Is Bankruptcy The Same Everywhere? Part 2

01 Jul Is Bankruptcy The Same Everywhere? Part 2

One year ago, I posted a blog on this website discussing some of the ways that the bankruptcy law was applied differently in different locations throughout the country. In that blog I discussed the fact that states had vastly different exemption laws, and that in some states a debtor in bankruptcy could protect an unlimited amount of equity in their residence, while in others, they could protect as little as $10,000.

I also discussed the fact that bankruptcy courts have interpreted the new Bankruptcy law (BAPCPA) in very different and sometimes opposite ways. An example I cited was whether or not you could “cram down” a vehicle purchased in the past 2 1/2 years if there was a negative trade in on the new vehicle. Some courts say yes, and some say no. Both of these disparities continue to exist, but there have been several other areas where courts continue to conflict over the interpretation of provisions in the current bankruptcy law.

Some of the current major disparities include the following issues:

*Do you have to prove actual damages to recover from a creditor who willfully violates the automatic stay?
*On the means test, can a debtor without an actual car payment deduct the standard amount for vehicle ownership?
*On the means test, can a debtor whose intent is to surrender collateral still take the deduction for that secured debt?
*Can the repayment of a 401(k) loan be considered a special circumstance?
*What are the requirements for a creditor to withstand an objection to their proof of claim?
*Does failure to file the credit counseling certificate mandate the dismissal of the bankruptcy case?
*In a Chapter 7, does funding a retirement plan demonstrate abuse?
*In a Chapter 13, is surrender of security in full satisfaction of the entire debt permitted?
*How is “projected disposable income” determined?
*How is the “applicable commitment period” determined?
*Can an above median debtor get an early discharge?
*What determines a debtor’s household size?
*Does the means test apply to debtors who convert from Chapter 13 to Chapter 7?

The fact that your bankruptcy issues may be resolved very differently than the same issue for a debtor in another location (or before a different judge) is another reason you need to be sure that your bankruptcy lawyer is very aware of what the judge in your case is likely to rule on the issues in your case. It is also important for your attorney to be up to date on what other judges have decided, so s/he can push the envelope in your case and get the best result possible for you.

A year ago I asked the question…is it fair that a debtor in one place gets a better deal in their bankruptcy than a debtor in another place? The answer is still no.

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Peter Orville is a bankruptcy lawyer in Binghamton, located in the Southern Tier of New York. He is a member and New York co-chair of the National Association of Consumer Bankruptcy Attorneys.
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