Chapter 11: Handling the Individual Debtor Case Debtor and Creditor - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Chapter 11: Handling the Individual Debtor Case Debtor and Creditor Challenges With Post-Petition Income, Estate Property, Plan Confirmation, Payment of Attorney Fees and More TUESDAY, AUGUST 7, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Peter M. Lively, Principal, Law Office of Peter M. Lively , Culver City, Calif. M. Jonathan Hayes, Principal, Law Office of M. Jonathan Hayes , Northridge, Calif. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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5 CHAPTER 11: HANDLING THE INDIVIDUAL DEBTOR CASE AUGUST 7, 2012

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 6 I. PRE-FILING PRACTICE TIPS Chapter 13 Debt Limits [11 U.S.C. § 109(e)] A. 1. Individuals and join-debtors who owe noncontingent, liquidated, unsecured debts of less than $360,475 AND noncontingent, liquidated, secured debts of less than $1,081,400. a) When secured debt is treated as unsecured for eligibility purposes. b) What is contingent and liquidated debt? Is “disputed” debt unliquidated? Not necessarily, even if the debtor denies he owes the debt at all.

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 7 B. Getting Paid 1. Factors in determining the retainer a) Cash collateral prepetition vs postpetition cash collateral b) Source of payment after he/she goes through retainer. Non-dischargeability actions – divorces. c) d) Multiple representations creating potential or actual conflicts. [11 U.S.C. § 327] Proposed attorney cannot be a creditor of the debtor. e) Lien on the retainer? f) Payment in the budget? g) US Trustee Compliance takes a huge amount of time.

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 8 C. Exit Strategies (Determining the end game at the beginning) 1. If the goal of the bankruptcy is to save the home, the Debtor cannot modify the loans and therefore must pay. [11 U.S.C. § 1124(b)(5)] 2. Have to pay net disposable income for five years or duration of plan. [11 U.S.C. § 1129(a))(15)(B)] 3. The Debtor should make the regular monthly mortgage payments immediately even though it is not technically required. Does individual qualify as a small business? [11 U.S.C. § 101(51D)] D. E. Debtor must still obtain pre-bankruptcy credit counseling. [11 U.S.C. § 109(h)]

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 9 II. FILING THE PETITION A. First Day Motions Cash Collateral [11 U.S.C. § 363(a) and (c)(2)] 1. Rent from income properties. [11 U.S.C. § 552(b)(2)] a) b) Cash, A/R, and inventory in business cases. i. Form a corporation in advance? 2. Personal Budget 3. Wages Utilities [11 U.S.C. § 366] 4. 5. Procedure and Proceedings Collateral Valuation Motions [11 U.S.C. § 506(a)] B. Debtor’s residence - § 1123(b)(5) anti-modification on first deed. 1. 2. Non-residence C. Assumptions, Rejection, and Assignment of Executory Contracts § 365- 120 day deadline for non-residential real property leases. 1.

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 10 III. PLAN CONFIRMATION TIPS A. Disclosure Statement B. Plan Confirmation Alternatives 11 U.S.C. § 1129- Consensual Confirmation 1. a) Sections (a)(4) through (a)(6), (a)(13), and (a)(16) are generally not applicable to individual debtors. b) (a)(1)- Requires compliance with Title 11 form and content of the actual plan. Includes proper classification of claims. c) (a)(2)- Requires compliance with Title 11 activities of the plan proponent. Includes adequate disclosures. d) (a)(3)- Good Faith i. Plan must be proposed in good faith and not by any means forbidden by law.

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 11 e) (a)(7)- Liquidation Analysis i. Plan must be proposed in good faith and not by any means forbidden by law. f) (a)(8)- Acceptance i. Each impaired class must affirmatively accept the plan. What is impaired? [11 U.S.C. § 1124] ii. A class accepts if holders of more than half in number and at least two-thirds in amount vote to accept. Count only creditors who actually vote. [11 U.S.C. § 1126] g) (a)(9)- Administrative Claims i. Administrative claims must be paid cash equal to the allowed amount of such claims on the effective date of the plan, unless otherwise agreed to. ii. Priority taxes must be paid in full with interest within five years of petition date. iii. At the government interest rate- Section 511.

M. Jonathan Hayes Peter M. Lively, JD, MBA Law Office of Peter M. Lively Law Offices of M. Jonathan Hayes 9700 Reseda Boulevard, Suite 201 11268 Washington Boulevard, Suite 203 Northridge, CA 91324 Culver City, CA 90230 Telephone: (310) 391-2400 / Web: www.petermlively.com Telephone: (818) 882-5600 / Web: www.hayesbklaw.com Email: Jhayes@hayesbklaw.com Email: Peter@PeterMLively.com 12 h) (a)(10)- Acceptance by Impaired Class i. At least one impaired class must accept the plan, unless plan leaves all classes of claim unimpaired. The dreaded “consenting class”! ii. Problematic for individuals. i) (a)(11)- Feasibility i. Court must find that confirmation is not likely to be followed by the liquidation, or the need for further financial reorganization. ii. Demonstrated if Plan has a reasonable probability of success. j) (a)(12)- Requires payment of US Trustee Fees k) (a)(14)- Domestic Support Obligations i. Individual debtor must be current with all domestic support obligations that accrue postpetition.