Category: Bankruptcy Information

Information about bankruptcy, the process, and some of the basics one should to be aware of

duplex apartment outhouses and homestead exemption house with knife

Duplex, ADUs, Apartments, Buildings and Calif Homestead Exemption

Posted by Hale Andrew Antico on

Duplex, ADUs, Apartments, Buildings and California Homestead Exemption

Does the California Homestead protect a separate dwelling unit?

Is a duplex or apartment protected by the California homestead exemption? What about a separate building like an ADU on the same lot. Or a very large lot. It depends.

Accessory dwelling units (or ADUs) are becoming quite common in California. The question is whether the Calif homestead is broad enough to cover ADUs.  The California homestead exemption lets someone in a bankruptcy protect some or all of the equity in their residence. What are the limits of this though?

Starting with a common scenario: if someone rents out a room in their home, is the unpartitioned house now subject to limited protection? What if it becomes partitioned?

The issue only gets more complicated from there. Debtors can live in a duplex or apartment building they own, but how extensive (or limited) is the asset protection of the homestead exemption in California?  What about a home on a (very large) lot? Two dwellings or ADUs on a lot?  Let’s take a look.

Continue reading “Duplex, ADUs, Apartments, Buildings and Calif Homestead Exemption” →

Fighting over home appreciation in a converted bankruptcy

9th Cir: Here’s who gets Asset Appreciation in Converted Bankruptcy

Posted by Hale Andrew Antico on

9th Cir: Here’s who gets Asset Appreciation in Converted Bankruptcy

Ninth Circuit rules home appreciation which accrued between Chapter 13 confirmation and conversion to Chapter 7 can be administered to repay debts, creating split from 10th Circuit

It’s not uncommon for a debtor in Chapter 13 bankruptcy to need to convert to Chapter 7 if debtor has a job loss or health problems.  In a rising real estate market, homes can appreciate between confirmation and conversion. To whom does the appreciation in equity belong? This is where debtors and Chapter 7 trustees fight fiercely over the home and its new equity.

Continue reading “9th Cir: Here’s who gets Asset Appreciation in Converted Bankruptcy” →

Bankruptcy conversion can lead to losing an asset for bad faith

Converting a Bankruptcy and Bad Faith

Posted by Hale Andrew Antico on

Converting a Bankruptcy and Bad Faith

Bankruptcy Conversion to Chapter 7 Could Risk a Postpetition Asset if Debtor Acted in Bad Faith

Summary

In Pancic v Lokan (In re Lokan), BAP No. OR-22-1249-CLB, Bk. No. 6:20-bk-62593-TMR (9th Cir. BAP 6/14/2023)(unpublished opinion), the Bankruptcy Appellate Panel for the Ninth Circuit (“BAP”) held that the chapter 13 debtors converted their case to Chapter 7 in good faith and therefore a post-petition inheritance was not property of the chapter 7 estate.

Facts

Stephen and Brenda Lokan filed a Chapter 13 bankruptcy in Oregon on November 23, 2020 with unsecured claims of approximately $100,000.  Their plan was confirmed with plan payments of $150 per month giving unsecured creditors about 10% of their claims.

Continue reading “Converting a Bankruptcy and Bad Faith” →

Surplus Income, Bankruptcy, and Nonconsumer or Business Debt Avoids the Maze of the Means Test

Nonconsumer Debt + No Means Test = Chap 7 Discharge? A Deep Dive

Posted by Hale Andrew Antico on

Nonconsumer Debt + No Means Test = Chap 7 Discharge? A Deep Dive

A Look at Surplus Income and Nonconsumer Debt, Skipping the Bankruptcy Means Test, and if the Case Law Leads to Chapter 7 Success

Does having primarily nonconsumer debt give someone a shortcut to Chapter 7 discharge? Generally, Chapter 7 is for people who can’t afford to repay debt. There’s a means test that makes someone eligible for Chapter 7. However, there appears to be a loophole that allows someone with primarily nonconsumer debt to skip the means test. Does that shortcut mean high-income debtors with primarily non-consumer debt are on easy street to Chapter 7 discharge?

The Issue: Why Nonconsumer Debt May Help Chapter 7 Discharge

Debt can be categorized as either consumer or nonconsumer. The big difference is if the debt is nonconsumer, you can skip the means test, and squeeze into Chapter 7 bankruptcy.

Continue reading “Nonconsumer Debt + No Means Test = Chap 7 Discharge? A Deep Dive” →

exceptions to bankruptcy discharge 523

Bankruptcy Discharge Exceptions of 523: Explained in Simple Terms

Posted by Hale Andrew Antico on

Bankruptcy Discharge Exceptions of 523: Explained in Simple Terms

In bankruptcy, debt is discharged unless there’s an exception that makes it nondischargeable. That’s the rule: all unsecured debt is eliminated in bankruptcy unless the exception is in Section 523 of the Bankruptcy Code. What kind of things are listed there? You can guess: recent taxes, most student loans, and so on. Here’s a look at the the bankruptcy discharge exceptions of 11 USC 523.

The statute: 11 USC 523(a)

The rule is all unsecured debt goes away in bankruptcy, and 11 USC 523(a) is the list of exceptions to the rule. In some cases, there are exceptions to the exceptions. That is, the list below is not absolute; sometimes debts in 523a can be discharged in bankruptcy.

Before launching into the long list, Section 523(a) of the Bankruptcy Code says:

A discharge under section 727, 1141, 1192 [1] 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt:

That’s the preamble. It basically says that a discharge in Chapter 7 bankruptcy, Chapter 13 bankruptcy, Chapter 11 or Chapter 12 bankruptcy doesn’t eliminate the following debts.

Continue reading “Bankruptcy Discharge Exceptions of 523: Explained in Simple Terms” →

Amending exemptions or schedules in a reopened case is not allowed in some courts

Amend Exemption in Reopened Bankruptcy? The Three Approaches

Posted by Hale Andrew Antico on

Amend Exemption in Reopened Bankruptcy? The Three Approaches

In a bankruptcy case where you already got the order of discharge and has been closed, can you go back and reopen the case to amend the exemptions to protect an asset? The answer is (say it with me): it depends.

The Scenario: Need to Reopen & and Amend Schedules

If you practice bankruptcy long enough, you know the situation. Debtor files bankruptcy, and somehow forgets that they had a cause of action and (potential) lawsuit against someone, and doesn’t disclose the potential asset.

Years later, defendant finds out about the bankruptcy, considers judicial estoppel, and for good measure, notifies the old bankruptcy trustee about the asset in the closed bankruptcy case.

Debtor then reopens the bankruptcy case, and amends the schedule of assets and exemptions and all is forgiven. No harm, no foul.

Of course, this can also happen when you want to avoid the lien of a home with no equity at the time of an old case, using Section 522(f). This would lead to the need to reopen and amend Schedule C with a de minimis amount to show that the lien is impairing an exemption.  In re Higgins, 201 BR 965 (9th Cir BAP 1996)

The Problem: Can you Amend Exemptions after a Bankruptcy is Closed?

We start with one potential issue:  Rule 1009(a) of the Federal Rules of Bankruptcy Procedures says when a case can be amended. “A voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed.”

Continue reading “Amend Exemption in Reopened Bankruptcy? The Three Approaches” →

double homestead exemption for married couple filing bankruptcy jointly

Can Married Couples Double Stack Homestead Exemptions: Explained

Posted by Hale Andrew Antico on

Can Married Couples Double Stack Homestead Exemptions: Explained

If each spouse gets a homestead exemption in bankruptcy, it could double the amount of equity protected.

If married, can you double or stack a homestead exemption?  A homestead exemption helps protect your residence when you file bankruptcy. But if a married couple files jointly, does each get an exemption? Does the homestead exemption double for each spouse? Maybe. That would allow the debtors to double or stack the homestead exemption and protect more equity.

Courts have struggled with this. On the one hand, the law means what the law says. If the statute says the limit is a number, that’s the number. On the other hand, why should a person not get same the amount as if they were single? Put differently, if the exemption amount is the same if someone single or married, a married person is only getting half the protection.

Continue reading “Can Married Couples Double Stack Homestead Exemptions: Explained” →

bankruptcy venue for is which district or circuit jurisdiction someone can file bankruptcy

Bankruptcy Venue and Where Can you File

Posted by Hale Andrew Antico on

Bankruptcy Venue and Where Can you File

Bankruptcy venue is the concept that guides where, in which specific geographic location, someone can file a Chapter 7, Chapter 11 or other bankruptcy petition.

Where? In bankruptcy court, of course! Yes, but in which location? Must it be the exact federal circuit, state, or district in which someone lives? Or is having one asset in that district enough? And what if someone lives outside the United States… can they even file bankruptcy? Is having a bank account in a district sufficient contacts to establish proper venue?

Continue reading “Bankruptcy Venue and Where Can you File” →

A converted bankruptcy case may start the objection deadline

Bankruptcy Conversion and Exemption Objection Deadlines

Posted by Hale Andrew Antico on

Bankruptcy Conversion and Exemption Objection Deadlines

Does a converted bankruptcy case restart the deadline for objections to exemptions?

A recent look at objecting to exemptions and Rule 4003 revealed a circuit split — despite the rule’s text — as to whether a bankruptcy that is filed as Chapter 11 or as Chapter 13 but then converted to Chapter 7 resets the clock for objections to exemptions.

The Issue

The FRBP rule says that the opportunity to object to exemptions is within 30 days of the 341a meeting.  But when a case is filed as a Chapter 11 or Chapter 13, the trustee and creditors are not quite as motivated to challenge exemptions as in Chapter 7, as these chapters are not about liquidation or taking nonexempt assets for the benefit of the creditors. However, when a case is then converted to Chapter 7, a trustee who is focused like a laser beam on exemptions is then appointed. However, the 341(a) meeting was already concluded months (if not years) ago and the new trustee doesn’t get a chance to object to the exemptions.

Some courts have found this to be unfair as a backdoor way around exempting assets or a violation of due process, and the courts have allowed a new deadline. Others have held true to the statute’s plain text. This has led to a split in the circuits.

Continue reading “Bankruptcy Conversion and Exemption Objection Deadlines” →

Deadline to object extended by amending exemptions or schedules

Objecting to Exemptions: Amendments and the 4003 Deadline

Posted by Hale Andrew Antico on

Objecting to Exemptions: Amendments and the 4003 Deadline

When does the 30-day deadline of Rule 4003 get restarted?

Does any amendment of schedules extend the 30-day objection deadline of Rule 4003, or only amended exemptions or assets? Another bankruptcy attorney recently saw that a creditor objected to his client’s exemptions, which creditors are allowed to do. The issue is, there’s a deadline to object to exemptions, as a rule. Creditor objected after the deadline, and debtor’s counsel asked if he was justified to seek Rule 11 sanctions.

There are exceptions that can extend or restart that objection deadline. Obviously, it would be fair that, for example, amending the exemptions on Schedule C gives an opportunity to object to the amendments and new exemptions. But what if there’s an amendment to any of the schedules?  Does amending income on Schedule I give a new opportunity to object to exemptions? Let’s take a look.

Continue reading “Objecting to Exemptions: Amendments and the 4003 Deadline” →