March 2013

31 Mar What’s Baseball Got to Do with Bankruptcy?

Batter Hitting Baseball NATIONAL LEAGUE CHAPTER 13 TRUSTEES vs. AMERICAN LEAGUE CHAPTER 13 DEBTORS

The Basic Rules of Baseball Bankruptcy by Jan Hamilton, Chapter 13 Trustee

Sections 544, 545, 547, 548 and 549 of the Bankruptcy Code grant “strong arm” powers to bankruptcy trustees, but not specifically to debtors. These statutes permit trustees to seek set aside of certain transfers, including preferential payments and fraudulent conveyances. Long-standing disputes continue over whether these strong arm powers are available to the chapter 13 trustee, the debtor, both or neither. The precise statutory language in chapters 7, 11, 12, and 13 contribute to judicial polarity. Chapter 13 bears some similarities to chapter 11 and even more so to its stepchild chapter 12, although they are not the same. The chapter 13 trustee and debtor are given certain mandates not wholly inconsistent with the duties of the trustee and debtor in the other applicable chapters. One must start with the proposition that the actual phrase “debtor in possession” is never used in chapter 13, while chapter 12 specifically provides for “removal of debtor in possession” in § 1204. § 1101 states the “debtor in possession” is the debtor. §1306, however, does provide that “the debtor shall remain in possession of all property of the estate,” unless otherwise provided for in the order confirming plan. As is demonstrated, although this dichotomy is at the center of the interpretive dispute, it is not determinative, as other statutes bearing on the issue are not wholly consistent with one another. “All players on a team shall wear uniforms identical in color, trim and style." 1.11(a)(1), Official Major League Baseball Rules. When considering the role of the chapter 13 trustee, it is often difficult to determine which color uniform she is wearing. Is it the uniform of a chapter 7 trustee? The debtor? For what team is she playing? The statutory language ostensibly establishing the scheme for chapter 13’s is not particularly helpful in this regard.
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28 Mar Should I Reaffirm My Mortgage After Filing For Bankruptcy?

White House PictureAs a bankruptcy attorney, I get asked many questions each and every day about debt and mortgages. Should I reaffirm my mortgage after I file for bankruptcy?The answer is always - NO. Now, this question has started coming in a different format? Clients who filed for bankruptcy protection years ago are asking: Why didn't I sign a reaffirmation agreement? My mortgage company is telling me that you didn't file the correct paperwork, and it goes on and on. This is where I usually have to take a few minutes to explain why I can give this advice without reservation. Let's start with what a reaffirmation agreement is and what it is not. My Colleague, Karen Oakes, answered this question in a prior post. Basically, the filing of a bankruptcy kills most contracts; including car purchases and home purchases. Once the contract is dead, the secured creditor may retrieve its collateral but cannot go after the debtor for any deficiency if the collateral was sold for less than what was owed.
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