Source: http://www.scribnerbankruptcyblog.com/notes-from-bapcpa/
Timestamp: 2017-10-18 16:26:11
Document Index: 157364743

Matched Legal Cases: ['§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707', '§707']

Notes from BAPCPA Archives | Rochester New York Bankruptcy Law Blog
Notes from BAPCPA Archives
New Means Test Figures: Median Income, Expenses Up in NY
On behalf of Peter R. Scribner, Esq. posted in Notes from BAPCPA on Wednesday, April 18, 2012.
New income and expenses figures are now available for bankruptcy Means Test calculations, effective May 1, 2012. In New York, median incomes and expenses are generally up.Under the means test, a debtor's household income for the previous six months is compared with the median income for a similar size family in the debtor's state. Median incomes in New York had actually dropped in New York the last time these figures were adjusted (see my Oct. 17, 2011 blog); now they have gone back up.Median incomes in New York, for cases filed now and for cases filed after May 1, 2012:Family of 1: $45,931 goes up to $47,381
Family of 2: $56,113 goes up to $57,884
Family of 3: $66,953 goes up to $69,066
Family of 4: $81,212 goes up to $83,775National expense standards also rise. For example, the National expense for food, clothing etc. for a single person household rises from $534 to $565 per month; for a family of four, the rise is from $1,377 to $1,450.Regional housing and utility expenses are almost unchanged (for Monroe County, NY, the figures adjust a dollar or two up or down.) The regional operating cost for a motor vehicle, $278 p/m, remains unchanged. But the ownership cost for a vehicle in the North East Region (outside the major metro areas) rises from $496 to $517.Higher income debtors, especially single debtors or small families, need to have their means test situation reviewed very carefully before filing bankruptcy. If you are considering a bankruptcy and wish a free phone consultation, please see the contact page of my web site.
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Blast from the Past: Elizabeth Warren on BAPCPA
On behalf of Peter R. Scribner, Esq. posted in Notes from BAPCPA on Monday, March 21, 2011.
Elizabeth Warren, a Harvard Law School bankruptcy professor tapped by President Obama to chair the committee organizing the new Consumer Financial Protection Bureau (see, Dana Milbank article Sept. 16, 2010, by Bradly Dennis), has come under fire from Republicans in her new position (see, Washington Post analysis by Dana Milbank, March 16, 2011; New York Times column by Paul Krugman, March 20, 2011.)
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Is a Sallie Mae Career Training Loan dischargeable in bankruptcy under BAPCPA?
On behalf of Peter R. Scribner, Esq. posted in Notes from BAPCPA on Wednesday, January 13, 2010.
Sallie Mae, the student loan servicing organization, provides more than just government-insured loans. The "Career Training Loan" administered by Sallie Mae Bank, is, according to their website, "a private, credit-based student loan for technical training or trade school, online courses, and other education programs." So is this sort of loan dischargeable in bankruptcy? It depends upon the institution where the training was received.As "everyone" knows, student loans are not discharged in bankruptcy. Section 523(a)(8) of the Bankruptcy Code excepts from discharge the following:- an educational loan made, insured, or guaranteed by a governmental unit- an educational loan made under any program funded in whole or in part by a governmental unit or nonprofit institution- an obligation to repay funds received as an educational benefit, scholarship, or stipend- an educational loan that is a qualified education loan, as defined in the Internal Revenue Code section 221(d)(1)That last type of loan, referring to IRC section 221(d)(1), was added as an exception to discharge when the Bankruptcy Code was amended in 2005. That section states:"Definitions: For purposes of this section - (1) Qualified education loan; The term "qualified education loan" means any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses"So what does the term "qualified higher education expenses" refer to? IRC section 1.25A-2, definitions, states:"(d) Qualified tuition and related expenses &8212;(1) In general. Qualified tuition and related expenses means tuition and fees required for the enrollment or attendance of a student for courses of instruction at an eligible educational institution."Okay so what is "an eligible educational institution"? IRC section 1.25A-2 defines that as:"(b) Eligible educational institution &8212;(1) In general. In general, an eligible educational institution means a college, university, vocational school, or other postsecondary educational institution that is&8212;(i) Described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088) as in effect on August 5, 1997, (generally all accredited public, nonprofit, and proprietary postsecondary institutions); and(ii) Participating in a Federal financial aid program under title IV of the Higher Education Act of 1965 or is certified by the Department of Education as eligible to participate in such a program but chooses not to participate."To summarize, a private student loan is not discharged in bankruptcy if it was used to pay educational expenses at a postsecondary educational institution that is eligible to participate in the federal student loan program. So, is a Sallie Mae "Career Training Loan" dischargeable in bankruptcy? My analysis is that if the training was provided by an institution that is qualified to offer government student loans, the private Sallie Mae Career Training Loan is not dischargeable in bankruptcy. If, on the other hand, the training institution is not eligible to offer government student loans, the private Sallie Mae loan would be dischargeable in bankruptcy.Please note that I cannot find any case law one way or the other on this issue, and so the above analysis is not based upon any court finding it but is just my own personal analysis.
Continue reading Is a Sallie Mae Career Training Loan dischargeable in bankruptcy under BAPCPA?...
When can a creditor file a means test motion? A legislative history of Sections 707(b)(6) and 707 (b)(7)
On behalf of Peter R. Scribner, Esq. posted in Notes from BAPCPA on Tuesday, November 17, 2009.
Section 707(b) allows a Chapter 7 bankruptcy case to be dismissed as an abuse. Section 707(b)(2) allows a case to be dismissed if the debtor fails the "means test"; that is, if the debtor's income over the previous six months exceeds the expenses allowed by the IRS collection system, plus other expenses provided by the complicated means test calculation. Section 707(b)(3) allows a case to be dismissed if, under the totality of circumstances, the case is abusive. This usually means the debtor has actual ongoing income that exceeds actual necessary expenses, and that there is no special circumstance, such as unemployment or health issues, that justify a bankruptcy filing.The Office of the United States Trustee, a division of the United States Justice Department, monitors abusive chapter 7 cases and always has standing to file a 707(b) abuse motion. But what about creditors? Can an aggressive creditor file a motion to dismiss a case, perhaps intending to pressure the debtor to settle with them? Yes, IF the debtor has higher income than the median for the state. However, there is a slight wrinkle in this provision when a debtor is married and files alone. For a Section 707(b)(2) "Means test" motion, the non-debtor's spouse is counted in calculating whether the debtor is above the state median. If the debtor and non-debtor spouse's combined income is below median, no one (no creditor, no trustee, no US trustee) may file a "Means test" motion. But if the debtor's income, plus the non-debtor spouse's contribution to household expenses, do not exceed the state median, the US Trustee, and only the US Trustee, may bring a Section 707(b)(3) totality of circumstances motion.These two limitations are located next to each other in the bankruptcy code, as Sections 707(b)(6) and 707(b)(7). But these two provisions, with their seemingly inconsistent results, arrived next to each other through different routes through the legislative history of the 2005 bankruptcy amendments. The issue may not come up often, but if it does, it is helpful for a debtor's attorney to know when a creditor may - or may not - file an abuse motion.Legislative history:§707(b)(6) states: Only the judge or United States trustee (or bankruptcy administrator, if any) may file a motion under section 707(b), if the current monthly income of the debtor, or in a joint case, the debtor and the debtor's spouse, as of the date of the order for relief, when multiplied by 12, is equal to or less than... (B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals..." [Emphasis added].
§707(b)(7) states:No judge, United States trustee (or bankruptcy administrator, if any), trustee, or other party in interest may file a motion under paragraph (2) if the current monthly income of the debtor, including a veteran (as that term is defined in section 101 of title 38), and the debtor's spouse combined, as of the date of the order for relief when multiplied by 12, is equal to or less than ... (ii) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals..." [Emphasis added]. In 2005, in anticipation of the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"), I reviewed BAPCPA and presented a Continuing Legal Education seminar on the statute in Rochester, Buffalo, Syracuse and Corning. Among other things, I reviewed 'Thomas', the online service of the Library of Congress, and downloaded the text of the various bankruptcy statutes that had been introduced in Congress from 1997 through BAPCPA in 2005. By reviewing changes in these various versions of bankruptcy bills over time, I believe that we can have some understanding as to how BAPCPA §707(b)(6) and §707(b)(7), with their slightly different wording, came about. The 2005 BAPCPA modifications to §707(b) were essentially identical to versions passed by one house or the other of Congress since 2001, and statutory variations in bills from 1999 through 2001 shed light oin how this language was settled on.105th Congress:Prior to the 2005 BAPCPA amendment, §707(b) allowed for the dismissal of a consumer credit cases if it was a "substantial abuse" of the provisions of the Bankruptcy Code. There was a limit as to who could bring such motions: pre-BAPCPA, motions could be brought by "the court, on its own motion, or on a motion by the United States Trustee, but not at the request or suggestion of any party in interest..." [emphasis added.]The first bankruptcy reform bill, which eventually produced BAPCPA eight years later, was introduced in the Senate October 21, 1997 by Senator Grassley of Iowa, among others. As introduced, Grassley's bill, S. 1301, amended §707(b) by deleting the party in interest limitation (the bill simply struck out "but not at the request or suggestion of a party in interest"). The initial bill did not include any limitation on any party bringing an abuse motion. The initial S. 1301 bill also included the first acorn of language which, in subsequent bills, grew into the mighty oak of the §707(b)(2) means test. It stated, in full, In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter, the court shall consider whether - (A) under section 1325(b)(1) of this title, on the basis of the current income of the debtor, the debtor could pay an amount greater than or equal to 20 percent of unsecured claims that are not considered to be priority claims (as determined under subchapter I of chapter 5 of this title)S. 1301 passed the Senate June 2, 1998. This bill was modified to included the following §707(b) motion limitation: However, a party in interest may not bring a motion under this section if the debtor and the debtor's spouse combined, as of the date of the order for relief, have current monthly total income equal to or less than the national median household monthly income calculated on a monthly basis for a household of equal size [emphasis added.] Another bankruptcy bill, H.R. 3151, was introduced February 3, 1998 in House of Representatives (hereinafter "the House"). That bill was passed by the House June 10, 1998. It replaced the existing motion limitation language of §707(b) with the following language: After notice and a hearing, the court - (A) on its own motion or on the motion of the United States trustee or any party in interest, shall dismiss a case filed by an individual debtor under this chapter; or (B) with the debtor's consent, convert the case to a case under chapter 13 of this title; if the court finds that the granting of relief would be an inappropriate use of the provisions of this chapter.H.R. 3151 as passed by the House did not include any limitation on what party may bring a §707(b) motion. H.R. 3151 was then passed in an extensively modified version by the Senate Sept. 23, 1998. This version changed §707(b) from "the court, on its own motion, or on a motion by the United States Trustee, but not at the request or suggestion of any party in interest" to "the court, on its own motion, or on a motion by the United States Trustee, or at the request or suggestion of any party in interest." The 1998 Senate version of H.R. 3151 included a §707(b) safe harbor limitation similar to the provisions of S. 1301, set out in paragraph 13 above. The Senate version of H.R. 3151 stated:Only the judge, United States trustee, bankruptcy administrator or panel trustee may bring a motion under this section if the debtor and the debtor's spouse combined, as of the date of the order for relief, have current monthly total income equal to or less than the national median household monthly income calculated on a monthly basis for a household of equal size [emphasis added]. The House version of H.R. 3151 did not include any 'means test' provision, but the Senate version of H.R. 3151 included the short means test provision of S. 1301 (see paragraph 12, above).106th Congress:A new bill, S. 625, was introduced in the Senate March 16, 1999. This version changed §707(b) from "the court, on its own motion, or on a motion by the United States Trustee, but not at the request or suggestion of any party in interest" to "the court, on its own motion, or on a motion by the United States Trustee, panel trustee or at the request or suggestion of any party in interest." This was essentially the language used in all later bills, including the 2005 BAPCPA legislation.S. 625 was the first bankruptcy bill to incorporate the extensive means test calculation we are familiar with today, comparing the "current monthly income" of the debtor to the expenses allowed by IRS collection standards, plus additional allowed expenses. This bill included the definition of "current monthly income" as meaning "the average monthly income from all sources which the debtor, or in a joint case, the debtor and the debtor's spouse, receive without regard to whether the income is taxable income, derived during the 180-day period preceding the date of determination" [emphasis added.]S. 625 also included the following §707(b) safe harbor limitation: Only the judge, United States trustee, bankruptcy administrator, or panel trustee may bring a motion under this section if the debtor and the debtor's spouse combined, as of the date of the order for relief, have a total current monthly income equal to or less than the national or applicable State median family monthly income calculated on a monthly basis for a family of equal size [emphasis added]. On May 5, 1999, the House passed their own bankruptcy bill, H.R. 833. This bill included an extensive means test provision similar to S. 625, and a §707(b) safe harbor provision identical to S. 625, as set out in paragraph 20 above. H.R. 833 was then passed by the Senate February 2, 2000. But the safe harbor limitation was modified from the version passed by the House and S. 625 passed previously by the Senate. H.R. 833 as passed by the Senate in 2000 now stated:Only the judge, United States trustee, bankruptcy administrator, or panel trustee may bring a motion under section 707(b), if the current monthly income of the debtor, or in a joint case, the debtor and the debtor's spouse, as of the date of the order for relief, when multiplied by 12, is equal to or less than - (i) the national or applicable State median family income reported for a family of equal or lesser size, whichever is greater; or (ii) in the case of a household of 1 person, the national or applicable State median household income last reported by the Bureau of the Census for 1 earner, whichever is greater [emphasis added.] The safe harbor provision of H.R. 833, as passed by the Senate in 2000, was essentially the same language as the BAPCPA §707(b)(6).107th Congress:A new bankruptcy bill, H.R. 333, was passed by the House March 1, 2001. This version included language virtually identical to BAPCPA §707(b)(6) and (b)(7). H.R. 333 modified §707(b) to include the following two paragraphs:(6) Only the judge, United States trustee, or bankruptcy administrator may bring a motion under section 707(b), if the current monthly income of the debtor, or in a joint case, the debtor and the debtor's spouse, as of the date of the order for relief, when multiplied by 12, is equal to or less than - (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner last reported by the Bureau of the Census;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals last reported by the Bureau of the Census; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals last reported by the Bureau of the Census, plus $525 per month for each individual in excess of 4.(7) No judge, United States trustee, panel trustee, bankruptcy administrator or other party in interest may bring a motion under paragraph (2), if the current monthly income of the debtor and the debtor's spouse combined, as of the date of the order for relief when multiplied by 12, is equal to or less than - (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner last reported by the Bureau of the Census;
(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals last reported by the Bureau of the Census, plus $525 per month for each individual in excess of 4." [Emphasis added]The Senate then passed S. 420 on March 15, 2001. The language of the §707(b)(6) and (7) safe harbors in S. 420 was almost, but not quite, identical to H.R. 333. S. 420 modified §707(b) as follows: (6) Only the judge, United States trustee, or bankruptcy administrator may bring a motion under section 707(b), if the current monthly income of the debtor, or in a joint case, the debtor and the debtor's spouse, as of the date of the order for relief, when multiplied by 12, is equal to or less than - (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner last reported by the Bureau of the Census;
(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals last reported by the Bureau of the Census, plus $525 per month for each individual in excess of 4.(7) No judge, United States trustee, panel trustee, bankruptcy administrator or other party in interest may bring a motion under paragraph (2), if the current monthly income of the debtor, or in a joint case, the debtor and the debtor's spouse, as of the date of the order for relief when multiplied by 12, is equal to or less than - (A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner last reported by the Bureau of the Census;
(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals last reported by the Bureau of the Census, plus $525 per month for each individual in excess of 4. [Emphasis added] On July 17, 2001, the Senate passed their version of H.R. 333, but with the same §707(b)(6) & (7) safe harbor language as S. 420. A year later, on July 26, 2002, a conference committee of the House and Senate reported a compromise bill, which used the same §707(b)(6) & (7) safe harbor language as the original H.R. 333 as passed by the House. 108th & 109th Congress:The House passed H.R. 975 March 19, 2003, using the same §707(b)(6) and (b)(7) language as the House version and the Conference version of the 107th Congress' H.R. 333. BAPCPA, as S. 256, was finally passed by the Senate March 10, 2005, and included essentially the same safe harbor provisions of §707(b)(6) and (b)(7) as the 2001 conference report.Analysis:From the very first bill introduced in 1997, the bankruptcy bills that lead up to BAPCPA all deleted the provision of the pre-BAPCAP Bankruptcy Code that limited to the court and the U.S. Trustee the standing to make, or even suggest, an abuse motion. Below is a list that shows the chronological development, through various bankruptcy bills, of the language that eventually became §707(b)(6) and §707(b)(7). No debtor income limitation on anyone bringing abuse motion:
House version of H.R. 3151 (1998)No abuse motion by creditor if the debtor and spouse combined CMI is below-medium:
Senate S. 1301 (1997); Senate version H.R. 3151 (1998); Senate S. 625 (as introduced) (1999); House version of H.R. 833 (1999)No abuse motion by creditor if the debtor and, in joint case only, spouse's CMI is below-medium:
Senate version H.R. 833 (2000); House version of H.R. 333 (2001); Senate S. 420 (2001); Senate version H.R. 333 (2001); Conference committee report (2002); House H.R. 975 (2003); BAPCPA (2005) (707(B)(6))No means test motion by anyone if the debtor and, in joint case only, spouse's CMI is below-medium:
Senate S. 420 (2001); Senate version H.R. 333 (2001)No means test motion by anyone if the debtor and spouse combined CMI is below-medium:
House version of H.R. 333 (2001); Conference committee report (2002); House H.R. 975 (2003); BAPCPA (2005) (707(B)(7))As shown on the list above, all these bankruptcy bills, other than the 1998 House bill, included a provision that limited the right of parties other than the Court or the United States Trustee to file any §707(b) abuse motion to cases where the debtor income was above-median. Through 1999, the bills stated that in cases where a married person files individually, the limitation would be if the debtor and the non-filing spouse's combined income was above median. Starting in 2000, all bills calculated the limitation as being the debtor's current monthly income in an individual case.As described above, a simplified "means test" was introduced in the very first 1997 Senate bankruptcy bill. The extensive means test that we now use, with six month pre-bankruptcy income compared to IRS expenses, was introduced in 1999 with S. 625. In 2001, a separate limitation on means test motions was first introduced. Prior to the 2001 limitation, a means test motion could have been made even if the debtor's income was below median. I believe it would be correct to say that the means test was debated publically and in Congress far more than any other provision of the bankruptcy bills leading up to the passage of BAPCPA. The original means test proposals, prior to 2001, were not limited to above-median debtors. In theory, a modest income debtor with even more modest expenses might have been caught up in a means test motion. In other words, §707(b)(6) and §707(b)(7) have their origins in two different aspects of the bankruptcy bills. The predecessor of §707(b)(6) was inserted at the very beginning of the process, to replace the pre-BAPCPA limitation on who can bring any abuse motion. §707(b)(7) was inserted for an entirely different purpose, to shelter below-median income debtors from the application of the means test. Looking at it from this perspective, the slightly different language between how median income is calculated in §707(b)(6) and §707(b)(7) in a case where a married debtor files individually - only the debtor's CMI is used in §707(b)(6) and the combined debtor-and-spouse CMI is used in §707(b)(7) - is irrelevant: the two provisions are dealing with two separate issues and the fact that they are located next to each other in the statute is little more than a coincidence. In any case, the limitation of §707(b)(6) was not some provision thrown into BAPCPA at the last minute. The language of §707(b)(6), which limits cases where a creditor can bring an abuse motion to those where the individual debtor's CMI is above median rather than the combined CMI of the debtor and a non-filing spouse, has been the standard language in every bankruptcy bill since 2000. The fact that bankruptcy bills 1997 through 1999 used language that calculated combined household median income, and the bills from 2000 through 2005 used language calculating the limitation as the debtor's individual CMI, shows that Congress must have considered both alternatives and intentionally chose the current language.The language used in §707(b)(7) first arose in 2001. The House versions of the 2001 bankruptcy bill used the BAPCPA language, stating that the means test only applies if the debtor-and-spouse combined income is above median. The Senate bills in 2001 set the median income calculation at the debtor's individual CMI. It appears that in conference the House version prevailed.
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