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Chapter 13 Eligibility=20
It is simplistic...however...along the same vein... And a little long ...however...
The Debtor's eligibility is reviewed at the time of filing. At the time of filing, the Schedules do not offer items that are secured by law and those secured by other reasons. The second can still go to foreclosure while the unsecured, Sch E or F debt, has only the rights found in Sch E or F type debts. At the time of filing, when the estate hits the Bankruptcy court jurisdiction, the claims, according to the schedules (I guess this is a strict construction view) is Secured. Would a HOA amount be unsecured as well? How about bifurcation of claims? Was this not discussed? If items are "unsecured" like those found in eligibility standards, why do we need to take the extra step of removing it? In a Chapter 7, I dont think there is an argument of Secured versus Unsecured. There is no doubt - a undersecured second is secured and survives the discharge....What is the difference between a 109 discussion in Chapter 7 then in Chapter 13? If Congress intended for the eligibility to include "wholly unsecured secured notes", then why is there no special placement for that? This is not a recent phenomonon. It stands to reason that 109 and 506 when read together still leave the item as secured up and until it is removed. Once it is removed, then it becomes unsecured. We are taking a giant leap from at the time of filing, there is a secured amount (ie The Second Can foreclose according to State law and THEN pursue a deficiecny---where a CC can pursue immediatley after default). and once the case has been filed 30 or more days later, we can attempt tp remove the second. If its logical that the amount is unsecured why would a extra step be needed? Because clearly, it is not the same type of class or character of the unsecured debt as described for eligibility purposes. When a creditor files a claim, they file it as secured. Once it is removed, then the deficiecy is unsecured....but that is way after the time of filing. If it known to be "unsecured" why do Creditors file the claim as secured? I believe Congress intended the two type of claims. And at the time of filing , the classes of claim are accurate up and until a Court orders otherwise. So, for purposes of eligibility, there are two classes: Secured and Unsecured. Not "potentially unsecured and only unsecured in a 13"....
Again, there are different disticntions for 7, 11 and 13, but the 109 eligibility is for all. If we decided a secured is unsecured because it "looks right", then are we not just making the law up?
To: cdcbaa@yahoogroups.com
Sent: Thursday, March 19, 2009 6:42:40 AM GMT -08:00 US/Canada Pacific
Subject: [cdcbaa] Re: Chapter 13 Eligibility
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
>
Matthew D. Resnik
Attorney at Law
Simon and Resnik LLP
449 S. Beverly Drive
Suite 210
Beverly Hills, Ca
90212
T:310-788-9777
F: 310-788-0017
Matt@resniklaw.com
www.simonresnik.com
p { margin: 0; }It is simplistic...however...along the same vein...And a little long ...however...The Debtor's eligibility is reviewed at the time of filing. At the time of filing, the Schedules do not offer items that are secured by law and those secured by other reasons. The second can still go to foreclosure while the unsecured, Sch E or F debt, has only the rights found in Sch E or F type debts. At the time of filing, when the estate hits the Bankruptcy court jurisdiction, the claims, according to the schedules (I guess this is a strict construction view) is Secured. Would a HOA amount be unsecured as well? How about bifurcation of claims? Was this not discussed? If items are "unsecured" like those found in eligibility standards, why do we need to take the extra step of removing it? In a Chapter 7, I dont think there is an argument of Secured versus Unsecured. There is no doubt - a undersecured second is secured and survives the discharge....What is the difference between a 109 discussion in Chapter 7 then in Chapter 13? If Congress intended for the eligibility to include "wholly unsecured secured notes", then why is there no special placement for that? This is not a recent phenomonon. It stands to reason that 109 and 506 when read together still leave the item as secured up and until it is removed. Once it is removed, then it becomes unsecured. We are taking a giant leap from at the time of filing, there is a secured amount (ie The Second Can foreclose according to State law and THEN pursue a deficiecny---where a CC can pursue immediatley after default). and once the case has been filed 30 or more days later, we can attempt tp remove the second. If its logical that the amount is unsecured why would a extra step be needed? Because clearly, it is not the same type of class or character of the unsecured debt as described for eligibility purposes. When a creditor files a claim, they file it as secured. Once it is removed, then the deficiecy is unsecured....but that is way after the time of filing. If it known to be "unsecured" why do Creditors file the claim as secured? I believe Congress intended the two type of claims. And at the time of filing , the classes of claim are accurate up and until a Court orders otherwise. So, for purposes of eligibility, there are two classes: Secured and Unsecured. Not "potentially unsecured and only unsecured in a 13"....Again, there are different disticntions for 7, 11 and 13, but the 109 eligibility is for all. If we decided a secured is unsecured because it "looks right", then are we not just making the law up?----- Original Mesnet>To: cdcbaa@yahoogroups.comSent: Thursday, March 19, 2009 6:42:40 AM GMT -08:00 US/Canada PacificSubject: [cdcbaa] Re: Chapter 13 Eligibility
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
@yahoogroups.com, "Jon Hayes" <Jhayes@...> wrote:
>
> 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
>
-- Matthew D. ResnikAttorney at LawSimon and Resnik LLP449 S. Beverly DriveSuite 210Beverly Hills, Ca 90212T:310-788-9777F: 310-788-0017Matt@resniklaw.comwww.simonresnik.com
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