an abuse under § 707(b)(1). [§ 707(b)(4)(C)]

## Domestic Support Obligations

- The 2005 Act makes number of amendments pertaining to domestic support obligations, *such as*:
**New Definition for “Domestic Support Obligation” [****	****§ 101(14A)]**: Defined, in part, as a debt accruing *before*, *on* or *after* the date of the order for relief in a title 11 case – including interest accruing on the debt – that is owed or recoverable by: 1) a spouse, former spouse or child of the debtor or such child’s parent, legal guardian or responsible relative, or 2) a governmental unit  [*see *entire definition in § 101(14A)].
**First Priority for Certain Domestic Support Obligations [§ 507(a)(1)]**: With the 2005 Act, the domestic support priority is rewritten and moved upward to have a **first priority** as paragraph (1) of § 507(a) [prior to the 2005 Act, it had a *seventh* priority – *see* § 507(a)(7) in the pre-Act version of the Bankruptcy Code].  Consequently, the *first* through *sixth* priorities in the pre-Act version of the Code are now the *second* through *seventh* priorities respectively in the amended Code [*see* § 507(a)(2) through (a)(7) of the Bankruptcy Code, as amended by the 2005 Act].
**Schedule E (Official Form 6) **and **Official Form 10** have been amended to reflect the amendments made to § 507(a).

## Domestic Support Obligations (continued)

**Exception to the Automatic Stay Pertaining to Domestic Relations Matters – § 362(b)(2)**: With the 2005 Act, the exception to the automatic stay pertaining to domestic relations matters has been broadened to include such actions as:
- The ***withholding***** **of income [that is either property of the estate or property of the debtor] for the payment of a domestic support obligation [under a judicial or administrative order or by statute].
- The ***withholding***, ***suspension ***or ***restriction*** – under state law –of a driver’s license, a professional or occupational license, or a recreational license [as specified in § 466(a)(16) of the Social Security Act].
***Interception ***of a tax refund [under certain provisions of federal law or analogous state law].
***Enforcement ***of a medical obligation [under title IV of the Social Security Act].

## Audit of Cases

**28 U.S.C. § 586(f)** – The US Trustee must engage the services of ***auditors**** *to **audit** the chapter 7 and 13 cases of individual debtors.
- While debtors will be *randomly selected* for an audit under procedures that are established, the 2005 Act requires that *not less than* **1 of every 250** debtors be selected for an audit.
- When the **report** resulting from an audit reveals a **material misstatement** of the debtor’s *income*, *expenditures *or *assets*:
- The clerk must give **notice of the misstatement** to creditors.
- The US Trustee must report the misstatement to the **US Attorney** and, if advisable, take appropriate action such as commencing an adversary proceeding to ***revoke the debtor’s discharge***.
**§ 521(a)(3) and (4) – Debtor’s Duties When Audited**: The debtor’s duties set forth in paragraphs (3) and (4) – duties to *cooperate* with the trustee and to *surrender* **property of the estate** and **recorded information** to the trustee – are amended to make these duties applicable to cases in which an auditor is conducting an audit under 28 U.S.C. § 586(f).

## Involuntary Cases

**Court to Seal Record**: Pursuant to new subsection (l)* of § 303, the court, on motion of the debtor, shall ***seal ***all the records relating to an involuntary petition, as well as all references to the petition, where:
- The debtor is an individual;
- The involuntary petition filed against the individual is false or contains any materially false, fictitious or fraudulent statement; and
- The court dismisses such petition.
**Prohibition Applicable to Consumer Reporting Agencies**: If the debtor is an individual and the court dismisses a petition under § 303, the court may enter an order ***prohibiting*** all consumer reporting agencies from making a report containing information pertaining to the petition or the case commenced by the filing of that petition.
**Court May Expunge Record**: The court, on motion of the debtor and for good cause, may **expunge **any records relating to an involuntary petition filed under § 303 (on expiration of the statute of limitations in 18 U.S.C. § 3282, for violation of 18 U.S.C. § 152 or 157).
- * [NOTE: Congress – in deleting subsection “(k)” of § 303 – should probably have designated this new subsection as “(k)” instead of using the next letter {*i.e*., “(l)”}.]

## Fraudulent Transfers and Obligations Under § 548

***Change of “Look Back” from 1 to 2 Years***: As amended by the 2005 Act, **subsections (a) and (b)** **of § 548** permit the trustee to avoid certain transfers made – or obligations incurred – within ***2 years*** before the date of the filing of the petition where, under the provisions of § 548, the transfer or obligation is considered to be fraudulent (*prior to the 2005 Act, the transfer or obligation had to have occurred within **1 year** prior to filing*).
- This amendment applies only to bankruptcy cases commenced ***more than 1 year after*** the date of enactment (*date of enactment was April 20, 2005*).
***Transfers to Self-Settled Trusts***: Under new § 548(e), the trustee may avoid certain transfers made by the debtor to self-settled trusts on or within 10 years before the date of filing of the petition (where the debtor is the beneficiary of such trust and the transfer was made with actual intent to hinder, delay or defraud any entity to which the debtor was or became indebted).
- This amendment applies only to bankruptcy cases commenced ***on or after*** the date of enactment (*date of enactment was April 20, 2005*).

## Secured Claims 

**Replacement Value To Be Used in Individual Debtor’s Ch. 7 or 13 Case**: In a ch. **7 **or **13** case of an **individual debtor**, the value of **personal property** ***securing ***an allowed claim shall be determined based on the ***replacement value*** of such property as of the date of filing of the petition (*without *deduction for costs of sale or marketing). [§ 506(a)(2)]
***Replacement value*** of property acquired for personal, family or household purposes shall mean “the price a retail merchant would charge for property of the kind considering the age and condition of the property” at the time of valuation. [§ 506(a)(2)]
- Due to this amendment, Schedules A, B, C and D no longer refer to “market value.”  *See* the Advisory Committee Note to Official Form 6.
**Section 506 *****Not *****Applicable to Certain Secured Claims in Ch. 13**: Where a creditor in a ch. 13 case has a ***purchase money security interest*** securing the debt owed to it, section 506 shall ***not ***apply – for purposes of § 1325(a)(5) – to a claim described in § 1325(a)(5) if: 1) the debt was incurred within the approximately **2.5 years*** prior to filing and the collateral for that debt is a **motor vehicle** (acquired for personal use), or 2) the debt was incurred during the 1 year preceding the filing and the collateral for that debt consists of *any other thing of value*. [*See *the *new sentence* added at the end of § 1325(a).]
- * [NOTE: Amended statute refers to “910 days”; *see *§ 1325(a), as amended.]

## Collection of Bankruptcy Statistics

**In Cases of Individual Debtors With Primarily Consumer Debts under Under Chapters 7, 11 and 13**: Under a new section added to title 28 (28 U.S.C. § 159), the clerk of the district court – or clerk of the bankruptcy court [if one is certified under 28 U.S.C. § 156(b)] – shall collect statistics regarding ***individual debtors with primarily consumer debts*** under chs. **7**, **11 **and **13**.
- The Administrative Office will compile the statistics and make them available to the public.
- The information that the statistics are required to include may be found in subparagraphs (A) through (H) of 28 U.S.C. § 159(c)(3).
- To collect the required information, a *new summary* has been added to the schedules; *see *the* *“**Statistical Summary of Certain Liabilities**” that has been added to Official Form 6.
- This provision does not become effective until **October 2006**, *i.e.*, 18 months after the effective date (effective date was April 20, 2005).