§ 4.4     Other Sections You Should Read
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 4.4, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Most of the thousands of pages that follow discuss sections of the United States Code in Title 11 between §§ 1301 and 1330—Chapter 13. The current version of Chapter 13 is reproduced in full in Appendix R.

[2]

But of course there are sections of the Bankruptcy Code that are quite important to Chapter 13 practice that are not physically found in Chapter 13. It is not practical to here reproduce the entire Bankruptcy Code, but it is perhaps useful to call special attention to a handful of Bankruptcy Code sections not in Chapter 13 that are unusually important to Chapter 13 practice.

[3]

There are nine Code sections thumbnailed below and reproduced verbatim in Appendix R. Not coincidentally, these nine sections were either added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 or were substantially amended by BAPCPA in ways that make them worth special attention here.

[4]

Don’t be misled—there’s lots more to the Bankruptcy Code and lots more that is important about BAPCPA than just these nine sections. But at a minimum, you are going to want to read these nine sections in the original Code text because these sections are woven into the fabric of Chapter 13 in ways that cannot be avoided.

1.11 U.S.C. § 101(10A): Current monthly income (CMI). Current monthly income was a new term of art coined by BAPCPA in 2005. CMI is used as the baseline measurement of how much money a debtor has for several important purposes. As Henry Hildebrand, the Chapter 13 trustee for the Middle District of Tennessee, loves to mention, CMI is “neither current nor monthly nor income.” Section 101(10A) is a rat’s nest of poor wording and contradictory concepts that spawned an avalanche of litigation—including one and a half2 Supreme Court decisions in barely half a decade after its debut in 2005. The Advisory Committee on Bankruptcy Rules has drafted, redrafted and re-redrafted an Official Form trying to capture CMI.3 CMI is discussed in much detail as a component of the disposable income test at confirmation in Chapter 13 cases.4
2.11 U.S.C. § 101(12A): Debt relief agency (DRA). Debt Relief Agency is the insulting new moniker imposed by BAPCPA on bankruptcy attorneys and others who provide “bankruptcy assistance”5 to an “assisted person.”6 BAPCPA subjected DRAs to a labyrinth of new restrictions,7 disclosures8 and requirements.9 All bankruptcy petition preparers are DRAs.10 The intricacies of this new definition and the ill-wind that blows for bankruptcy professionals are discussed in detail elsewhere.11
3.11 U.S.C. § 101(14A): Domestic support obligation (DSO). The drafters of BAPCPA were not satisfied with the comprehensive, special treatment of alimony, maintenance and support already in the Bankruptcy Code. BAPCPA started over with a new definition of domestic support obligation in § 101(14A). This new creature was then cross-referenced by BAPCPA in many places in the Bankruptcy Code—such as priority claims,12 dischargeability13 and new conditions for confirmation of a Chapter 13 plan.14 In some respects DSO is broader than the “alimony, maintenance and support” that it replaces.15 But use of many similar words has led most courts to apply pre-BAPCPA tests to determine whether a debt is a DSO.16 Curiously, even armed with a unitary definition of DSO, the drafters of BAPCPA managed to create some inconsistencies by sloppy draftsmanship.17
4.11 U.S.C. § 342: Notice. It could have been the most important single section in BAPCPA. So far, it hasn’t turned out that way.18 Section 342 is a significant foray by Congress into the procedural world of notice in the bankruptcy courts. Described by Professor Ken Klee as “a statutory definition of due process,”19 a close look at § 34220 reveals that the lobbyists who wrote this section were clueless about the capacity of the bankruptcy system to capture and use the names and addresses that creditors prefer in bankruptcy cases. Section 342 as amended by BAPCPA is a complex and incomplete statutory definition of notice that applies in some circumstances and in some bankruptcy cases. Section 342 supplements many other notice provisions of the Bankruptcy Rules and, in some important respects, contradicts those rules.21 Time will tell whether this conceptually ambitious section realizes its potential.
5.11 U.S.C. § 362: Automatic stay. BAPCPA contained many changes to the automatic stay—most dealing with new exceptions to the stay, situations in which the stay does not arise or new circumstances that terminate the automatic stay. Repeat bankruptcy filers were addressed with new provisions that end the stay on the 30th day after a serial filing or cause no stay to arise at all.22 Some debtors with prior bankruptcy experience must ask for a not-automatic stay.23 Savvy debtors’ attorneys race creditors to confirmation in cases in which the stay terminated or never arose.24
6.11 U.S.C. § 521: Debtor’s duties. The drafters of BAPCPA used § 521 as the garbage can for new creditor-friendly provisions of the Bankruptcy Code. Section 521 is packed with new duties for debtors, including severe consequences for even minor failures to file or act on the strict new statutory schedules. BAPCPA spawned a problematic new creature in § 521(i)—“ automatic” dismissal when an individual debtor fails to file certain information.25
7.11 U.S.C. § 522: Exemptions. In their zeal to forbid debtors the large homestead exemptions available in a few states, the drafters of BAPCPA thoroughly scrambled the whole process of claiming exemptions in bankruptcy cases. There is a new domicile selection rule that bizarrely directs debtors to the exemption laws of states in which they have not resided for years and with respect to which no exemptions are available absent “extraterritorial effect.”26 In a stroke of complete misdirection, BAPCPA overruled many state laws that opt out of the federal exemption scheme when the new domiciliary rules defeat any claim of exemption.27
8.11 U.S.C. § 707: Abuse test. Despite eight years of effort, four Congresses and untold millions of dollars, the lobbyists who drafted BAPCPA failed to perfect the centerpiece of bankruptcy “reform”—the abuse test28 for access to Chapter 7.29 The calculations required by § 707(b) are immensely complicated. Incorporation of IRS standards, multiple uses of new terms of art and internally contradictory requirements of the amended section simply can’t be applied without controversy. Section 707(b) immediately became one of the most litigated sections of the Bankruptcy Code.30 Parts of the abuse test are incorporated into the disposable income test at confirmation of a Chapter 13 case under § 1325(b)—when the debtor’s current monthly income is above applicable median family income.31 In barely half a decade, the unholy interaction of the abuse test and the projected disposable income test at confirmation has twice traveled to the Supreme Court of the United States.32
9.11 U.S.C. § 1325: Confirmation of a plan. Yes, this is a trick—§ 1325 is in Chapter 13 itself, not somewhere else in the Code. But it is included here because you can’t read this section too many times. The requirements for confirmation of a Chapter 13 plan were substantially changed and complicated by BAPCPA. There are now two good-faith requirements.33 The treatment of secured claims was fundamentally perverted by new debt alchemy—a 910-day purchase money security interest in an automobile, with respect to which § 506 of the Bankruptcy Code “shall not apply.”34 For Chapter 13 debtors with CMI greater than applicable median family income, BAPCPA incomprehensively incorporated parts of the abuse test from § 707(b) with startling consequences for wealthier debtors.35 The 2005 amendments to § 1325 sentenced Chapter 13 debtors, creditors and their lawyers to what will certainly be decades of mostly worthless litigation.

 

 

 

 


 

1  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

2  The one is Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010), a decision dealing directly with CMI as a component of the projected disposable income test in § 1325(b). See § 92.3  Current Monthly Income: The Baseline. The half is Ransom v. FIA Card Services, N.A., 562 U.S. 61, 131 S. Ct. 716, 178 L. Ed. 2d 603 (Jan. 11, 2011), which plays off the ball in Lanning to discuss projected disposable income after the CMI component is determined. See § 95.3  Local Standards: Housing and Transportation.

 

3  See Official Forms 122C-1 and 122C-2, discussed in § 36.19  Form 122C-1: Statement of Current Monthly Income, § 36.20  Form 122C-1: Commitment Period Calculation and § 36.21  Form 122C-2: Disposable Income Calculation.

 

4  See § 92.3  Current Monthly Income: The Baseline.

 

5  See 11 U.S.C. § 101(4A).

 

6  See 11 U.S.C. § 101(3).

 

7  See 11 U.S.C. § 526.

 

8  See 11 U.S.C. § 527.

 

9  See 11 U.S.C. § 528.

 

10  See § 4.2  Bankruptcy Petition Preparers.

 

11  See § 4.1  WARNING! You Are a Debt Relief Agency.

 

12  See 11 U.S.C. § 507(a)(1), discussed in § 73.3  Priority Claims Added or Changed by BAPCPA.

 

13  See 11 U.S.C. § 523(a)(5), discussed in § 159.5  Domestic Support Obligations: § 523(a)(5).

 

14  See 11 U.S.C. § 1325(a)(8), discussed in § 113.3  Domestic Support Obligations Must Be Current.

 

15  See § 57.5  Domestic Support Obligations: Preconfirmation Rights after BAPCPA and § 73.3  Priority Claims Added or Changed by BAPCPA.

 

16  See § 136.21  Domestic Support Obligations after BAPCPA and § 159.5  Domestic Support Obligations: § 523(a)(5).

 

17  See § 113.3  Domestic Support Obligations Must Be Current.

 

18  See § 4.3  Section 342: Notice What Didn’t Happen.

 

19  This was an offhand but typically bull’s-eye comment by Professor Klee at an ALI-ABA seminar on BAPCPA in San Francisco, August 11, 2005. I have his permission to “make whatever [I] can” of his comment.

 

20  See § 4.3  Section 342: Notice What Didn’t Happen.

 

21  See § 4.3  Section 342: Notice What Didn’t Happen.

 

22  See 11 U.S.C. § 362(c)(3), discussed in § 60.1  When Does § 362(c)(3) Apply?.

 

23  See § 61.2  Procedure, Timing and Form for Imposing Stay.

 

24  See § 120.5  Effects of Confirmation after BAPCPA.

 

25  See 11 U.S.C. § 521(i), discussed in § 42.2  Consequences of Failure to File Required Information, Including “Automatic Dismissal”.

 

26  See § 48.6  Domicile Rules after BAPCPA.

 

27  See hanging sentence after 11 U.S.C. § 522(b)(3)(C), discussed in § 48.6  Domicile Rules after BAPCPA.

 

28  The abuse test in § 707(b) has been called the “means test” by so many lobbyists and others that the name seems to have stuck. The test in § 707(b) actually determines whether Chapter 7 relief would be an abuse. The word “means” is associated with this test only once in 11 U.S.C. § 707(b)(2)(D).

 

29  11 U.S.C. § 707(b) applies in part at confirmation of some Chapter 13 cases through the disposable income test in § 1325(b). See § 94.1  Big Picture: Too Many Issues, § 94.2  Netting Issues, Including Exclusion of Payments for Debts, § 94.3  Accounting for Spouses, § 95.1  In General, § 95.2  National Standards, § 95.3  Local Standards: Housing and Transportation, § 95.4  Other [Necessary] Expenses—In General; All Categories, § 95.5  Other [Necessary] Expenses—Accounting and Legal Fees, § 95.6  Other [Necessary] Expenses—Charitable Contributions, § 95.7  Other [Necessary] Expenses—Child Care, § 95.8  Other [Necessary] Expenses—Court-Ordered Payments, § 95.9  Other [Necessary] Expenses—Dependent Care, § 95.10  Other [Necessary] Expenses—Education, § 95.11  Other [Necessary] Expenses—Health Care, § 95.12  Other [Necessary] Expenses—Involuntary Deductions, § 95.13  Other [Necessary] Expenses—Life Insurance, § 95.14  Other [Necessary] Expenses—Secured or Legally Perfected Debts, § 95.15  Other [Necessary] Expenses—Unsecured Debts, § 95.16  Other [Necessary] Expenses—Taxes, § 95.17  Other [Necessary] Expenses—Optional Telephones and Services, § 95.18  Other [Necessary] Expenses—Student Loans, § 95.19  Other [Necessary] Expenses—Internet Provider/E-mail, § 95.20  Other [Necessary] Expenses—Repayment of Loans to Pay Federal Taxes, § 95.21  Health and Disability Insurance, § 95.22  Family Violence Expenses, § 95.23  Five Percent More Food and Clothing, § 95.24  Elderly, Ill or Disabled, § 95.25  Administrative Expenses, Sorta, § 95.26  Education Expenses, § 95.27  Home Energy Costs, § 95.28  ABLE Program Contributions, § 96.1  Average Monthly Payments on Account of Secured Debts, § 97.1  Total Priority Debts and Divide by 60 and § 98.1  Additional Expenses or Adjustments to CMI.

 

30  See § 94.1  Big Picture: Too Many Issues, § 94.2  Netting Issues, Including Exclusion of Payments for Debts, § 94.3  Accounting for Spouses, § 95.1  In General, § 95.2  National Standards, § 95.3  Local Standards: Housing and Transportation, § 95.4  Other [Necessary] Expenses—In General; All Categories, § 95.5  Other [Necessary] Expenses—Accounting and Legal Fees, § 95.6  Other [Necessary] Expenses—Charitable Contributions, § 95.7  Other [Necessary] Expenses—Child Care, § 95.8  Other [Necessary] Expenses—Court-Ordered Payments, § 95.9  Other [Necessary] Expenses—Dependent Care, § 95.10  Other [Necessary] Expenses—Education, § 95.11  Other [Necessary] Expenses—Health Care, § 95.12  Other [Necessary] Expenses—Involuntary Deductions, § 95.13  Other [Necessary] Expenses—Life Insurance, § 95.14  Other [Necessary] Expenses—Secured or Legally Perfected Debts, § 95.15  Other [Necessary] Expenses—Unsecured Debts, § 95.16  Other [Necessary] Expenses—Taxes, § 95.17  Other [Necessary] Expenses—Optional Telephones and Services, § 95.18  Other [Necessary] Expenses—Student Loans, § 95.19  Other [Necessary] Expenses—Internet Provider/E-mail, § 95.20  Other [Necessary] Expenses—Repayment of Loans to Pay Federal Taxes, § 95.21  Health and Disability Insurance, § 95.22  Family Violence Expenses, § 95.23  Five Percent More Food and Clothing, § 95.24  Elderly, Ill or Disabled, § 95.25  Administrative Expenses, Sorta, § 95.26  Education Expenses, § 95.27  Home Energy Costs, § 95.28  ABLE Program Contributions, § 96.1  Average Monthly Payments on Account of Secured Debts, § 97.1  Total Priority Debts and Divide by 60 and § 98.1  Additional Expenses or Adjustments to CMI.

 

31  See § 94.1  Big Picture: Too Many Issues.

 

32  See Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010); Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 131 S. Ct. 716, 178 L. Ed. 2d 603 (Jan. 11, 2011), discussed in § 92.2  Projected Disposable Income: All Debtors and § 92.3  Current Monthly Income: The Baseline.

 

33  See 11 U.S.C. § 1325(a)(3) and (a)(7), discussed in § 110.1  Good-Faith Filing Requirement after BAPCPA and § 110.2  Good-Faith Plans after BAPCPA.

 

34  See hanging sentence at the end of 11 U.S.C. § 1325(a), discussed in § 75.1  In General: Modification Without § 506.

 

35  See § 94.1  Big Picture: Too Many Issues, § 94.2  Netting Issues, Including Exclusion of Payments for Debts, § 94.3  Accounting for Spouses, § 95.1  In General, § 95.2  National Standards, § 95.3  Local Standards: Housing and Transportation, § 95.4  Other [Necessary] Expenses—In General; All Categories, § 95.5  Other [Necessary] Expenses—Accounting and Legal Fees, § 95.6  Other [Necessary] Expenses—Charitable Contributions, § 95.7  Other [Necessary] Expenses—Child Care, § 95.8  Other [Necessary] Expenses—Court-Ordered Payments, § 95.9  Other [Necessary] Expenses—Dependent Care, § 95.10  Other [Necessary] Expenses—Education, § 95.11  Other [Necessary] Expenses—Health Care, § 95.12  Other [Necessary] Expenses—Involuntary Deductions, § 95.13  Other [Necessary] Expenses—Life Insurance, § 95.14  Other [Necessary] Expenses—Secured or Legally Perfected Debts, § 95.15  Other [Necessary] Expenses—Unsecured Debts, § 95.16  Other [Necessary] Expenses—Taxes, § 95.17  Other [Necessary] Expenses—Optional Telephones and Services, § 95.18  Other [Necessary] Expenses—Student Loans, § 95.19  Other [Necessary] Expenses—Internet Provider/E-mail, § 95.20  Other [Necessary] Expenses—Repayment of Loans to Pay Federal Taxes, § 95.21  Health and Disability Insurance, § 95.22  Family Violence Expenses, § 95.23  Five Percent More Food and Clothing, § 95.24  Elderly, Ill or Disabled, § 95.25  Administrative Expenses, Sorta, § 95.26  Education Expenses, § 95.27  Home Energy Costs, § 95.28  ABLE Program Contributions, § 96.1  Average Monthly Payments on Account of Secured Debts, § 97.1  Total Priority Debts and Divide by 60 and § 98.1  Additional Expenses or Adjustments to CMI.