CUTTING THE KNOT WITH DEBRA VORHIES LEVINE AND BRAD SMITH

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) Pub.L , 119 Stat. 23, enacted April 20, 2005 New Bankruptcy Law Effective Date: October 17, 2005

The Effect of Marital Property on the Bankruptcy Estate Upon the filing of a bankruptcy case, all of the debtor’s property as of the date of filing the case, whatever or wherever it is, forms an estate for the benefit of creditors. 11 U.S.C. 541(a).

Exemptions and Exemption Planning Certain property is exempt from property of the bankruptcy estate and therefore immune from administration by the trustee. 11 U.S.C. § 522. Some states give the debtor a choice of using the state exemptions or the federal exemptions, while in others a debtor may only use state exemptions. There are certain requirements of domiciliary of the debtor for using a states or the federal exemptions. 11 U.S.C. 522(b)(3).

Joint Filings Two married people may commence a joint case under 11 U.S.C. § 302. This kind of case proceeds as if it were filed by one debtor. If a married couple has some joint debts and one spouse files, the other spouse will not be protected against those debts in a Chapter 7, and will only be protected during the pendency of a Chapter 13 case.

Automatic Stay 11 U.S.C. § 362 The filing of a petition immediately and automatically, without further order or proceeding operates as a stay, applicable to all entities, against all actions by creditors and other interested parties against the debtor or property of the debtor, except for limited exceptions.

Discharge, Non-Dischargeable Debts and Reaffirmations Discharge is the forgiveness of all debts of a Debtor unless they are excepted from discharge by 11 U.S.C § 523. Reaffirmation is where a debtor decides to reaffirm a debt making it non-dischargeable through the debtor’s bankruptcy discharge, limited by certain restrictions that the code designates on these agreements. Redemption is accomplished by paying the lienholder the amount of the allowed secured claim which equals the value of the collateral or the amount owed, whichever is less.

Chapters 7, 11, 12, and 13 Chapter 7 is a liquidation proceeding. (Individuals or a business may file for liquidation under Chapter 7) Chapter 11 is a reorganization (Mostly used for businesses, but is being used more for individuals in the present economy of the U.S.) Chapter 13 is a reorganization proceeding. (Only individuals may file Chapter 13s, and there are certain debt limitations for filing a Chapter 13)

Means Test and Totality of the Circumstances The means test is contained in 11 U.S.C. § 707(b).

DOMA (Defense of Marriage Act) Does the DOMA halt the filing of joint cases for same-sex couples? – It appears that the Department of Justice will no longer raise this issue. – However, they did raise it in some cases that were actual same-sex marriage states. – Thus, it is yet to be determined how they will interpret civil union couples, since they have the same rights as married couples, but do not use the same terms.