Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.


Author: Craig Andresen, Minneapolis, MN, Bankruptcy Attorney

05 Apr Chapter 7’s Section 707(b) Applies Even When Converting from Chapter 13, Appeals Court Says

A federal appeals court has added its voice to the growing number of cases which hold that a debtor who converts a chapter 13 case to chapter 7 is still subject tosection 707(b)'sincome eligibilty standards for filing chapter 7. Left unanswered, however, is the question of what time period must used for the means test's six month look-back period for calculating income: is it the six months prior to filing the chapter 13 case, or the six months prior to converting to chapter 7? In this consolidated appeal oftwo Iowa and Minnesota cases, In re Chapman and In re Cruse, Nos. 10-6046 and 10-6047 (8th Cir. BAP Mar. 11, 2011), the debtors had filed chapter 13 after the 2005 Bankruptcy Reform Act. After changes in circumstances, they converted their chapter 13 cases to chapter 7, asking for a discharge of their debts prior to completion of their chapter 13 plans. The U.S. Trustee objected to their chapter 7 cases under bankruptcy code section 707(b). This section requires that debtors file chapter 13 rather chapter 7 if their income, as calculated under the byzantine "means test" formula, shows they can afford a payment toward their debts in chapter 13, or if their actual income and expenses show that as well.
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06 Mar Student Loan Dischargeability: Diabetic, Permanently Disabled, Blind, Prosthetic Eye, Pancreas and Kidney Transplants, But Still No “Undue Hardship”

It's no secret that federal bankruptcy courts are reluctant to grant a bankruptcy discharge of student loans based on section 523(a)(8)'s "undue hardship" standard. Indeed, courts haveusually construed the phrase "undue hardship" narrowly, rendering it difficult to discharge student loans in bankruptcy. However, in a recent Ohio case, the court went to unusual lengths in finding that the repayment of student loans would not create an undue hardship for the bankruptcy debtor. The debtor in this case, Wallace v. Educational Credit Management Corp., 2010 WL 5764771 (Bky.S.D. Ohio Dec. 1, 2010), had been diagnosed with diabetes at age nine. In 2004 he obtained a bachelor's degree in sociology, incurring student loan debt of $32,500 in doing so. He worked for one year after graduation, earning about $12,000. However, his diabetes caused him to gradually become blind and was forced to leave the workforce. The debtor'sdiabetes alsocaused him to require dialysis and even kidney and pancreas transplants. By 2008 he had a prosthetic right eye, was deemed legally blind, and was awarded social security disability in the amount of $811 per month. He had not been employed since the year he left college. He lived with his father and listed expenses of $790 per month in his chapter 7 petition. Interest of 2.875% had cause the student loan balance to increase to $38,000.
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06 Feb Means Test for Conversion to Chapter 7? Appeals Court Soon to Weigh In

When a chapter 13 bankruptcy debtor's circumstances change during the case, making it difficult for the debtor to continue making payments under the chapter 13 plan, the debtor should ask his or her lawyer about converting the case to chapter 7.North Carolinabankruptcy lawyerAdrian Lapasposted an article hererecently (February 4, 2011)explaining how converting a chapter 13 case to one under chapter 7 can solve the problem of the debtor's inability tocontinue making required chapter 13 plan payments. While converting to chapter 7 may be a powerful remedy for some chapter 13 debtors, courts are split on whether the debtor must file a Form B22A(the "means test" form) and whether the debtor must "pass" the chapter 7 means test when converting from chapter 7 to chapter 13. To date, six lower courts have ruled that the means test applies to a conversion to chapter 7. However, six other lower courts have differed and ruled that the means test does not apply to a converted chapter 7. The question whether a means test must be filed with a conversion to chapter 7 is critically important to debtors who filed chapter 13 because they could not pass the chapter 7 means test. Thankfully,a federal appeals court is set to rule on this question in the near future. On February 1, 2011, the Bankruptcy Appellate Panel, Eighth Circuit, heard oral arguments on this issue. In re Chapman/Cruse, Nos. 10-6046, 10-6047 (8th Cir. BAP).
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21 Jan Business Bankruptcy Debtor Denied a Discharge Under Section 707(a) for Ability to Pay

A Michigan bankruptcy court recently took the unusual step of denying a discharge under bankruptcy code section 707(a) to a debtor whose debts were primarly business debts, based upon the court's determination that the debtor could repay a portion of his debts in a chapter...

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