NEW DEVELOPMENTS AND
TRENDS IN BANKRUPTCY
REVIEW
• Nationally, prior to BAPCPA, 50% of those
filing a consumer case had filed a previous case,
65% had filed a case within the preceding year
• 30% had filed one case
• 10% had filed two cases
• 10% had filed more than two cases
Eastern District Trends in Filings
Year
Total
cases
Chapter 7 Chapter
13
13/7
Ratio
1990
4,974
3,685
1,105
30%
2001
10,113
6,881
3,159
46%
2004
9,658
6,499
3,230
50%
2008
3,217
1,608
1,570
98%
2009*
4,192
2,305
1,830
79%
* Estimated based on figures through 9/30/09
Year
Chapter 11 filings Adversaries
1990
183
314
2001
73
549
2004
50
236
2008
38
132
2009*
56
175
* Estimated based on filing through 9/30/09
Size of Commercial Filings in Assets
Year /
Total 11
Filings
0-50,000
50,001100,000
100,000500,000
500,0001.000.000
1,000,000
-10M
10M100M
2006/ 68
53
2
1
2
4
6
2007/ 43
5
2
5
19
3
9
2008/ 30
1
4
4
17
4
2009/38*
8
5
8
15
2
* Through 9/30/09
Success Rates
Year
Conf
DSM’d
DSM’d
w/o Conf
w/in
365
days
> 365 >730 Completed/ Conv
but days Pending
<730
days
2004 78%
56%
20%
66%
26%
8%
42%
2%
2005
71%
49%
50%
66%
22%
12%
25%
8%
2006 73%
42%
80%
69%
25%
6%
8%/ 59%
6%
2007
79%
31%
54%
77%
22%
1%
3%/ 69%
5%
2008 78%
33%
65%
78%
21%
n/a
3%/67%
5%
Effective December 1, 2009
New time limits will apply to:
All pending actions unless infeasible or unjust.
If infeasible or unjust, apply the former rule.
Rules Enabling Act, 28 U.S.C. 2074
Hanging Paragraph Claims on a Vehicle
• Chrysler v Miller, 570 F.3d 633 (5th Cir. 2009)
Secured lender retains the right to file a
deficiency claim after surrender or foreclosure
of a 910 vehicle.
• In re Dale, 2009 WL 2857998 (5th Cir. 2009)
Creditor’s claim for negative equity included in
a PMSI claim on a 910 vehicle did not destroy
the nature of the claim. Negative equity was a
“cost of acquiring the vehicle” and therefore a
PMSI debt.
Changes to Exemptions
Act 201- Effective June 30, 2009
• Increases Homestead Exemption to $35,000
• Extends protection to proceeds of insurance paid for
damage to property after governor declares a natural
disaster
• Limits creditor with a judgment on consumer credit card
debt from seizing
• Judgment creditor may record judgment and a judicial lien
is created. However, damages may be obtained if the
property is seized an sold.
Pending changes to proofs of claim
Rule 3001
• New requirements :
• Escrow Account Statement
• Amount necessary to cure default
• Failure to attach may result in sanctions
including attorneys fees and expenses
What format does the Escrow Statement take?
In accordance with RESPA
Escrow charges
Hazard Ins
Flood Ins
Taxes
Total
Amt Date paid
$A
X/X/XX
$B
X/X/XX
$C
X/X/XX
Mo amt
A/12=M
B/12=O
C/12=Q
S
Mos to petition date
Total
X/X/XX-Petition date=N M*N
X/X/XX-Petition date=P O*P
X/X/XX-Petition date=R Q*R
T
The two (2) months worth of escrow payments allowed under RESPA are
calculated:
[(A + B + C)/12 ] x 2 = U
U + T = Catch Up Escrow Payments
The actual escrow balance on petition date minus the Catch Up Escrow Payments
(U + T) = escrow balance on proof of claim
The debtor’s postpetition escrow account should begin with a balance equal to the
Catch Up Escrow Payments (U + T).
S = new monthly postpetition escrow payment added to postpetition installments
of principal and interest
Rule 3002.1
• Requires written notice to debtor, debtor’s attorney and trustee
of any change in the monthly amount due on a home mortgage
debt at least 30 days prior to the effective date of the change
• Requires written notice of the assessment, postpetition, of any
fee or charge against a debtor’s account to debtor, debtor’s
counsel and trustee within 30 days.
• Debtor or third party has one year to challenge
• Trustee must send Notice of Final Cure within 30 days of the
last payment
• Creditor has 21 days to Object
• Court must hold a hearing on the Objection within 30 days
Pitfalls for the unwary:
• Failure to include missed escrow payments in the proof of claim
See Campbell v Countrywide, 2008 WL 3906382 (5th Cir. 2008)
• Double dipping-inclusion of missed escrow payments in the
proof of claim and collection of past due escrow postpetition
through increased monthly payments
See In re Fitch, 390 B.R. 834 (Bankr.E.D. La. 2008)
• Sheriff’s costs/ deposits
• Upcharges for third party expenses, i.e. inspection fees, BPO or
appraisal costs
• Proper application of payments
See In re Jones, 366 B.R. 584 (Bankr.E.D. La. 2007)
In re Stewart, 391 B.R. 327 (Bnkr.E.D. La. 2008)
Truth in Lending
Changes effective October 1, 2009
• Section 226.36c(i) & (ii)-Servicing
No servicer shall fail to credit a payment as of the date of receipt
Impose a late fee or delinquency charge when only attributable
to late fees or delinquency charges assessed on an earlier
payment
• See http://www.fdic.gov/regulations/laws/rules/6500-1800.html#fdic6500226.35