Bankruptcy In Florida: Chapter 13 Two Years After Reform
By Carmen Dellutri, Attorney at Law on Oct 18, 2007 in Bankruptcy Practice and Procedure, Benefits of Bankruptcy, Chapter 13 Bankruptcy, Consumer Protection, Decisions of Interest, Florida, General Bankruptcy Information, Protecting Assets In Bankruptcy
Two years ago, Congress presented President Bush with a “new and improved” Bankruptcy Code. At that time the Bankruptcy Code did not need fixing, Congress did, and in my humble opinion, still does. For eight years, the credit card companies and the companies that finance automobiles had contributed to the congressional coffers, and they wanted results for all the money that they had contributed to their Congressmen. These creditors wanted to stop people from filing bankruptcy. They wanted to stop those individuals who abuse the bankruptcy system. They wanted people to pay more of their debts.
Well it seems that the Creditors may have bitten off a little more than they can chew, and now many of them are eating steel. Since the changes to the Bankruptcy Code, we have witnessed many issues being litigated that were not supposed to be litigated. The best example of this is the anti-cramdown provisions on automobiles. Creditors thought that by adding a provision to the bankruptcy code which says that debtors cannot cramdown their vehicles until they owned them for a minimum of 910 days, that debtors would be forced to keep their over-secured vehicles, and therefore, pay more money. Instead, our local Judge read the plain language of the statue, and he agreed with a majority of other Courts around the nation, and stated that debtors can give these cars back to the creditors in full satisfaction of the obligation, and therefore, the creditors get their cake and get to eat all of that negative financing that they created in the first place. How about that?
Another example which hits home for local individuals is the abolition of Judge Paskay’s 20% rule. Prior to the Bankruptcy Reform, Judge Paskay maintained an unwritten rule in his courtroom. He would not approve a Chapter 13 plan unless the unsecured creditors received a minimum of twenty cents on the dollar (this was not a hard and fast rule, exceptions were made). However, this rule did impose hardships on many potential debtors, and therefore, chapter 7 became a much more viable option. The BAPCPA changed all of this. Now, Judge Paskay routinely confirms chapter 13 plans with little or no distribution to the unsecured creditors. In other words, since the passage of the BAPCPA, unsecured creditors are receiving only a fraction of what they would have received if the law didn’t change. Ouch! But wait, there’s more to come in the future.
Just remember: Be careful what you ask for because you just might get it.
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