Bankruptcy Basics: The ABCs of Filing Chapter 13

348 Pages·2012·2.87 MB·English

Bankruptcy Basics: The
ABCs of Filing Chapter 13
Cosponsored by the Debtor-Creditor Section
Friday, June 15, 2012
8:30 a.m.–4:30 p.m.
Oregon State Bar Center
Tigard, Oregon
7.25 General CLE or Practical Skills credits
BAnkruPTCy BASiCS: ThE ABCS OF FiLinG ChAPTEr 13
SECTiOn PLAnnErS
The honorable Frank r. Alley, iii, U.S. Bankruptcy Court, District of Oregon, Eugene
Ann k. Chapman, Vanden Bos & Chapman LLP, Portland
Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland
Wayne Godare, Chapter 13 Trustee, Portland
OrEGOn STATE BAr DEBTOr-CrEDiTOr SECTiOn EXECuTiVE COMMiTTEE
Tara J. Schleicher, Chair
Susan S. Ford, Chair-Elect
Patrick W. Wade, Past Chair
M. Caroline Cantrell, Treasurer
David W. Hercher, Secretary
The Honorable Frank R. Alley
E. Clarke Balcom
Christopher N. Coyle
Wayne Godare
Keith D. Karnes
Justin D. Leonard
Howard J. Newman
Karen M. Oakes
Thomas M. Orr
Milly Whatley
The materials and forms in this manual are published by the Oregon State Bar exclusively for the use of attorneys.
Neither the Oregon State Bar nor the contributors make either express or implied warranties in regard to the use of the
materials and/or forms. Each attorney must depend on his or her own knowledge of the law and expertise in the use
or modification of these materials.
Copyright © 2012
OREGON STATE BAR
16037 SW Upper Boones Ferry Road
P.O. Box 231935
Tigard, OR 97281-1935
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TABLE OF COnTEnTS
Schedule .............................................................................v
Faculty ................................ ..............................................vii
1. Chapter 13: Case Objectives and Applicable Law ................................. 1–i
— Ann k. Chapman, Vanden Bos & Chapman LLP, Portland, Oregon
— Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland, Oregon
2. Chapter 13: Drafting a Chapter 13 Plan from Theory to Practice—Dealing with
Typical Scenarios .............................................................. 2–i
— Ann k. Chapman, Vanden Bos & Chapman LLP, Portland, Oregon
— Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland, Oregon
3. Chapter 13 Trustee’s Office ..................................................... 3–i
— Wayne Godare, Chapter 13 Trustee, Portland, Oregon
4A. Chapter 13: The Creditor’s Perspective ..........................................4A–i
— Stephen T. Tweet, Albert & Tweet LLP, Salem, Oregon
4B. Confirmation and the Order Confirming Plan ................................... 4B–i
— Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland, Oregon
5. Chapter 13: Confirmation to Completion ......................................... 5–i
— Ann k. Chapman, Vanden Bos & Chapman LLP, Portland, Oregon
— Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland, Oregon
— Jordan S. hantman, Office of the Chapter 13 Trustee, Portland, Oregon
6. Chapter 13 Potpourri .......................................................... 6–i
— Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland, Oregon
— Jordan S. hantman, Office of the Chapter 13 Trustee, Portland, Oregon
7. Putting it All Together: Chapter 13 hypotheticals ................................. 7–i
— Douglas r. ricks, Vanden Bos & Chapman LLP, Portland, Oregon
— Ann k. Chapman, Vanden Bos & Chapman LLP, Portland, Oregon
8. 11 u.S.C. Chapter 13—Adjustment of Debts of an individual with regular
income ................ ................................................ ....... 8–i
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SChEDuLE
7:30 registration
8:30 Chapter 13: Case Objectives and Applicable Law
F Why debtors file Chapter 13
F Legal framework and requirements
F Law regarding secured creditors
The honorable Frank r. Alley, iii, U.S. Bankruptcy Court, District of Oregon, Eugene
Ann k. Chapman, Vanden Bos & Chapman LLP, Portland
Wayne Godare, Chapter 13 Trustee, Portland
9:15 Drafting a Chapter 13 Plan: From Theory to Practice
F Basic drafting requirements
F Trustee’s common drafting errors
F Drafting common scenarios
The honorable Frank r. Alley, iii, U.S. Bankruptcy Court, District of Oregon, Eugene
Ann k. Chapman, Vanden Bos & Chapman LLP, Portland
Wayne Godare, Chapter 13 Trustee, Portland
keith D. karnes, Cascade Pacific Lawyers, Salem
10:15 Break
10:30 Drafting a Chapter 13 Plan (Continued)
11:00 Checking the Plan Against Confirmation requirements
F Trustee’s plan analysis
F Utilizing Trustee’s liquidation analysis and feasibility programs
F Ensuring plan compliance with applicable commitment period
F Drafting complete Chapter 13 plans
Wayne Godare, Chapter 13 Trustee, Portland
Jordan S. hantman, Office of the Chapter 13 Trustee, Portland
12:15 Lunch
1:00 Filing to Confirmation
F Defending the plan through confirmation
F Objections to confirmation
F Responses
F Contested confirmation proceedings
F Lien avoidance
The honorable Frank r. Alley, iii, U.S. Bankruptcy Court, District of Oregon, Eugene
Wayne Godare, Chapter 13 Trustee, Portland
keith D. karnes, Cascade Pacific Lawyers, Salem
Stephen T. Tweet, Albert & Tweet LLP, Salem
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SChEDuLE (Continued)
2:30 Break
2:45 Confirmation to Completion
F Treatment of tax refunds and income compliance
F Post-confirmation events
F Reviewing and objecting to claims
F Motions for relief
Ann k. Chapman, Vanden Bos & Chapman LLP, Portland
Jordan S. hantman, Office of the Chapter 13 Trustee, Portland
keith D. karnes, Cascade Pacific Lawyers, Salem
Stephen T. Tweet, Albert & Tweet LLP, Salem
3:15 Chapter 13 Potpourri
F Tax concerns in bankruptcy
F Hardship discharge
Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland
Jordan S. hantman, Office of the Chapter 13 Trustee, Portland
3:45 Putting it All Together: Chapter 13 hypotheticals
The honorable Frank r. Alley, iii, U.S. Bankruptcy Court, District of Oregon, Eugene
Ann k. Chapman, Vanden Bos & Chapman LLP, Portland
Wayne Godare, Chapter 13 Trustee, Portland
4:30 Adjourn
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FACuLTy
The honorable Frank r. Alley, iii, U.S. Bankruptcy Court, District of Oregon, Eugene. Prior to his
appointment in 1995, Judge Alley was a partner in the Medford, Oregon, firm of Fowler Alley &
McNair, where his practice emphasized commercial litigation. He is a former member of the Board
of Governors of the Oregon State Bar and the Executive Committee of the bar’s Debtor-Creditor
Section. He has taught Debtor/Creditor Relations and Bankruptcy at Willamette University School
of Law. He has served as a faculty member at the Northwest Bankruptcy Institute and in CLE
presentations for the Oregon State Bar Debtor-Creditor and Family Law Sections, the Conference
of Chief Bankruptcy Judges of the Ninth Circuit, and the Bankruptcy Section of the State Bar of
Montana.
Ann k. Chapman, Vanden Bos & Chapman LLP, Portland. Ms. Chapman practices in the areas of
bankruptcy law and commercial law. She is a member of the Credit Abuse Resistance Education
Committee (C.A.R.E.), a member and past chair of the Oregon State Bar Debtor-Creditor Section,
and a member of WOMBATS (Women Bankruptcy Attorneys). She has spoken on bankruptcy
and practice management for the Oregon State Bar, the Multnomah Bar Association, the National
Business Institute, and other professional organizations, and she has authored several articles on
professionalism and other topics.
Christopher n. Coyle, Vanden Bos & Chapman LLP, Portland. Mr. Coyle practices in the areas of
bankruptcy law, commercial litigation, and debtor/creditor issues. Prior to joining Vanden Bos &
Chapman, Mr. Coyle was a solo practitioner practicing taxation and bankruptcy law. He is admit-
ted to practice before the United States Tax Court. He is a member of the Oregon State Bar Taxation
and Debtor-Creditor sections, C.A.R.E., and the Multnomah Bar Association.
Wayne Godare, Chapter 13 Trustee, Portland. On June 1, 2010, Mr. Godare became the Chapter 13
Bankruptcy Trustee for the District of Oregon, Portland Division. He was first admitted to the
State Bar of Arizona in 1971, the Wyoming State Bar in 1983, and the Oregon State Bar in 1990. Mr.
Godare has practiced bankruptcy law exclusively since joining the Oregon State Bar.
Jordan S. hantman, Office of the Chapter 13 Trustee, Portland. Mr. Hantman is a staff attorney for
Wayne Godare, Chapter 13 Trustee. Prior to joining the Trustee’s Office, he represented both debt-
ors and creditors in consumer bankruptcy cases in Oregon.
keith D. karnes, Cascade Pacific Lawyers, Salem. Mr. Karnes practices in the areas of bankruptcy,
consumer law, foreclosure, and tax defense. He is past chair of the Oregon State Bar Consumer
Law Section and a current member of the Oregon State Bar Consumer Law and Debtor-Creditor
sections’ executive committees. He has written and lectured extensively on fair debt collection,
foreclosure defense, bankruptcy, and credit reporting. Mr. Karnes is licensed to practice in Oregon
and Washington.
Stephen T. Tweet, Albert & Tweet LLP, Salem. Mr. Tweet’s practice emphasizes business law, bank-
ruptcy, and creditors’ rights; he represents both debtors and creditors. Mr. Tweet is former secretary,
treasurer, and chair of the Oregon State Bar Debtor-Creditor Section and a former adjunct professor
of law teaching creditors’ rights at Willamette University.
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Chapter 1
ChAPTEr 13: CASE OBJECTiVES
AnD APPLiCABLE LAW
Ann K. ChApmAn
Vanden Bos & Chapman LLP
Portland, Oregon
Christopher n. Coyle
Vanden Bos & Chapman LLP
Portland, Oregon

Table of Contents
I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–1
II. Reasons to Consider Chapter 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–1
A. A Discharge with Dignity—A Debtor’s Desire to Repay the Creditors in a
Controlled Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–2
B. The Debtor Wants to Keep Nonexempt Assets . . . . . . . . . . . . . . . . . . . . . 1–2
C. The Debtor Wants to Protect a Codebtor from Creditor Actions . . . . . . . . . . . 1–3
D. The Forced “Redemption over Time” of Secured Collateral . . . . . . . . . . . . . 1–3
E. The Debtor Wants to Keep Property by Curing a Prebankruptcy Default. . . . . .1–4
F. The Debtor Needs the Chapter 13 “Super Discharge”. . . . . . . . . . . . . . . . .1–4
G. The “Chapter 20” Case (Filing Chapter 13 on the Heels of Chapter 7). . . . . . . .1–5
H. The Debtor Wants to Change Loan Terms. . . . . . . . . . . . . . . . . . . . . . . .1–6
I. The Debtor Needs to Stop Tax Collection and Pay Tax Debts over Time . . . . . . 1–7
J. Consider Dissolving a Small Corporation and Assuming All Liabilities . . . . . . 1–7
K. Stripping Wholly Unsecured Mortgages from Real Property. . . . . . . . . . . . .1–7
III. Legal Framework and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–8
A. Sources of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–8
B. Speaking Greek: Bankruptcy Shorthand . . . . . . . . . . . . . . . . . . . . . . . . 1–9
C. Conceptual Framework of Chapter 13: Composition, Pot, or Extension
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–11
D. Who May Be a Debtor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–13
E. Plan Drafting: Requirements and Optional Provisions . . . . . . . . . . . . . . . 1–14
F. Confirmation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–20
IV. Law Regarding Secured Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–23
A. Collateral Value and Cram-Down . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–23
B. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–24
C. Monthly Payments/Adequate Protection. . . . . . . . . . . . . . . . . . . . . . . 1–25
D. Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1–26
1–i
Chapter 1—Chapter 13: Case Objectives and Applicable Law
1–ii