A recent Press Release from the American Bankruptcy Institute confirms that bankruptcy filings are on a downward trend. In September of 2011, a total of 110,410 noncommercial bankruptcy cases were filed in the United States. In September of this year, 87,492 noncommercial bankruptcy cases were filed, which represents a 21% decrease.
Bankruptcy filings in the Western District of Kentucky followed the national trend. In September of 2011, a total of 900 bankruptcy cases were filed in the Western District of Kentucky. In September of this year, 734 bankruptcy cases were filed, which represents an 18% decrease.
Tuesday, October 9, 2012
Tuesday, August 17, 2010
Click on the image above to see a larger version of a map demonstrating bankruptcy filings per capita by county in the United States. A Press Release from the United States Court System reports that bankruptcy filings rose 20% during the 12-month period ending June 30, 2010. A total of 1,572,597 bankruptcy cases were filed during that time period, which is the highest number of cases since 2005.
Thursday, August 12, 2010
Brock v. Branch Bank & Trust Co. (6th Cir.)
Darrohn v. Hildebrand (6th Cir.)
Debtor purchased a vehicle with financing from a Bank within 90 days of filing chapter 7 bankruptcy. Under Kentucky law, a lender perfects a security interest in a vehicle by having its lien noted on the vehicle's title. The Bank submitted the proper paperwork and fee to a county clerk to have its lien noted on the vehicle's title. However, there was a delay of almost 2 weeks between the date the Bank submitted the paperwork to the clerk and the date the lien was recorded by the clerk on the vehicle's title. The Bankruptcy Trustee moved to avoid the Bank's security interest as a preferential transfer under 11 U.S.C. Section 547. The Court determined that the Bank's perfection of its security interest did not occur until the date the lien was actually noted on the vehicle's title. Therefore, the transfer of the security interest did not fall within the 20 day "enabling loan exception" to the Trustee's avoidance powers. The troubling conclusion from this case is that a Kentucky bank may lose a lien on a vehicle during a bankruptcy proceeding as a consequence of a county clerk's delay in recording the lien on the vehicle's title.
Darrohn v. Hildebrand (6th Cir.)
Within 6 months of filing a chapter 13 bankruptcy, the Debtor lost his job. The Debtor remained unemployed for 3 months, but he secured employment before filing bankruptcy. Official Bankruptcy Form 22 attempts to calculate a debtor's disposable income for the purpose of determining a chapter 13 debt repayment plan by reviewing a debtor's average income in the 6 months prior to bankruptcy. In this case, the Debtor's disposable income calculation was inaccurate on his Form 22, because the Form did not take into consideration the Debtor's new employment which would result in future income at a higher amount than the 6 months prior to bankruptcy. The Court determined that when calculating a debtor's projected disposable income for a chapter 13 debt repayment plan, a Bankruptcy Court may consider changes in income and expenses that are not demonstrated by Form 22. The Court's decision is a good example of using substance over form.
Wednesday, August 4, 2010
A recent FBI Intelligence Assessment describes use of the bankruptcy process in foreclosure avoidance schemes. The foreclosure rescue schemes occur when spurious individuals promise to save a home from foreclosure after a mortgage default in order to extract monthly fees from desperate homeowners. The perpetrators of the fraud then file fraudulent bankruptcy petitions to delay the foreclosure and maximize monthly fees. The Assessment further reports that from 2007 to 2009, US housing inventory increased from 127 million units to 130 million units; US properties in foreclosure increased more than 120 percent; and US home prices declined each consecutive year.
Tuesday, July 27, 2010
The inaccurately named "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" mandates the United States Courts to track certain statistics. Pursuant to that mandate, the Administrative Office of the Courts recently released a Report regarding 2009 statistics for consumer bankruptcies. The Report and Statistics reveal that both the average assets and average debts listed by debtors in Kentucky are close to the lowest in the United States. Consumer bankruptcy debtors in the Western District of Kentucky listed average assets of $90,159 and average debts of $135,614. An Interactive Map created by the Administrative Office of the Courts allows easy review of the statistics for each District.
Wednesday, July 21, 2010
Prominent thoroughbred owner Stonewall Farm Stallions filed bankruptcy on June 20, 2010. In its Bankruptcy Petition, the large horse operation lists Fifth Third Bank and Harleysville National Bank among the largest creditors with debts of approximately $1,000,000.00 each. JP Morgan Chase Bank is listed with a debt of $500,000.00. An Article from BloodHorse.com indicates that Stonewall Stallions plans to sell its farm in Kentucky and move operations to Florida. A previous post outlined the financial troubles recently suffered by Stonewall Stallions. The bankruptcy is proceeding as Case No. 10-52318 in the U.S. Bankruptcy Court for the Eastern District of Kentucky.
Friday, July 16, 2010
National Union Fire Ins. Co. v. VP Buildings, Inc. (6th Cir.)
After the Debtor filed for Chapter 11, it bought insurance whereby the Debtor agreed to reimburse the insurance company for certain potential future claims. Subsequently, the Debtor filed a bankruptcy plan to liquidate, and the insurance company argued that its claim related to future reimbursement payments was entitled to administrative priority status. Typically, administrative claims receive a much higher payout than general unsecured claims. Under 11 U.S.C. Section 503(b)(1)(A), a creditor's claim must be related to an "actual" cost that is "necessary" to the "preservation" of the company in Chapter 11 in order to qualify as an administrative expense. The Sixth Circuit determined that the insurance company's claim would not be "actual" until the insurance company made the future payments and sought reimbursement, and, therefore, declined to grant the insurance company's claim administrative priority.
Menninger v. Schramm (B.A.P.)
In a case involving a Debtor's effort to exempt life insurance proceeds from trustee liquidation in a Chapter 7 case, the Court noted that life insurance contracts owned by a Debtor are exempt from creditor claims under 11 U.S.C. Section 522(d)(7) and payments to a Debtor/Beneficiary who is a dependent of the insured are exempt to the extent reasonably necessary for the support of the Debtor under 11 U.S.C. Section 522(d)(11)(C).
Cusano v. Klein (B.A.P.)
The Debtor filed three Chapter 13 cases in three years, frustrating a California creditor's collection efforts. Oddly, the creditor at issue was the rock bank KISS. After the California creditor filed a Motion to Convert to Chapter 7, the Debtor filed a Motion to Dismiss. The Bankruptcy Court dismissed the case, barred the Debtor from refiling under Chapter 13 for two years, and ordered that the automatic stay for any future case would not prohibit the California creditor's future collection efforts. The Bankruptcy Appellate Panel affirmed in finding that 11 U.S.C. Section 349(a) and 11 U.S.C. Section 105(a) provide authority to sanction bad-faith serial filers and condition dismissal of a case upon prospective relief from the Bankruptcy Code's automatic stay of collection efforts.
A Bank held a security interest in funds that were located in the Debtor's checking account. After the Debtor filed a Chapter 7 case, the Trustee asked the Debtor to turnover the funds in the account. The Debtor complied by delivering a check to the Trustee. After transfer of the funds pursuant to the check, the Trustee sought under 11 U.S.C. Section 544 to avoid the Bank's security interest in the funds. The Trustee argued that under UCC 9-332 the Bank's loss of possession and control of the collateral resulted in loss of perfection of the security interest. However, the Bankruptcy Appellate Panel determined that claims and their priority are determined as of the petition date pursuant to 11 U.S.C. Sections 502, 506 and 507, and, therefore, rejected the Trustee's argument.