BAPCPA in the Blogs

Below are some notable BAPCPA-related blog posts that have caught our eye as of late.

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The BAPCPA blog provides three posts this week on recent BAPCPA related decisions:

A 12/1/05 post on In re Montoya, 2005 WL 3160532 (Bankr. D. Utah, 11/23/05) (applying BAPCPA's new section 362(c)(3)(C)(i))


An 11/29/05 post on In re Lucre, Inc., 2005 WL 3111078 (Bkrtcy. W.D. Mich., 11/9/05) (on BAPCPA's new Bankruptcy Code section 366(c) and a chapter 11 debtor's attempt to extend the injunction against discontinuation of utility service)

An 11/28/05 post on In re Blair, 2005 WL 3108495 (Bankr. N.D. Tex., 11/21/05) (Court holds that under BAPCPA's new Bankruptcy Code section 522(p), a debtor's increasing equity in residential property from regular mortgage payments made during the 40 months preceding the debtor's bankruptcy filing did not qualify as an "interest" acquired during the period, and thus would remain exempt and not be subject to the BAPCPA's statutory homestead cap).

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Volokh's Prof. Todd Zywicki here and The Bankruptcy Lawyers Blog's Kevin Chern here both link to a recently filed suit that challenges BAPCPA's constitutionality. The suit was filed by the law firm of Milavetz, Gallop & Milavetz P.A. and challenges BAPCPA's constitutionality under the First and Fifth Amendments. The suit challenges BAPCPA's authority over attorney/client communications and asks that attorneys not be classified as "debt relief agencies."

I think most consumer bankruptcy lawyers would like to see their local district take the same affirmative step (referenced here) that Chief Bankruptcy Judge Lamar Davis of the Southern District of Georgia took in declaring sua sponte on BAPCPA's effective date that attorneys practicing in the Bankruptcy Courts of the Southern District of Georgia are not "debt relief agencies" under BAPCPA. To the best of our knowledge, no other district has issued such a blanket ruling (sua sponte or otherwise).

We wish the lawyers at Milavitz, Gallop & Milavetz good luck in their endeavors! We'll try to monitor developments in that case for you.

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In a similar vein, The Journal of the Business Law Society Blog, from the students at the University of Illinois College of Law, submits this excellent post entitled "Bankruptcy Abuse Prevention Takes Aim at Attorneys," noting that BAPCPA's distrust of consumer motives "has been translated into attorneys now taking on the role of 'gatekeepers', with enhanced responsibilities for monitoring and verifying filings and penalties for noncompliance."

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Chapter Seven blog links to a story from the Kansas City Star on Chief Judge Bob Nugent's efforts in trying to establish a "local program to educate people, particularly young people, about the dangers of credit cards." According to the article:

Nugent hopes to establish a local version of CARE, for Credit Abuse Resistance Education, which puts credit card abuse on a par with abusing alcohol and drugs. The program started with a bankruptcy judge in Buffalo, N.Y., and is in place in some other states. Similar programs are gaining momentum in Kansas City and Topeka.

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The Bankruptcy Lawyers Blog submits a post on the case of In re Schlitzer, 2005 WL 3072791 (Bankr. W.D.N.Y., 11/17/05), which held that "a debtor's failure to file a statement of intention in his Chapter 13 case did not result in the termination of the automatic stay under [BAPCPA's] new Code section 362(h)."

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The Bankruptcy Lawyers Blog in its post entitled "The Broad Effects of Bankruptcy Law" reports on the far-reaching effects of the new bankruptcy law, with a cite to an article by Nicholas Kulish, a member of the New York Times editorial board, entitled The New Rules for Going Broke in America: Forget 'if at first you don't succeed�'"

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The King of the Forest Blog submits this post entitled, "A Few Thoughts on Bankruptcy," in response to the same article by Nicholas Kulish.

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The Idiotarian Savant Blog submits this post citing to the Washington Post article on the dramatic post-BAPCPA drop in consumer filings, saying:

The scuttlebutt around the local courts is that the new cases are being disproportionately filed in pro per (that is, without benefit of legal counsel), using forms that are out-of-date and without adherence to any of the new requirements, such as mandatory credit counseling, mandated by the new law. Therefore, many of the cases included in the total are going to get dismissed.

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Credit/Debt Recovery Blog submits a post entitled "Congress to limit debt counselors' DMPs" on Congressional action "to limit DMP [debt management plan] activity on the part of credit counseling agencies ... as part of an effort to answer concerns raised in a Senate subcommittee's investigation of profiteering in credit counseling."

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Moving Ideas: The Electronic Policy Network submits this post that links to an article entitled "The Plastic Safety Net: The Reality Behind Debt in America," authored by the Demos Organization and the Center for Responsible Lending. The post claims that the article "reveals the factors behind the explosion of credit card debt in American households over the last two decades and provides an inside look at credit card debt among America's low- and-middle income households."

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The Bankruptcy Lawyers Blog reports here on "The Costs of Bankruptcy," noting a recent estimate from the Congressional Budget Office that the added cost to consumer debtors from BAPCPA's requirement that an attorney must complete a "reasonable investigation" of the debtor's financial affairs and assets before they can file would be between $240 million and $800 million in 2007 alone.

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The Bankruptcy Blog submits this report that Bank of America and JP Morgan Chase, the second and third largest US banks, expect significant increases in bad debt write-offs in the fourth quarter because of the surge in bankruptcy filings before BAPCPA's enactment. According to the report, B of A expects a $400 million to $500 million increase in net charge-offs, and JP Morgan Chase expects a $700 million increase in net charge-offs since last quarter (which is $200 million more than it had forecast last month).

© Steve Jakubowski 2005


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