Chapter 13 Bankruptcy Rules – Proof of Claim Requirements

November 21, 2018

The Federal Rules of Bankruptcy Procedure set forth a relatively short timeline for creditors to file proofs of claim in chapter 13 bankruptcy cases.  These deadlines must be followed closely because they impact whether a creditor may be entitled to a distribution or payment through the chapter 13 plan.

A missed claim deadline can have a significant impact on a chapter 13 case from both the perspective of the creditor, and often times the Debtor.  It may be advisable in some cases to file a protective claim on behalf of a creditor who has missed a deadline in order to ensure that a claim may be paid through the chapter 13 process.  There are also deadlines for protective claims filed on behalf of a creditor that must be followed closely.

The following are a few important Rule sections regarding claims that should be considered in the chapter 13 process:


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LLC Membership and Property of the Bankruptcy Estate

February 8, 2018

It is not uncommon for individual debtors in bankruptcy to own membership interests in LLCs. If a member of a multi-member limited liability company files bankruptcy, what happens to the Debtor’s membership interest in the LLC? 


The debtor, bankruptcy Trustee, creditors, and the other members of the LLC are all impacted when an individual member files bankruptcy, because the membership units become property of the estate.

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Commercial Real Property Leases in Bankruptcy

January 23, 2018

With increasing frequency, we find landlords facing lease issues in bankruptcy as a result of mall closings, strip mall vacancies, and what appears to be a movement away from brick and mortar in some retail industries.   

Executory contracts are governed by section 365 of the Bankruptcy Code. Section 365(d)(3) requires that a debtor under a non-residential real property lease must continue to fully and timely perform its obligations from the petition date through the date on which the lease is assumed or rejected.

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Causes of Action that Arise Prior to Bankruptcy

November 30, 2017

“When” is a cause of action property of the bankruptcy estate? In answering this question, attorneys are required to determine when the cause of action matured. Thereafter, we must distinguish between pre-petition, post-petition, post-confirmation, and post-discharge causes of actions. Depending upon where the cause of action falls in relation to the bankruptcy filing, the debtor may or may not be entitled to keep all of the proceeds generated from the cause of action. This article will focus on the pre-petition nature of a cause of action.


The question is not “what is property of the bankruptcy estate” but is rather “when is property of the bankruptcy estate.”  This determination requires fact intensive analysis.  Whatever opinion the debtor or counsel may have – full and complete disclosure is required and full disclosure is the best means by which to preserve a cause of action for the debtor and the estate.  Failure to do so can result in the debtor being estopped from pursuing a cause of action and potentially lead to a malpractice action against debtor’s counsel.


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Should I STAY or should I go: The clash between the bankruptcy automatic stay and family law.

October 20, 2017

“Should I stay or should I go now?
Should I stay or should I go now?
If I go, there will be trouble
And if I stay it will be double
So come on and let me know”

- The Clash (1982)

When a bankruptcy proceeding and a divorce proceeding are pending simultaneously, it can feel like you have been transported back in time to 1982 and the Clash’s lyrics “Should I Stay or should I go?” are once again all too relevant.

For individual Debtors, the financial tipping point for deciding to file for bankruptcy is often related to a divorce.  When a party files for bankruptcy during a divorce proceeding, the family law attorney can really feel the full meaning of, “If I go there will be trouble, but if I Stay it will be double.”  This can be true whether you represent the Debtor or the non-bankruptcy filing party.  What actions are permissible in family court when one party has filed a bankruptcy petition?

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Supreme Court Decisions Regarding the FDCPA: Part 2 of 2

July 7, 2017

What is a Right without a Remedy?

The United States Supreme Court reversed the 11th Circuit Court of Appeals in another case concerning the Fair Debt Collection Practices Act (FDCPA) in Midland Funding, LLC v. Johnson, Case No. 16-0348. 

Timeline of events:

  • In March of 2014, an individual debtor filed for Chapter 13 Bankruptcy in the Southern District of Alabama.  A creditor, Midland Funding, filed a Proof of Claim in the debtor’s Chapter 13 case with a written statement that the debt in question ($1,879.71 of credit card debt) was more than 10 years old.  The debtor objected using the statute of limitations as an affirmative defense.  In Alabama the statute of limitations on collection of debt is six years.  Midland did not file a response.  As such, the bankruptcy court disallowed Midland’s Claim.
  • The debtor then sued Midland Funding in District Court for violating the FDCPA by attempting to collect on an expired debt.  The District Court dismissed the case, concluding the FDCPA did not apply.
  • The 11th Circuit Appellate Court reversed the District Court.  Midland Funding then proceeded to file a petition for certiorari, or a petition for review, asking the Supreme Court to weigh in on this question:

“Whether the conduct at issue here is ‘false,’ ‘deceptive,’ ‘misleading,’ ‘unconscionable,’ or ‘unfair’ within the meaning of the FDCPA.”

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The United States Supreme Court and the FDCPA: Who Is a Debt Collector?

June 20, 2016

Semantics!  Sometimes it boils down to just one word.  Such was the focus of the very first Opinion to come from the newly appointed Justice Neil Gorsuch in the case Henson v. Santander.  After a dense grammatical discussion of the word “owed” in the context of the Fair Debt Collection Practices Act (“FDCPA”), Justice Gorsuch affirmed the decisions of the District court and the Fourth Circuit Court of Appeals concluding that defendant, Santander, does not qualify as a debt collector under the definition of the FDCPA.

Besides the petitioners’ creative account of past vs. present participles and how that can affect the intended meaning of the FDCPA, Justice Gorsuch’s Opinion looks at a few other angles in attempt to answer the ultimate question: Who qualifies as a “debt collector?”

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Asset Protection, Attorney-Client Privilege, Pre/Post Wrongdoing

June 5, 2017

“The court is loath to invade the attorney-client privilege except upon the most persuasive prima facie presentation, as the Trustee has made in support of his Motion”

A recent decision in the Western District of Michigan Bankruptcy Court, allows for a Trustee to subpoena a debtor’s Attorney for correspondence that the non-moving party argues is protected by attorney-client privilege.  In the matter of In re Rosich, Adversary Case Number 15-80203, the Court came to this careful determination by citing the crime-fraud exception and using a two-part test to show why attorney-client privilege does not apply in this case.  Within this decision, the Court did not simply open the flood gates; instead they applied an important distinction between pre/post wrongdoing to limit the scope of the subpoena. 

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Ninth Circuit BAP rules in Student Debtor’s Favor on Student Loan Debt case

May 21, 2017

Last week we featured a blog entitled, “What to do with Student loan Debt? The Debate Continues.”  In that blog we discussed an important ruling by the 11th Circuit Court that allowed a debtor to discharge $112,000.00 in student loan debt through her individual bankruptcy.

Under a recent ruling by the 9th Circuit Bankruptcy Appellate Panel (BAP), a debtor may be able to discharge over $70,000.00 in private student loans. 

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