Kansas Bankruptcy Court Proposes Local Rules Changes

Amendments to the local rules of practice and procedure are proposed by the U.S. Bankruptcy Court for the District of Kansas about post-confirmation recovery of assets by the chapter 13 trustee, proof of insurance on motor vehicles, required information for attorney signatures on pleadings, and cases commenced by foreign representatives.

The Court is soliciting written comments on the proposed local rules until December 1, 2008.  Comments may be sent to the Clerk of the U.S. Bankruptcy Court, 444 SE Quincy, Topeka, KS 66683, or at the clerk’s office in the Wichita and Kansas City, KS, divisions.

Click here to download a redlined copy of the proposed revisions.  Minutes of the Bench and Bar Committee, which recommends the proposed changes, can be found here on the court’s website.

Strict Deadlines Apply to Discharge Challenges

Section 704(b) requires that the U.S. Trustee file a statement of abuse within 10 days after the date of the first meeting of creditors and a motion to dismiss for abuse within 30 days after filing the statement. Judge Julie A. Robinson of the Kansas District Court on appeal affirmed the Bankruptcy Court’s ruling that the U.S. Trustee cannot manipulate and extend these deadlines by continuing the meeting of creditors to later date–the first meeting is the first meeting. When the U.S. Trustee filed its statement of abuse after a continued meeting of creditors, weeks after the “first” meeting, the Courts agreed that the statement and subsequent motion to dismiss were untimely, and Debtor’s chapter 7 discharge was allowed to stand.

In re Close, Case No. 07-2076-JAR, Bankruptcy case No. 06-20195-7, Turner UST v Close.

Consider Chapter 13

Considerchapter13.com is a new web site launched by the National Association of Chapter 13 Trustees Academy for Consumer Bankruptcy Education. The site contains information for consumers and bankruptcy attorneys by the Chapter 13 trustees who belong to the NACTT.

As always with any information on the internet, you should ask questions and discuss specific issues with your own bankruptcy attorney.  Chapter 13 bankruptcy practice varies widely from trustee to trustee and judge to judge around the country.

Bailout No Help for Kansas Home Borrowers

Legislation that would have allowed for bankruptcy court-supervised loan modifications in some limited circumstances, sometimes called lien stripping, was stripped from the Wall Street bailout bill in Congress this weekend after protests from the mortgage bankers.  The Center for Responsible Lending had predicted that the proposed legislation would have resulted in 3,587 fewer Kansas homes lost in foreclosure and $96 million in home values and tax base saved. [Read more…]

New Mortgage Payment Rule Clarified

New Standing Rule 08-01 for ongoing mortgage payments through the 13 trustee in Kansas applies to all chapter 13 banrkuptcy cases filed on or after October 1, 2008.  Debtors in cases filed earlier will not be subjected to the new rule even if they subsequently become delinquent on their home mortgage payments.

The Hon. Janice Miller Karlin, U.S. Bankruptcy Judge for the District of Kansas, Topeka Division, issued the following statement last week after polling all the Kansas bankruptcy judges: [Read more…]

New Address for KCK Chapter 13 Payments

Effective October 1, 2008, all chapter 13 payments to William H. Griffin Trustee must be mailed to PO Box 613106, Memphis TN 38101.

Payments to Griffin, the standing chapter 13 bankruptcy trustee for cases filed in Kansas City, Kansas, will no longer be accepted in person at Griffin’s office in Fairway, at meetings of creditors or at court hearings.  All payments must be mailed to the Memphis lock box.

Griffin is not moving his office.  He is changing banks to Suntrust Bank.


New Rule: Chapter 13 Mortgage Payments Through Trustee

The Kansas Bankruptcy Court adopted a new rule requiring chapter 13 debtors behind on mortgage debts when the bankruptcy case is filed to be paid through the trustee.  The rule goes into effect for cases filed on or after October 1, 2008.

Proponents of the new rule say the chapter 13 trustee records will aid the court in protecting debtors from charges for inappropriate fees and from false allegations of nonpayments.  Opponents of the new rule object to the chapter 13 fee (up to 10%) added to the to the mortgage payments, creating additional financial hardship for debtors.

Kansas City Software Firm Hired for Largest U.S. Bankruptcy

The Kansas City, Kansas, computer software company used by one Topeka chapter 7 bankruptcy trustee was chosen this week to manage claims for Lehman Brothers Holdings Inc., the largest bankruptcy case in U.S. history.

Epiq Systems Inc., develops software to manage bankruptcy cases.  It has experience with large chapter 11 bankruptcy cases including World Com and Enron and national class action cases.

Kansas Bankruptcy Court Unveils New, Improved Website

The U.S. Bankruptcy Court for the District of Kansas unveiled today a new and improved website at www.ksb.uscourts.gov. Improvements will continue to be made by court personnel for the near future including a RSS feed.

Topeka Debtors Allowed Means Test Deduction for Cars With No Liens

EDITOR UPDATE:  This post is out of date.  Judge Karlin reverted to her original ruling in In re Law after the Pearson decision was vacated.  This issue is currently pending the the U.S. Court for the Tenth Circuit  so we should have a binding ruling soon.  December 13, 2009.

Topeka Bankruptcy Judge Janice Miller Karlin announced last week that she is reversing course and will follow the Pearson decision to allow debtors a means test deduction for ownership of a car without a debt against it.

Judge Karlin had earlier disallowed the car ownership deduction in In re Law, 2008 WL 1867971 (Bankr. D. Kan. 2008), following the decision by Kansas District Court Judge John W. Lungstrum in Wieland v. Thomas, 382 B.R. 793 (D. Kan. March 4, 2008), reversing Judge Robert D. Berger of Kansas City, KS, in In re Thomas, 2007 WL 2903201 (Bankr. D. Kan. Oct. 02, 2007). [Read more…]

Bankruptcy Income Guidelines to Increase Slightly October 1

It will be a little easier to qualify for bankruptcy relief when the income guidelines used for eligibility increase slightly on October 1.  A single Kansas earner will be able to make $894 more per year and qualify for chapter 7 bankruptcy relief.  A family of four will be allowed a $2036 more income per year in Kansas.

Here are the “means test” figures now in effect and the figures approved by the U.S. Trustee for bankruptcy cases file on October 1, 2008, or after.

  • 1 earner                       $38,594      $39,488
  • 2-person families    $52,989      $54,070
  • 3-person families    $58,075      $60,906
  • 4-person families    $69.831      $71,867
  • 5-person families    $76,731      $78,767
  • 6-person families    $83,631      $85,667
  • add $6,900 for each additional person [Read more…]

New Standing Order 08-02

The U.S. Bankruptcy Court for the District of Kansas issued Standing Order 08-02 eliminating the requirement of notice to creditors by the chapter 13 trustee in certain circumstances.  Here is the text of the order:

Notice to all creditors of post-confirmation motions to modify plan, which notice is required by Fed. R. Bankr. P. 3015(g), is waived when the motion is filed by a Chapter 13 Trustee, and the sole purpose of the motion to modify plan is to recover an asset that Debtor has been ordered to repay to the estate, but which he/she has not repaid. The only notice required will be to the Debtor and Debtor’s Attorney. This Standing Order will expire March 17, 2009.

33 Don’ts Before Filing Bankruptcy

There are lots of do’s and don’ts when you file a consumer bankruptcy case. Recently, my NACBA colleagues across the country brainstormed to come up with a short list of don’ts for people thinking about filing for bankruptcy.

Violating these, and many other do’s and don’ts, can cause you to lose property and get you into big trouble when you file for bankruptcy. If you make a mistake, even an innocent mistake, your attorney might not be able to reverse what you have done.

The best advice is not to act on your own – discuss what you want to do with your bankruptcy attorney first. You and your attorney should make your bankruptcy game plan together.

Here is the list compiled by my colleague, Jonathan Becker, of Lawrence, Kansas: [Read more…]

Kansas Exemptions Not Extra Territorial

DEBTOR GETS FEDERAL EXEMPTIONS IF MISSOURI RESIDENT IS
ENTITLED TO KANSAS EXEMPTIONS AS OF DATE OF FILING
In re Fabert, Case No. 06-21539
January 2008, Judge Somers
For purposes of 522(b), debtor who was a Missouri resident as of date of filing but was
entitled to Kansas exemptions is entitled to federal exemptions under 522(d). Trustee
argued debtor could not claim federal exemptions because Kansas an opt out state. The
decision hold, also, that Kansas exemptions are not extra territorial.

10% Home Mortgages Under Water

Here is a scary statistic for 2007 being reported by ABC News: 10% of American homeowners owe more money on their house than the house is worth. That figure has doubled from 5% in 2006.

For homes purchased in the past two years, the figure shoots up to an alarming 30%, according to Reuters. These are the highest numbers of homes under water since the Great Depression of 1929.

Eight million families are in danger of losing their homes due to mortgages that are greater than the value of the homes. See what fellow blogger, Gene Melchionne, has to say on the Mortgage Law Network about what this means for all Americans, particularly retirement funds.

Wichita Car Dealer Convicted of Bankruptcy Fraud – Facing 5 Years in Jail

A Wichita car dealer who gave money to relatives before filing his bankruptcy case and lied on his bankruptcy paperwork was convicted of federal crimes this week and faces possible jail time for his fraud.

Evidence at trial proved he gave money to his wife and his brother prior to filing his bankruptcy case and he lied on his paperwork. He falsely said he had no bank accounts and he had made no transfers of money to relatives nor closed any bank accounts. He also charged $125,000 on credit cards within a year of filing the bankruptcy petition for airline tickets, jewelry and other goods. [Read more…]

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