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Chapter 13 Eligibility
Peter,
I like this except that 506 does not require a hearing or determination that I know of and that corresponds with "the determination from the debtor's schedules." If the debtor says the second is unsecured in his schedules - by use of schedule D - and no one objects and the schedules are "filed in good faith," the unsecured portion is an allowed unsecured claim per 506(a) - right? Now - that is a meaningless result since 506(a) can never have any utility when the collateral is the home.
Likewise, Dave Tilem's comment that 506(a) does not apply when the colalteral is the residence is also not true. 1322 says you cannot modify the rights of the secured creditor in the plan.
That may be the hook though. We could agree that 506(a) is "in play" when considering 109(e) but just not on consentual liens on homes. That way we are not going against the bulk of the reported cases. Judge, 506(a) may technically apply to homes but there is no circumstances when 506(a) would be used because of 1322 and Nobleman so it is not part of the 109(e) analysis meaning you look to common language when looking at 109(e).
We're making progress. Jon
>
> How about court should not presume conclusion of the successful application of 506 to the claim as of the filing date re 109 petition date eligibility because 506 requires a valuation hearing on the collateral. Leaving the 109 determination openafter thepetition date goes against a uniform reading of the bankruptcy code and the result is utter against the sound public policy in favor of cost-efficient debtor access to the court as well as judicial effecient administration favoring Chapter 13 over Chapter 11.
>
> --- On Wed, 3/18/09, Jon Hayes wrote:
>
> Subject: [cdcbaa] Chapter 13 Eligibility
> To: cdcbaa@yahoogroups.com
> Date: Wednesday, March 18, 2009, 7:59 PM
>
>
>
>
>
>
> Folks,
> I am working on a brief for Judge Tighe on whether my chapter 13 debtor qualifies for chapter 13 after the Lam motion is granted (or even before based on the schedules). The cases are brutally against us. Judge Tighe made it clear in court that she is going to rule in a written opinion that the unsecured portion of the secured debt per 506(a) counts as of the petition date (presumably without a Lam motion) and makes the debtor ineligible for ch 13.
> We need to do some thinking outside the box to be corney about it.
> There is one 9th cir case - Scovis and one 9th cir BAP case - Soderland - both against us. In both cases the BK court ruled the debtor was eligible and was reversed. We can distinguish Scovis sort of by saying it is a judgment lien but Soderlund was a deed of trust.
> The other circuit cases - Day - 1984 - a/r was basically worthless so debt was unsecured; Miller - 1990 - 8th cir was an unsecured 2nd; Balbus - 91 - 4th cir. are big time agin us us. Only Edmonston - 88 ED CA and Morton - 84 - EDNY are with us.
> So we need to do some thinking to get Tighe to ignore Scovis and Soderlund which I think she really wants to do.
> I have done a little research on the history of ch 13 but found nothing helpful so far.
> One thought I have is: Who cares? The consequence of not being eligible is that the debtor will have to convert to chapter 11 - ch 11 works exactly the same as 13 (at 10x the costs) except that creditors get to vote and there has to be a consenting class. Why would Congress have wanted to force people to do what they can do at 10x the cost. I have to think how to pooh pooh away the consenting class and right to vote.
> Anyway, I have read Lou Esbin's brief and have changed my mind again. If 109(e) and 506(a) are read together, you never get to state law and when the lien is actually avoided. (I expect to get a howler from Lou on this). If 506(a) should be ignored, you look to state law for the meaning of "unsecured debt" since it is not defined in the code and Lou is right. But 506(a) applies in chapter 13s - right - and the unsecured portion for 109(e) is determined by the schedules - right? No further hearings are required unless bad faith blah blah.
> Anyone have thoughts? Something new - "Judge, you gotta ignore 506(a) because the civilized world is a goner? because Obama would ignore it? because x% of the cases something or the other?
> The cases are against us. We need to tell a reason why the debtor should be allowed to proceed.
> Jon
>
The post was migrated from Yahoo.
Normally I would agree that 506 applies in Chapter 13, but remember that it
does NOT apply with respect to the debtor's principal residence. Can you
use that?
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Jon Hayes
Sent: Wednesday, March 18, 2009 7:59 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] Chapter 13 Eligibility
Folks,
I am working on a brief for Judge Tighe on whether my chapter 13 debtor
qualifies for chapter 13 after the Lam motion is granted (or even before
based on the schedules). The cases are brutally against us. Judge Tighe made
it clear in court that she is going to rule in a written opinion that the
unsecured portion of the secured debt per 506(a) counts as of the petition
date (presumably without a Lam motion) and makes the debtor ineligible for
ch 13.
We need to do some thinking outside the box to be corney about it.
There is one 9th cir case - Scovis and one 9th cir BAP case - Soderland -
both against us. In both cases the BK court ruled the debtor was eligible
and was reversed. We can distinguish Scovis sort of by saying it is a
judgment lien but Soderlund was a deed of trust.
The other circuit cases - Day - 1984 - a/r was basically worthless so debt
was unsecured; Miller - 1990 - 8th cir was an unsecured 2nd; Balbus - 91 -
4th cir. are big time agin us us. Only Edmonston - 88 ED CA and Morton - 84
- EDNY are with us.
So we need to do some thinking to get Tighe to ignore Scovis and Soderlund
which I think she really wants to do.
I have done a little research on the history of ch 13 but found nothing
helpful so far.
One thought I have is: Who cares? The consequence of not being eligible is
that the debtor will have to convert to chapter 11 - ch 11 works exactly the
same as 13 (at 10x the costs) except that creditors get to vote and there
has to be a consenting class. Why would Congress have wanted to force people
to do what they can do at 10x the cost. I have to think how to pooh pooh
away the consenting class and right to vote.
Anyway, I have read Lou Esbin's brief and have changed my mind again. If
109(e) and 506(a) are read together, you never get to state law and when the
lien is actually avoided. (I expect to get a howler from Lou on this). If
506(a) should be ignored, you look to state law for the meaning of
"unsecured debt" since it is not defined in the code and Lou is right. But
506(a) applies in chapter 13s - right - and the unsecured portion for 109(e)
is determined by the schedules - right? No further hearings are required
unless bad faith blah blah.
Anyone have thoughts? Something new - "Judge, you gotta ignore 506(a)
because the civilized world is a goner? because Obama would ignore it?
because x% of the cases something or the other?
The cases are against us. We need to tell a reason why the debtor should be
allowed to proceed.
Jon
Message
Normally I would agree that
506 applies in Chapter 13, but remember that it does NOT apply with respect to
the debtor's principal residence. Can you use that?
David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.
What Peter said.
Are there other areas of the law where a subsequent ruling of law impacts a
precondition that was already satisfied? Even if there are, allowing it
here goes against the plain language, common sense and public policy.
Hale
_____
The post was migrated from Yahoo.
Also, Soderlund is not binding on the bankruptcy court. While it may be an unwritten policy for bankruptcy judges to follow BAP decision, the decision is simply wrong topresume the conclusionof a postpetition 506 motion not yet decided and is certainlynotgood lawbecause it causes aninequitable and inefficient result in this economic climate not foreseen by the BAP.
Regarding Scovis a judgment lien is of an entirely differnt character from a consentual lien. The debtor and creditor agree to a trust deed securing a note to real property and the secured nature is undisputed. Judgment liens are inheritantly frought with validconcernsregarding potential inequitable distribution of the estate propertyandusuallyinvovle
The post was migrated from Yahoo.
How about court should not presume conclusion of the successful application of 506 to the claim as of the filing date re 109 petition date eligibility because 506 requires a valuation hearing on the collateral. Leaving the 109 determination openafter thepetition date goes against a uniform reading of the bankruptcy code and the result is utter against the sound public policy in favor of cost-efficient debtor access to the court as well as judicial effecient administration favoring Chapter 13 over Chapter 11.
The post was migrated from Yahoo.
Jon,
If you are to look to the Schedules, the wholly undersecured creditor is listed in Schedule D (secured debt), with the difference between the amount of the claim divided between the secured and unsecured columns in Schedule D. So, strict construction of looking to the schedules confirms that the debt is secured until the underlying debt obligation is discharged. If the debt was listed in Schedule F, the analysis would be different. In Scovis, the debt is listed in Schedule D, but because the homestead exemption is automatic and the lien is avoidable as a matter of law upon the date of filing, the lien in Scovis is unsecured as of the date of filing. The same cannot be said of the consensual lien arising from a deed of trust. Again, it is state law that is considered in both instances.
Lou
>
> Folks,
> I am working on a brief for Judge Tighe on whether my chapter 13 debtor qualifies for chapter 13 after the Lam motion is granted (or even before based on the schedules). The cases are brutally against us. Judge Tighe made it clear in court that she is going to rule in a written opinion that the unsecured portion of the secured debt per 506(a) counts as of the petition date (presumably without a Lam motion) and makes the debtor ineligible for ch 13.
> We need to do some thinking outside the box to be corney about it.
> There is one 9th cir case - Scovis and one 9th cir BAP case - Soderland - both against us. In both cases the BK court ruled the debtor was eligible and was reversed. We can distinguish Scovis sort of by saying it is a judgment lien but Soderlund was a deed of trust.
> The other circuit cases - Day - 1984 - a/r was basically worthless so debt was unsecured; Miller - 1990 - 8th cir was an unsecured 2nd; Balbus - 91 - 4th cir. are big time agin us us. Only Edmonston - 88 ED CA and Morton - 84 - EDNY are with us.
> So we need to do some thinking to get Tighe to ignore Scovis and Soderlund which I think she really wants to do.
> I have done a little research on the history of ch 13 but found nothing helpful so far.
> One thought I have is: Who cares? The consequence of not being eligible is that the debtor will have to convert to chapter 11 - ch 11 works exactly the same as 13 (at 10x the costs) except that creditors get to vote and there has to be a consenting class. Why would Congress have wanted to force people to do what they can do at 10x the cost. I have to think how to pooh pooh away the consenting class and right to vote.
> Anyway, I have read Lou Esbin's brief and have changed my mind again. If 109(e) and 506(a) are read together, you never get to state law and when the lien is actually avoided. (I expect to get a howler from Lou on this). If 506(a) should be ignored, you look to state law for the meaning of "unsecured debt" since it is not defined in the code and Lou is right. But 506(a) applies in chapter 13s - right - and the unsecured portion for 109(e) is determined by the schedules - right? No further hearings are required unless bad faith blah blah.
> Anyone have thoughts? Something new - "Judge, you gotta ignore 506(a) because the civilized world is a goner? because Obama would ignore it? because x% of the cases something or the other?
> The cases are against us. We need to tell a reason why the debtor should be allowed to proceed.
> Jon
>
The post was migrated from Yahoo.
Folks,
I am working on a brief for Judge Tighe on whether my chapter 13 debtor qualifies for chapter 13 after the Lam motion is granted (or even before based on the schedules). The cases are brutally against us. Judge Tighe made it clear in court that she is going to rule in a written opinion that the unsecured portion of the secured debt per 506(a) counts as of the petition date (presumably without a Lam motion) and makes the debtor ineligible for ch 13.
We need to do some thinking outside the box to be corney about it.
There is one 9th cir case - Scovis and one 9th cir BAP case - Soderland - both against us. In both cases the BK court ruled the debtor was eligible and was reversed. We can distinguish Scovis sort of by saying it is a judgment lien but Soderlund was a deed of trust.
The other circuit cases - Day - 1984 - a/r was basically worthless so debt was unsecured; Miller - 1990 - 8th cir was an unsecured 2nd; Balbus - 91 - 4th cir. are big time agin us us. Only Edmonston - 88 ED CA and Morton - 84 - EDNY are with us.
So we need to do some thinking to get Tighe to ignore Scovis and Soderlund which I think she really wants to do.
I have done a little research on the history of ch 13 but found nothing helpful so far.
One thought I have is: Who cares? The consequence of not being eligible is that the debtor will have to convert to chapter 11 - ch 11 works exactly the same as 13 (at 10x the costs) except that creditors get to vote and there has to be a consenting class. Why would Congress have wanted to force people to do what they can do at 10x the cost. I have to think how to pooh pooh away the consenting class and right to vote.
Anyway, I have read Lou Esbin's brief and have changed my mind again. If 109(e) and 506(a) are read together, you never get to state law and when the lien is actually avoided. (I expect to get a howler from Lou on this). If 506(a) should be ignored, you look to state law for the meaning of "unsecured debt" since it is not defined in the code and Lou is right. But 506(a) applies in chapter 13s - right - and the unsecured portion for 109(e) is determined by the schedules - right? No further hearings are required unless bad faith blah blah.
Anyone have thoughts? Something new - "Judge, you gotta ignore 506(a) because the civilized world is a goner? because Obama would ignore it? because x% of the cases something or the other?
The cases are against us. We need to tell a reason why the debtor should be allowed to proceed.
Jon
The post was migrated from Yahoo.