SOME KEY BANKRUPTCY BASICS... 1. MEANS TEST FOR CHAPTER 7 The Trustee or any creditor can bring a motion to dismiss under §707(b) if the debtor’s income is greater than the state median income. Abuse is presumed if the debtor’s currently monthly income (as determined by an average of the previous 6 months) less secured payments divided by 60, less priority debts divided by 60, less the allowed expenses permitted by the IRS, less certain other allowed expenses, is greater than $100 per month of a Chapter 13 plan. Debtors who meet this new standard would be shifted to 5 year repayment plan in Chapter 13. If a debtor’s income falls below the state median, the court may still find abuse but the creditors do not have the standing to file the motion. In determining whether the median threshold has been reached, the law looks at the number of people in the debtor’s household (which the census bureau defines to be all the people occupying a dwelling unit) compared to census figures adjusted by the CPI. The presumption of abuse may only be rebutted by demonstrating “special circumstances that justify additional expenses or adjustments of current monthly income.” 2. MANDATORY CREDIT COUNSELING / DEBTOR EDUCATION No individual may be a debtor under title 11 unless they have, within 180 days prior to filing, received credit counseling from an “approved nonprofit budget and credit counseling agency”, either in an individual or group briefing. Said counseling agencies are to be approved by the U.S. Trustee. The court may not grant a Chapter 13 discharge unless the debtor has completed an education course in personal financial management as approved by the U.S. Trustee. A debtor can be denied discharge under §727 if the debtor fails to complete the course. 3. AUTO LIENS IN CHAPTER 13 A Chapter 13 plan must provide that a secured creditor retain its lien until the payment of the entire debt, not just the secured portion, where the creditor holds a security interest in a motor vehicle purchased within 910 days of the filing. 4. SCOPE OF DISCHARGE Debts owed to a single creditor totaling more than $500 for luxury goods incurred within 90 days of filing are presumed non-dischargeable; cash advances of $750 within 70 days are similarly treated. 5. SERIAL FILINGS (Chapter 20) A discharge will not be granted in Chapter 13 if the debtor obtained a discharge in Chapter 7, 11 or 12 within the 4 years prior to the date of filing of the pending case, or in a Chapter 13 case filed within 2 years of the pending case. This provision, though, does not prevent the debtor from filing a Chapter 13 case, and receiving the benefits of the stay, including the ability to cure arrearages on secured claims over a period of time. 6. TIME BETWEEN DISCHARGE(S) Chapter 7 Debtor cannot receive a discharge if a prior discharge was received within 8 years (rather than 6) of the new filing. 7. REAFFIRMATIONS Section 524 now contains extensive new disclosures, detailing the rights that the debtor has and specifying the amount of debt reaffirmed, rates of interest, when payments will begin, filing requirements with the court, the right to rescind, a certification that the agreement does not impose an undue hardship on the debtor. Such agreements are presumed to create a hardship if the debtor’s expenses including the reaffirmed debt exceed income. If there is such a presumption, the debtor must explain to the court why it can, nevertheless still afford to satisfy the debt (but no such requirement applies if the reaffirmed debt is owed to a credit union. The disclosure requirements are satisfies if “given in good faith.” A creditor can accept payments under a non-compliant reaffirmation as long as the creditor “believes in good faith” that the agreement is effective. 8. AUTOMATIC STAY LIMITATIONS The new law limits the application of the stay or provides that it does not go into effect, in certain circumstances, where there are serial filings under circumstances that would indicate bad faith or abusive filings. The stay terminates after 30 days if there is a filing by an individual in Chapter 7, 11 or 13 within 1 year after the prior case (under any Chapter) was dismissed (except for a case refiled in another chapter after a dismissal of a Chapter 7 case based on the means test). A party in interest (including the debtor) may move to extend the stay and show that the filing is in good faith.   CALL US FOR HELP.  WORKING TOGETHER, WE CAN WORK THROUGH YOUR LEGAL PROBLEMS. Questions?  Use our e-mail link We welcome inquiries, but cannot guarantee e-mail will be received or answered, so clients, parties, and counsel should not use e-mail to communicate with us regarding actual files or cases: please restrict such communications to regular mail, facsimile, or telephone.	U.S. Bankruptcy Court, E.D. United States Courthouse Milwaukee, Wisconsin 9. NOTICE TO CREDITORS Notice to be given by a debtor to creditors must be to the address designated by the creditor, either in communications to the debtor or by the creditors preferred address as provided to the court. Such notice to creditors must include account numbers. 10. DURATION OF CHAPTER 13 PLANS If the Chapter 13 debtor’s income is greater than the state median income, the plan proposed must be for 5 years. On the anniversary date of a confirmed plan, a debtor must file a new statement of income and expenses. 11. DOCUMENT FILING REQUIREMENTS/DISMISSAL: In addition to the list of creditors, schedules of assets liabilities, income and expenses, debtors must also provide: -certificate of credit counseling -evidence of payment from employers 60 days before filing, a statement of monthly net income and any anticipated increase in income of expenses after filing -tax returns or transcripts for the most recent tax year -tax returns filed during the case including tax returns for prior years that had not been filed -a photo ID and Social Security card, among other items. Failure to provide the documents within 45 days after the petition has been filed (with a possibility of a 45-day extension) results in automatic dismissal of the case after the time period has passed. 12. ATTORNEY VERIFICATION Attorneys must make “reasonable inquiry to verify that the information contained” in petitions and schedules are “well grounded in fact.” “The signature of an attorney on the petition shall constitute a certification that the attorney has no knowledge after an inquiry that the information in the schedules filed with such petitions is incorrect” 13. DEBTOR STATEMENT OF ITENT Debtor must perform §521 statement of intent as to secured property within 30 days after the date set for the first creditors meeting. Failure to either redeem the property of reaffirm the debt within 45 days after the §341 meeting results in termination of the automatic stay (as noted above) and allows the creditor to exercise whatever remedies it has under applicable non-bankruptcy law, subject to a request by the trustee to extend the stay upon providing adequate protection to the creditor. 14. DOMESTIC SUPPORT OBLIGATIONS Support obligations are a first priority, but the administrative costs of a trustee are paid ahead of the support costs to the extent that the trustee is administering assets that can be used to pay support costs. To the extent such support claims have been assigned to or are directly recoverable by a governmental entity, such claims are subordinated to the support of claims that are not assigned. The stay does not apply to the payment of a domestic support obligation from property that is not property of the estate or to the enforcement of a wage withholding order under a judicial or administrative order, or statute, including obligations accruing from both before and after the filing. Failure to remain current on support claims is grounds for conversion or dismissal of a case, the debtor must be current on post petitions obligations in order to confirm a plan, the plan must provide for priority payment or support debts (with a limited cramdown available for claims assigned to or owed directly to a governmental unit), and the debtor may not obtain a discharge unless such obligations are paid in accordance with the terms of the plan. 15. CHAPTER 13 SUPERDISCHARGE Debts for trust fund taxes, taxes for which returns were never filed or filed late (within two years of the petition date), taxes for which the debtor made a fraudulent return or evaded taxes; fraud and false statements under §523(a)(2), unscheduled debt under §523(a)(3), defalcation by a fiduciary under §523(a)(4), domestic support payments, student loans, drunk driving injuries, criminal restitution and fines and civil restitutions or damages rewarded for willful or malicious personal actions causing personal injury or death are now excepted from discharge. 16. TAX RETURNS MANDATORY The Debtor must provide a copy of their latest tax return or a transcript at least 7 days before the meeting of creditors or the case “shall” be dismissed. Said information must also be provided to any creditor who requests. All tax returns must be filed for a plan to be confirmed in Chapter 13. The debtor must file all returns from 4 years prior to the Chapter13 filing. 17. STUDENT LOANS Student loan nondischargeability is extended to for profit and non-governmental entities; however, student loan payments can be included in Chapter 13 plans. CASPER LAW OFFICE BANKRUPTCY ATTORNEY SERVICES EXTEND TO CLIENTS THROUGHOUT THE EASTERN DISTRICT OF WISCONSIN INCLUDING THE CITIES OF FOND DU LAC, WAUPUN, RIPON, GREEN LAKE, OSHKOSH, NEENAH-MENASHA, APPLETON, WEST BEND, CAMPBELLSPORT, PLYMOUTH, SHEBOYGAN, MANITOWOC, and CHILTON.