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Amendments to U.S. Bankruptcy Code Effective April 1, 2019

Written by Gary Elmer of Ciardi, Ciardi, & Astin Law Firm

Posted July 8, 2019

Section 104(a) of the Federal Bankruptcy Code provides for automatic adjustments to certain dollar amounts in the Bankruptcy Code every three years. (11 U.S.C. § 104(a)).  The automatic adjustments will affect seven Official Bankruptcy Forms which contain adjusted dollar amounts, the Instructions for Individual and Non-Individual Debtors, two Director’s Forms which include dollar amounts, and one set of instructions for a Director’s Form which includes a dollar amount.  The most recent adjustments took effect on April 1, 2019, and apply to all cases commenced on or after that date.

In addition, the United States Bankruptcy Court for the Southern District of California has published for feedback two CSD forms and created a new form related to the pre-confirmation process in Chapter 13 cases.  They are the CSD 1330 Pre-Confirmation Modification form, CSD 1170 Notice of Modified Chapter 13 Plan Filed Before Confirmation, and a new CSD 1331 Notice of Pre-Confirmation Modification form.   The forms were presented for comment through April 5, 2019.  The Official Forms, Director’s Forms, and instructions impacted can be accessed through this link.

Below is a summary of a few of the adjustments.

Section 104(a) of the Federal Bankruptcy Code provides for automatic adjustments to certain dollar amounts in the Bankruptcy Code every three years. (11 U.S.C. § 104(a)).  The most recent adjustments took effect on April 1, 2019, and apply to all cases commenced on or after that date. Below is a summary of a number of the adjustments.

Adjustments Related to Debtors

Small Business Debtor – A small business debtor must have aggregate noncontingent liquidated secured and unsecured debt as of the petition that are not more than $2,725,625 (increased from $2,566,050).

Chapter 13 Debtor – A person must have noncontingent, liquidated, unsecured debts of less than $419,275 (increased from $394,725) and noncontingent, liquidated, secured debts of less than $1,257,850 (increased from $1,184,200).

Involuntary Chapter 7 or 11 Petition – The minimum aggregate claims needed to commence an involuntary chapter 7 or 11 petitions is $16,750 (up from $15,775).

Means Test – The court shall presume abuse exists if the debtor’s current monthly income (less certain deductions) and multiplied by 60 is greater than (a) the lesser of 25% of the debtor’s nonpriority unsecured claims or $8,175 (increased from $7,700) or (b) $13,650 (increased from $12,850).  In addition, the maximum monthly education expense for each dependent student (line 29) changed to $170.83.

Federal Exemptions- Many of the federal exemption amounts have increased, including the homestead, wildcard, individual retirement account, and household items exemptions.  This affects not only the federal bankruptcy exemption under 11 U.S.C. § 522, but also the exemption amounts for states that tie their exemption amounts to the federal amounts, including California.

Exemption §522(d)

Current

New

Homestead (1)

$23,675

$25,150

Motor Vehicle (2)

$3,775

$4,000

Household (3)

$600 (per item)
$12,625 (total)

$625
$13,400

Jewelry (4)                  

$1,600  

$1,700

Wildcard (5)                

$1,250
$11,850 (homestead carryover)

$1,325
$12,575

Trade (6)                     

$2,375

$2,525

Life Insurance (8)       

$12,625

$13,400

Personal Injury (11)(D)     

$23,675

$25,150

 Pensions/IRA  $1,283,025  $1,362,800

Adjustments Related to Preferences

Minimum Amount of Suit – The minimum dollar thresholds for preference claims brought against a creditor in a bankruptcy case where the debtor has primarily non-consumer debts has increased to $6,825 (from $6,425).

“Home town” lawsuits – Legal proceedings brought by a trustee or debtor to recover a consumer debt of less than $20,450 (increased from $19,250) or to recover a non-consumer debt of less than $13,650 (increased from $12,850) should be filed in the defendant’s home-town federal district or bankruptcy court.

Claims

Administrative Priority for Deposits – A claim arising from the pre-petition deposit of money in connection with the purchase, lease, or rental of property or the purchase of services for the personal, family, or household use of such individuals, that were not delivered or provided is entitled to administrative priority up to $3,025 (increased from $2,850).

Click here for a chart showing the affected sections of the Bankruptcy Code and Title 28 with the current and adjusted dollar amount in those sections.

   

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