"Two important wins for NCBRC and NACBA"

"The last few days have seen two important appellate decisions where the National Consumer Bankruptcy Rights Center (NCBRC) represented NACBA as an amicus curiae. These decisions reinforce the importance of our amicus efforts to all NACBA members and their clients.

In In re Cranmer, 2012 U.S. App. LEXIS 22141 (10th Cir., October 24, 2012) the Tenth Circuit accepted NACBA's arguments that benefits under the Social Security Act should not be considered projected disposable income for purposes of section 1325(b) in determining whether to confirm a chapter 13 plan. The court also rejected the chapter 13 trustee's argument that failing to devote such benefits to the plan is bad faith, and held that it cannot be bad faith to propose a plan using the formula specifically provided by the statute. The court's decision closely tracked the amicus brief filed by NCBRC on NACBA's behalf, which was written by Geoff Walsh of the National Consumer Law Center.

Two days later, the Third Circuit, in In re Michael, 2012 U.S. App. LEXIS 22244 (3d Cir., October 26, 2012) ruled for the debtor on the issue of whether the chapter 13 trustee had to turn over to the debtor funds that the trustee was holding when the debtor converted from chapter 13 to chapter 7 after confirmation of the plan. Rejecting the trustee's position, which was supported by an amicus brief filed by all the chapter 13 trustees in the circuit, the court held that the trustee could not distribute the funds to creditors. The court reasoned that the conversion ended the chapter 13 trustee's services and vacated the order confirming the plan. It also found that the legislative history of section 348(f) supported the conclusion that Congress did not intend for the debtor to have the disincentive to filing chapter 13 that would be caused by the risk that filing a chapter 13 case could cause the loss of postpetition property if the debtor later had to convert to chapter 7. NACBA's brief was written by Irv Ackelsberg, who also was permitted to argue on NACBA's behalf in the court of appeals.


Henry Sommer, Chair, NACBA's Amicus Committee"