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Questions & Answers about BAPCPA

Click here to ask your questions or add a comment

Questions posed to us by attorneys and trustees, with our best answers, beginning Sept. 1, 2005, are shown below

Note: the following opinions are subject to legitimate disagreement, and some of the issues discussed will inevitably be the subject of considerable controversy, with wide variances in interpretation based on local practice and emerging case law. So, keep that in mind when you read our answers. 

Question 27: (added 10/05/06)

Does the income of a non-filing spouse have to be computed into the B22 test if she is part of the household?

Timothy Hawkins
Consumer bankruptcy attorney
St. Albans, Vermont


This topic is discussed in King's Guide at ¶ 8.3(e) and 6.4(a)(4)

In a nutshell, the portion of the non-filing spouse's income that must be included in the debtor's income is the portion regularly contributed to the household expenses." Code § 101(10A), (10B).

This creates lots of room for argument with the trustee. Even assuming the non-filing spouse deposits her entire paycheck into a separate checking account in his/her name only, it may be difficult convincing the trustee that the money does not in some way, even if indirectly, contribute to paying household expenses. The statute includes in the debtor's income any portion of a non-filing spouse's income regularly contributed to the debtor's dependents, as well. Thus one would have to trace the non-filing spouse's income to identify any portion being paid, directly indirectly, to cover expenses for the debtor's dependent children, or any dependent adults. Thus, the issue has to be addressed on Form B22 Part II line 8. This would apply whether one is calculating current monthly income for the means test, or for chapter 13.

See answer to Question # 23.

Question 26: (added 9/19/06)

I filed a chapter 7 for an elderly collecting only SSI and a Pension. The creditors meeting was held last week. Today, I receive a letter from the US Trustee that there may be abuse because even though the debtor passed the means test, he  had excess income. ($300.00 per month). What's your opinion on that?

Ira C. Yellin, Esq.
Yellin & Hyman, PC
Franklin, MA


This topic is discussed in King's Guide at ¶ 10.5(b)

The trustee may move for dismissal based on "abuse" or "bad faith" under 11 U.S.C. § 707(b)(3) even where the debtor's income does not raise an automatic presumption of abuse. In fact, under amendments made by BAPCPA to this section, it is easier than under pre-reform law to raise the issue of abuse. This is because under BAPCPA the text of the statute was amended to delete the word "substantial" from the phrase "substantial abuse" found at Code § 707(b)(1), so that now it reads simply "abuse." This appears to lower the burden to establish that the filing of chapter 7 is an abuse based on surplus income, even where the debtor's income is below the state median.

Two recent cases illustrate this.


The debtor owed some $24,000 in general unsecured debt. During the preceding year debtor received substantial sums of money from various sources and spent it all on unnecessary indulgences. The court found that debtor could have used the money to pay down all or a large portion of the debt, but elected to squander it by "treating" himself and "rewarding" himself. Court found that this was abuse under the bad faith and totality of circumstances elements prescribed at § 707(b)(3)(A) and (B).

[ed. note: since BAPCPA deleted the word "substantial" that had qualified "abuse" under the old code, it is clear the courts are going to scrutinize pre-filing spending behavior in a more intensive way than under pre-BAPCPA law. Hence, even though in most cases the attention is on the "means test" part of § 707(b)(2)., counsel should beware of the need for a more intensive "inquiry" into the client's past during the pre-petition stage.

In re James, 345 B.R. 664 (Bkrtcy.N.D.Iowa 2006).


Under the "totality of circumstances" test for abuse in chapter 7 as prescribed by 11 U.S.C. § 707(b)(3)(B) where the debtor's income is below the state median, the debtor's actual and anticipated future income may be taken into consideration.

In re Pak, 343 B.R. 239 (Bkrtcy.N.D.Cal. 2006).

Although the statute is not clear on this point, an argument can be made that in looking at the debtor's ostensible surplus income the court must begin with the debtor's "current monthly income" as is mentioned at § 707(b)(2)(A). Current monthly income ("CMI") is defined at Code § 101(10A)(A). This provision defines CMI as income "from all sources," but § (10A)(B) specifically excludes benefits received under the Social Security Act. See In re Fuller, 346 B.R. 472, 476 (Bkrtcy.S.D.Ill. 2006) (an opinion dealing with the calculation of surplus income for purposes of Chapter 13 but states " ... current monthly income does not include benefits received under the Social Security Act, payments to victims of war crimes, or payments to victims of terrorism").


Question 25: (added 01/27/06)

I need some clarification regarding §7.5 of King's Guide To Practice: Will a chapter 13 debtor receive a discharge on interest that accrues on income taxes that are less than 3 years old (assuming they were filed on time and no fraud)

Allen Mealey
Consumer bankruptcy attorney
Swansea IL


This topic is discussed in King's Guide - Release # 4, ¶ 7.5

Since priority income taxes are not excepted from discharge in chapter 13, pursuant to § 1328(a) [because that section does not include taxes under § 507(a)(8)(A) in the list of exceptions from discharge], it follows that priority income taxes are discharged in the Chapter 13; hence, the postpetition interest accruing on such a claim is discharged; the general rule is that the dischargeability of interest on a tax claim follows the tax, i.e., if the tax is dischargeable, so is the interest.

Question 24: (added 01/02/06)

We are in the 7th Circuit. Pursuant to the Bethea ruling, we need to collect all of our attorney's fees before filing the case, as they become dischargeable when the case is filed. How do we reconcile this with the Trustee's presumption that post-filing fees paid before filing are property of the estate? Under the old law we had the client sign one contract for pre-petition fees, and another after filing for post-petition fees, but our understanding is that we cannot have two separate fee contracts under the new law. How do we get paid for post-petition work under the new law in our Circuit?

William Mueller
Consumer bankruptcy attorney
Belleville, IL


This topic will be discussed in Release # 4B of King's Guide to Practice

This problem is not limited to the 7th Circuit, but in fact creates problems in every federal circuit.

BAPCPA imposes a number of additional postpetition tasks for the attorney to perform.

In view of these added time-consuming tasks there may be a temptation in chapter 7 cases to ask the debtor to pay a prepetition retainer large enough to cover substantial anticipated postpetition tasks. The problem with this is that any portion of the prepetition retainer fee that is allocated to cover postpetition services, and hence is unused as of the date the petition is filed, is property of the estate, and the trustee is directed by the Chapter 7 Trustee's Handbook to go after and recover those funds for the estate (i.e., demand that you disgorge the unused fees). The trustee would ordinarily be entitled to recover those unused fees because the U.S. Supreme Court has held that, unless court-appointed to represent the estate, the debtor's attorney may not be paid out of estate funds. Lamie v. United States, 124 S.Ct. 1023 (2004).

The Trustee's Handbook, at page 6-10, section "D" under Chapter 6, states:

"The trustee should be alert for retainers held by debtors' attorneys. While courts generally hold that an unearned retainer on hand at the commencement of a case constitutes estate property, the trustee may have to initiate action to obtain the balance of the retainer."

This issue is alive in some parts of the country, apparently dormant in others. But even where the local trustees are not currently going after unused retainer fees the issue is a ticking time bomb for unwary attorneys.

Finding a creative solution to this dilemma is not easy. But the bottom line is, be careful in taking a large prepetition retainer that is more than enough to pay for your prepetition services.

Here are several possible solutions.

1. I estimate the amount of the fee that will be unused when the petition is filed, then claim it as exempt. This should work in California (my state) where one of our exemption schemes includes a misc. exemption of about $18,000. Of course, the client must consent. If the client's miscellaneous assets already use up the entire exemption, then it's a problem.

2. There is bankruptcy case law that says, if the fee agreement specifies that the retainer fee is "advance payment for future services," that the money becomes immediately the property of the attorney and the debtor (and hence the estate) surrenders any interest in the funds.

3. There is bankruptcy case law that provides that if state law provides for an automatic lien on cash deposited with someone, then the asset (i.e. the cash) is fully encumbered in favor of the person holding the cash (e.g., an attorney), and hence must be surrendered by the estate at some point prior to closing the case.

4. Take only enough prepetition to cover services up to point of filing, then have a second fee agreement to be signed after the case is filed, and require a second retainer fee, to cover postpetition services. I know of no part of BAPCPA that prohibits this. The only word of caution I would give is make sure any money you take postpetition is money the debtor earned or borrowed after the petition is filed; if he/she pays you with funds in his or her possession when the petition is filed, it is property of the estate and must be turned over to the trustee (unless one of the other three strategies work to protect the funds).

Question 23: (added 12/05/05)

I have a client who is unemployed and is supported by his male domestic partner, who makes $135,000 per year. Arguably their financial affairs are not separate because they share a household and one supports the other and even has the monthly allowance direct deposited from his paycheck into my client's account. They are a "household" under the Act, but gay couples still cannot file a joint bankruptcy. Will the income of the domestic partner need to be disclosed and taken into account for median income purposes?

Shaye Larkin
San Francisco, CA


This topic is discussed at ¶ 6.4 of King's Guide To Practice.

In our opinion, such a situation creates no community property rights in the earning partner's income, nor does it make either partner a dependent of the other. In calculating the median income test to determine whether a presumption of abuse arises, one uses the debtor's "current monthly income" (see Code § 707(b)(6)). Code section 101(10A), which defines current monthly income, provides that the contributions to the household budget regularly made by other inhabitants of the household are included in the income calculation. Specifically, section 101(10A) states that the income " . . . includes any amount paid by any entity other than the debtor ... on a regular basis for the household expenses of the debtor or the debtor's dependents . . . " Code § 101(10A)(B).

If read literally, then, you would not include the earning partner's whole income, but only that portion that is routinely contributed to the household expenses.

Question 22: (added 12/05/05)

What do we file with the petition as far as the average income over the prior 6 months? I correctly completed the Form 22A Means Test. But I received a deficiency notice. Do I have to file 6 months of paystubs?

Richard Bash
Anderson, Indiana


This topic is discussed at ¶ 8.11 and Checklist # 4 of King's Guide to Practice

At the time of filing the petition and the usual schedules, the debtor must also file:

1. A statement of "current monthly income" over the last 6 months per § 521(a)(1)(B)(ii).

2. As part of the current monthly income statement above, a statement of current monthly income with a calculation showing whether a presumption of abuse arises (i.e., show the arithmetic for a means test calculation). § 707(b)(2)(C)

3. A statement of the amount of monthly net income, itemized to show how the amount is calculated. This is the current monthly income less allowable expenses under the IRS standards and the other permissible expenses described at § 707(b)(2). § 521(a)(1)(B)(v)

4. A statement of any anticipated increase in income following filing the petition. § 521(a)(1)(B)(vi).

5. Copies of pay stubs per § 521(a)(1)(B)(iv).

Question 21: (added 11/20/05)

The good-faith components in 1325(a)(3) and (7) apply to above median income cases. If so, does that mean that such a debtor can be forced to commit more money (in the plan) than the means test computes, if schedules "I" and "J" (or other disclosures such as past and future tax refunds) show that such funds are available?

David W. Ruskin
Detroit, MI


This topic is discussed at ¶ 8.3(f) of King's Guide to Practice

If read literally, the plan payment must be only the payment calculated under the Code without regard to actual income and expenses in the schedules "I" and "J." That in fact is NACBA's interpretation, and they intend to support litigation to establish that as the correct policy.

However, some chapter 13 trustees have indicated they intend to argue that to be a good faith plan it must propose to pay the higher of the calculated payment or the actual surplus income. Otherwise, they will argue, the plan is not proposed in "good faith" pursuant to §§ 1325(a)(3) and 1325(a)(7).

The answer will doubtless vary with local practice until the higher courts begin publishing opinions interpreting the Code in connection with the issue.

Question 20: (added 11/16/05)

I am confused about the trustee multiplier used in Form 22. The fee in my district has been 6% for quite some time, but the new multiplier is 4.6%. Which % fee is used when figuring the actual plan?

S. Sherman,
Tavares, FL


This topic is discussed at ¶ 8.6.5(d) of King's Guide to Practice

The purpose of the multiplier list on the U.S. Trustee's web site appears to be the percent that may be used in determining the chapter 13 trustee's fee portion of administrative expenses in doing the means test, pursuant to 11 U.S.C. § 707(b)(2)(A)(ii)(III). Whether that per centum is binding on each respective chapter 13 trustee is not clear.

One problem that may arise is that while § 707(b)(2)(A)(ii)(III) permits counsel to add the hypothetical administrative cost of a chapter 13 (as shown on the U.S. Trustee's web site) as a deduction from income for the means test, that code section, taken literally, puts a cap of 10% as the maximum that may be calculated in for administrative expenses.

Most lawyers assume that the unpaid balance of the attorney's fee may be paid through the plan as an administrative expense. However, some of the per centages listed on the web site do not appear to leave much room for attorney's fees. For example, the trustee's fee for the Northern District of California is fixed at 9.9%. Does this mean the plan can only pay .1% of the debt for attorney's fees?

Like a lot of other stuff in the new Code, it remains to be seen how this section will be applied in the various jurisdictions.

Question 19:

Client filed a pre-reform chapter 7 and now needs to convert to Chapter 13. Which version of the code applies to the conversion?

George Murphy
Benicia, CA
General practice attorney


Our interpretation is that a case filed pre-reform and converted post-reform will continue to be subject to pre-reform law.

The reason is that both pre-reform and post-reform law provide that upon conversion the case reverts back to the original date of filing as though it were filed as converted from the beginning. The Reform Act contains no language that changes that rule.

Question 18:

I purchased your manual and in Section 6.2(b) (related to non-consumer debt cases) it mentions dismissal for bad faith. The only location I can find dismissal based upon bad faith is in 707(b)(3) which is available only in a consumer debt case. As a result, if my client has a good amount of disposable income but the debts are not primarily consumer debts, it would appear that bad faith does not come into play and the client is free to file a chapter 7. My questions are: 1) Do you agree; and 2) Is there another section that provides for dismissal in a non-consumer debt case for bad faith?

Steve Brechner
Phoenix, Arizona
Consumer bankruptcy attorney


This topic is discussed at ¶ 6.2 of King's Guide to Practice, "Is The Median Income Test Required?"

The reference to "bad faith" in section 6.2 of the Guide was not meant to reference the grounds of "bad faith" listed in Code § 707(b)(3), but rather the general notion of an attorney's accountability under Rule 9011(b)(1) (attorney's signature represents case was not filed for an "improper purpose").

Reading Code § 707(b)(3) literally, you are right; dismissal on the ground of bad faith pursuant to that section is only available in cases in which the debts are primarily consumer debts. This conclusion is reached as follows: Section 707(b)(3) (dismissal for generic "bad faith") refers to cases falling under section 707(b)(1) by commencing with the words ""In considering under paragraph 1 ...)." Paragraph 1, in turn, provides that in cases in which the debts are "primarily consumer debts" a motion may be made to dismiss or convert based on bad faith (using the means test as the basis for the motion).

Paragraph 2 provides that one of the grounds for bad faith is a case in which the debtor's surplus income fails under the means test.

Paragraph 3 provides another, separate ground under the term "bad faith" used in the more generic sense, not based on the means test.

So, it appears that in cases for which the debts are primarily other than consumer debts, there is no statutory basis for a motion based on "bad faith." The phrase "bad faith" does not show up anywhere else on a word search of the text of the code. It does appear in the text of the Reform Act, under section 302 of the Act, entitled "Discouraging bad faith repeat filings." That section of the Act amends Code § 362 to limit the effect of the automatic stay in some cases in which the debtor had filed prior cases.

Question 15:

I have a website offering information about bankruptcy. Some of the people visiting my web site will be using my services, others won't. What disclosures am I required to put on the website on and after October 17, 2005?

Ronald Bernbaum
Tulsa, Oklahoma
Consumer bankruptcy attorney


This topic is discussed at ¶ 3.6 of King's Guide to Practice

Advertising for consumer bankruptcy cases must contain to key buzzwords; "debt relief agency," and "bankruptcy."

Section 229 of the Act adds Code §528(a)(3) to provide that a debt relief agency (i.e. a consumer bankruptcy attorney) must, in all advertisement of bankruptcy services directed to the general public (whether in general media, seminars or specific mailings, telephonic or electronic messages, or otherwise),  clearly  and  conspicuously communicate that the services or benefits are with respect to bankruptcy relief under this title; and clearly and conspicuously use the following statement in such advertisement:

"We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code," or a substantially similar statement.

In those situations where the requirement applies, a simple statement such as the following would appear to satisfy the rule: "We are a Designated Debt Relief Agency under Federal Law and We Provide Legal Assistance to Consumers Seeking Relief Under the Bankruptcy Code."

Code §528(b)(2) provides that any advertising that includes references to such things as credit defaults, mortgage foreclosures, eviction proceedings, excessive debt, debt collection pressure, or inability to pay any consumer debt, shall disclose clearly and conspicuously in such advertising that the assistance may involve bankruptcy relief. That provision appears to be directed at those firms that advertise heavily for foreclosure or eviction relief but use essentially bait-and-switch methods, luring potential clients without tipping them off that what is really being advertised is bankruptcy or chapter 13.

These requirements only apply to advertising, not media that merely identify the firm, such as letterhead or cards (unless mass-mailed to prospective clients). The consensus of opinion is that a web site will probably be deemed a form of advertising. Although one could argue that it is merely an educational or informational resource, to be on the prudent side we suggest it be deemed advertising and make sure the required phrases appear somewhere on the home page.

Question 14:

How will the impending bankruptcy reform laws affect those facing real property foreclosure in obtaining an automatic stay?

LaTonia Jackson
Florence, SC


The Bankruptcy Reform Act does not appear to restrict the ability of a debtor to halt a pending foreclosure on, say, a residence or other real property, by filing chapter 13, and provide for payment to catch up on the delinquent mortgage payments through the plan (in chapter 13 or 11).

There are traps for the unwary, however, in connection with the automatic stay. If the debtor has had recent, previous bankruptcy cases, then depending on whether they were filed in bad faith, or dismissed, or certain other circumstances, the automatic stay might not arise at all upon filing the current bankruptcy. Code § 362(c) et seq.

This topic is discussed at 10.3 of King's Guide to Practice.

If the automatic stay does not arise, it would, of course, mean the foreclosure can proceed without hindrance from the bankruptcy. Also, in some cases the automatic stay may arise, but terminate in 30 days, which would permit the foreclosure to resume. The debtor, or any other creditor in interest, may within 30 days after filing the current case move the court for an order that the stay take effect, which would halt a foreclosure in progress. Code § 362(c)(4)(A). Accordingly, it is critical that the lawyer explore the client's previous bankruptcy filing history to identify any reason the automatic stay may not stop the foreclosure proceedings.

Question 13:

I have been through the guide several times and think that the disclosure on pages 311-338 can be incorporated into my practice. May I reprint them and use them in my practice?

D.J. Rausa
San Diego, CA
Consumer bankruptcy attorney


Yes. Anything in the Appendix may be used in your practice. The only restriction is, they may not be duplicated for purposes of resale.

Question 12:

Is there a model Chapter 13 Plan which practitioners will be required to use under the new law?

Jennifer Kingsley
Wyomissing, PA
Consumer bankruptcy attorney


The subject of drafting the chapter 13 plan is discussed a STEP 8 of King's Guide to Practice.

Question 1:

Does the term "household" for means test purposes include roommates that live in the same house and share the rent/utilities?

Steve Brechner
Consumer bankruptcy attorney
Phoenix, Arizona


This is discussed at ¶ 6.4 of King's Guide To Practice

The current opinion is yes, a household for purposes of the means test includes all persons living with the debtor, whether related by blood or marriage, or not. The Bankruptcy Code as amended,§ 707(b)(6) uses terms "household" and "median family income." Section 101(39A) provides that "median family income" is based on U.S. Census Bureau statistics. The web site of the U.S. Census bureau defines a "household" - "A household consists of all people who occupy a housing unit regardless of relationship."

So, if read literally, it includes unrelated roommates.

Question 1 follow-up:

Okay so the current opinion is that roommates are included in the household under the act. If the roommate's income and financial life altogether is separate from the debtor, is the current opinion that the debtor must obtain 6 months of income and other related financial information from the roommate in order to file and sustain a bankruptcy case?


This is discussed at ¶ 6.4(a)(3) of King's Guide to Practice.

Bankruptcy Code § 101(10A) provides that in calculating current monthly income (which is also used as the starting point for calculating net monthly income under means test) one includes the debtor's and debtor's spouse's income (if joint filing), plus "any amount paid by any entity... on a regular basis for the household expenses of the debtor ..." Read literally, this means that only that portion of a roommate's income that is contributed to the household budget is counted, and even that is counted only if it is "regularly" contributed. Accordingly, there is no need to obtain any other information about the roommate's income or expenses.

Question 2:

Can an attorney seek approval as a credit counselor to meet the requirement of credit counseling provided there are no conflicts of interest to clients who remain eligible to file Chapter 7 bankruptcies because their income is under the state median?

John W. Gibson
Pittsburgh, Pennsylvania


The issue of what is required of a credit counselor is discussed at ¶ 5.12 of King's Guide to Practice

The question has been put directly to the Office of the U.S. Trustee, and answered as follows

"Can an attorney apply to be a credit counselor and/or debtor educator?"

"A: Attorneys are eligible to be approved as credit counselors and/or debtor educators, provided they meet the requirements set forth in Section 111 of the Bankruptcy Code. However, there may be state bar ethical considerations or other factors that limit an attorney's ability to provide these services or restrict how the services are rendered."

Code section 111 does not explicitly rule out an attorney as a credit counselor. It does, however, provide that the credit counselor may not "will not directly or indirectly benefit financially from the outcome of the counseling services provided by such agency."

You can view more questions and answers about credit counseling agencies put to the U.S. Trustee by clicking on this link:

 U.S. Trustee's answers to questions about credit counseling agencies

That's about the best answer we have at present.

Question 3:

Concerning the extraterritorial effect of homestead exemption. How will we determine if a States law will allow extraterritorial jurisdiction over the property in another State?

I am interested in how I will determine if the real property exemption of another State will apply to realty here in Tennessee if the debtor has not been a Tennessee resident for 2 years and has purchased real estate here in last 2 years. T.C.A. title 26 indicates that the exemptions listed are for Tennessee residents so I assume they would have no extraterritorial effect for filers in another state who moved from Tennessee in last 2 years. Without having access to codes for all 50 states how will we determine if we can use the other states homestead in cases filed here if the facts so warrant?

David Phillips
Nashville, TN.
Consumer bankruptcy attorney


This issue is discussed at ¶ 7.2 of King's Guide to Practice.

The question of which state's homestead exemption may be used is based on domicile. Domicile is that location the debtor considers his or her "home," and is a separate issue from residence. Residence can be a temporary abode, with the actual domicile located elsewhere.

In a nutshell, Code § 522(b)(3)(A) provides that the debtor may elect the state homestead exemption for the state in which he or she resides if he or she has been domiciled in that state for at least 730 days (2 years) preceding filing the bankruptcy.

If the debtor was not domiciled in the state for at least 2 years, the exemption that must be used is the exemption for the state in which the debtor was domiciled for the greater part of the 180 days immediately preceding the 730 days prior to filing the bankruptcy.

For a quick reference to find the exemptions of other states, the web site BankruptcyAction.com does a fairly reasonable job of keeping the exemptions current. Click here -


Question 4:

Does the credit counseling requirement apply in individual involuntary bankruptcies? Do you think involuntaries will be the waive of the future to collect from individuals with equity in their homes if they haven't owned the home for 1215 days? Any thoughts on how to protect a client from an involuntary?

David Langley
Plantation, FL
Consumer bankruptcy attorney


The credit briefing requirements are discussed in ¶ 5.1 et seq. in King's Guide to Practice.

If read literally, the Code does not permit a person to be a debtor in an involuntary bankruptcy unless such involuntary debtor satisfies the credit briefing required by Code § 109(h) within 30 days after the case is filed. Section 109(h) provides that a person may not be a debtor in a case filed under Title 11 (the Bankruptcy Code) unless such person has satisfied the credit briefing requirement. Section 303 provides that an involuntary bankruptcy may be filed only for chapter 7 or 11 (not chapter 13), and only against an individual who is eligible to be a debtor under the chapter in question.

Accordingly, since a person who has not completed the credit requirement prior to the filing of the bankruptcy, or no later than 30 days after filing, is not eligible to be a debtor in chapter 7, it would appear that such person cannot be a debtor in an involuntary bankruptcy.

This appears to be an example of many contradictions left, or created in the Code, by the Reform Act. How the courts will actually deal with this conundrum is difficult to predict.

In our opinion, there is no reason the Reform Act should result in more involuntary filings.

Question 5:

At least here in SD OH, a debtor's interest in a former spouse's retirement under a QDRO is property of the estate the Trustee can liquidate for the benefit of creditors. Does BARF change this result?

Stephen E Schafer
Columbus, Ohio
Consumer bankruptcy attorney


Exemption of pensions and retirement funds are discussed at ¶ 7.2 of King's Guide to Practice.

The Code at § 522(b)(3)(C) provides that pensions funds that are tax-exempt under the Tax Code are exempt in bankruptcy. Whether or not a debtor's interest in an ex-spouse's retirement fund falls into that category is more a substantive tax question than bankruptcy, and we are not qualified to address it.

Question 6:

1.) As to the consumer credit counseling requirement. I am in the S.D. of GA. Are you aware of any official policy as to whether clients will be able to do the credit counseling in my office via the Internet?

2.) Is it your interpretation that the requirement of using creditor addresses provided in the last two written communications from a creditor in the days prior to filing is ONLY for notices provided by the debtor in limited circumstances?

Richard S. Barid
Savannah, GA
Consumer bankruptcy attorney


1) The subject of credit counseling is covered in STEP 5 of King's Guide to Practice

We are aware of no policy that would prohibit a client from satisfying the credit briefing requirement in the attorney's office, via the Internet. The credit counseling agency providing the briefing would have to be off-site and not financially connected in any way to the law firm. The Act specifically provides for satisfying the briefing requirement by Internet or telephone. See Code § 109(h)(1), § 111. Informed sources tell us the Office of the U.S.Trustee is thinking about requiring the credit "briefing" to last approximately 90 minutes.

2) The subject of notice to creditors is discussed at ¶ 8.15 of King's Guide to Practice


Question 7:

Please explain the difference between "current monthly income" vs. "monthly net income" as it relates to Section 521.

David Phillips
Nashville, Tn.
Consumer bankruptcy attorney


This matter is discussed at ¶ 6.4 of King's Guide to Practice.

In a nutshell, current monthly income is defined at Code § 101(10A) as gross income minus certain specific exclusions from income, but does not take into consideration expenses. Monthly net income is not defined, but appears to constitute current monthly income less permissible expenses specified at Code § 707(b).

Question 8:

If a debtor has had a Chapter 7 bankruptcy dismissed within the last year and the debtor's attorney must file a motion to keep the automatic stay in effect after 30 days, how much notice does he need to give? Can it be done on a "no opposition, no hearing" basis? Thanks

James Beirne
Glendale, CA
Consumer bankruptcy attorney



Question 9:

A year ago, I'd never heard of a debt relief agency, now I am one. I'm not quite sure how this morphs into the concept of an attorney client relationship. Other than a large amount of noticing, is there something additional I should be doing at my initial meeting with a client?

Scott McGraw
Newark, OH
Consumer bankruptcy attorney


This matter is discussed at ¶ 4.5 of King's Guide to Practice.

If your question is, are there additional things that should be done at the initial meeting with the client, to reflect requirements of being a debt relief agency, then the answer is yes.

Additional duties and tasks of a debt relief agency (which is any attorney who provides advice or services to a person, for a fee, in connection with bankruptcy - Code § 101(12A)) are described at Code §§ 526, 527, 528.

Question 10:

Any ideas on how to get started on the problem of pre-petition filing credit counseling for clients after October 17?

Salvador C. Ramirez
El Paso, Texas
Consumer bankruptcy attorney


The subject of credit counseling is treated in STEP 5 of King's Guide to Practice.

Pursuant to Code § 109(h)(2)(A), debtors will be excused from doing the credit briefing if there are no credit counseling agencies in the district that have been approved by the Office of the U.S. Trustee. So, if there are no approved agencies in the district as of Oct. 17, it appears the attorney need not concern him/herself with this requirement.

If there is an approved agency in the district, the local court clerk's office will have that information. We suggest the attorney contact that the court clerk regularly leading up to Oct. 17 to determine whether any agency has been approved. We suggest that if there is an approved agency, the attorney contact the agency as soon as possible (even before actual cases come in that are subject to the Reform Act, if possible), to determine what will be necessary to handle a credit briefing; what forms may be used, how the briefing may be done (i.e., personal consultation, group consultation, phone, or Internet), and how long the briefing must be.

The certificate that the attorney is required to file on behalf of the debtor pursuant to Code § 521(b), certifying that the credit briefing has been done and describing the services provided, is a form to be signed by the credit counseling agency. No proposed interim official form for this use has been posted on the Rule Committee page of the web site for the Judicial Conference of The United States (See http://www.uscourts.gov/rules/BK_Memo.pdf) or the Office of the United States' Trustee. However, we anticipate that such a form will be prepared for use by Oct. 17, 2005.

Question 11:

If you file a Chapter 7 prior to 10/16 and after 10/17 while in the 7 elect to convert to Chapter 13, does the new law apply to the Chapter 13?

Jeff Rosenblum
Great Neck, NY
Consumer bankruptcy attorney


We will add a comment on this question to King's Guide to Practice.

The rule that upon conversion the characterization of the case reverts back to the date the case was originally filed, has not been changed by the Reform Act. Consequently, a case filed as a chapter 7 before the effective date of the Act, which is then converted to chapter 13 after the effective date, is treated as though filed as a chapter 13 from the original filing date preceding the Act's effective date. In other words, the case would continue to be governed by pre-reform law.

This interpretation is supported by the language of the Reform Act, which states, at § 1501, "... the amendments made by this Act shall not apply with respect to cases commenced under Title 11, United States Code, before the effective date of this Act." (There are a few exceptions, such as the provisions governing the homestead exemption, which became effective upon the date of enactment of the Act).




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