Monday, July 21, 2008

bankruptcy - exemption - objection - 30-day limit

In re Reilly - 3rd Circuit - July 21, 2008

http://www.ca3.uscourts.gov/opinarch/064290p.pdf

A Chapter 7 trustee who does not lodge a timely objection to a debtor’s claim of exemption of personal property may not move to sell the property if he later learns that the property value exceeds the amount of the claimed exemption.

Where, as here, the debtor indicates the intent to exempt her entire interest in a given property by claiming an exemption of its full value and the trustee does not object in a timely manner, the debtor is entitled to the property in its entirety.

Debtor is a cook with a one-person catering business. In her Schedule B and Schedule C, she listed "business equipment" as personal property with a value of $10,718 and claimed an exemption for the full value under 11 U.S.C. § 522(d)(6) and 11 U.S.C. § 522(d)(5).

The trustee did not object to the exemption within the 30-day period prescribed by Fed. R. Bank. P. 4003(b). He later sought an appraisal of the business equipment and determined it to have a value of approximately $17,200. He then filed a motion before the Bankruptcy Court to sell the business equipment in order to recoup the value, less the $10,718 exemption, for the bankruptcy estate. The Bankruptcy Court rejected this motion and agreed with the debtor that the property was fully exempt from the bankruptcy estate because the trustee had not filed a timely objection to the claim of exemption.

Under Fed. R. Bankr. P. 4003(b), the trustee, as a party in interest, has 30 days from the close of the creditors’ meeting under § 341(a) (or the date of filing any supplemental schedules or amendment to the exempt-property list, whichever is later) to object to any exemptions a debtor claimed on his or her Schedule C. If no objection is made, “the property claimed as exempt on [the Schedule C] is exempt.” 11 U.S.C. § 522(l).

Recognizing a split of authority of the issue, and relying primarily on Taylor v. Freeland & Kronz, 503 U.S. 638 (1992), the court rejected the trustee's argument that Rule 4003 and § 522(l) only place a 30-day limit on the trustee’s ability to object to an exemption on the ground that it was not properly taken—that there is no statutory basis for claiming the exemption—and does not control objections to property valuation.

The court said that its holding "accords with bankruptcy’s promise of a fresh start. Once the period for objection lapses, all parties involved know what property belongs to the bankruptcy estate and what remains with the debtor. The debtor can then use that property with the knowledge that it is her own and will not be subject to later liquidation for the benefit of creditors. This is not the case where the debtor claims an exemption in an amount less than the value listed on the schedules. In that circumstance, the trustee is entitled to claim for the bankruptcy estate the value of the property in excess of the exemption sought, without the need for a timely objection....But where the debtor lists a value for the property and claims an exemption in the same amount, the trustee is on notice of the debtor’s valuation and has ample time to seek confirmation that the debtor’s claimed value represents the true worth of the asset."

The trustee’s concern that the holding today will encourage gamesmanship among crafty debtors who may seek to undervalue their property with the hope of having it bypass the bankruptcy estate is answer by the fact that "there are significant protections in place for both the trustee and the bankruptcy estate....Moreover, on the facts here, there is no reason to suspect bad behavior on the part of the debtor. Indeed, it is quite to the contrary. If the trusteee discovered bad faith by the debtor, bankruptcy and criminal law allow recourse."

consumer - used cars - proposed FTC reg

http://edocket.access.gpo.gov/2008/pdf/E8-16634.pdf

SUMMARY: The FTC requests public comments on its Used Motor Vehicle Trade Regulation Rule.

DATES: Written comments relating to the Used Car Rule must be received by September 19, 2008.

I. Background
The Commission promulgated the Used Car Rule in 1984 and the Rule became effective in 1985.2 The Used Car Rule is intended primarily to prevent oral misrepresentations and unfair omissions of material facts by used car dealers concerning warranty coverage. \
To accomplish that goal, the Rule provides a uniform method for disclosing warranty information on a window sticker called the ‘‘Buyers Guide’’ that dealers are required to display on used cars. The Rule requires used car dealers to disclose on the Buyers Guide whether they are offering a used car for sale with a dealer’s warranty and, if so, the basic terms, including the duration of coverage, the percentage of total repair costs to be paid by the dealer, and the exact systems covered by the warranty.
The Rule additionally provides that the Buyers Guide disclosures are to be incorporated by reference into the sales contract, and are to govern in the event of an inconsistency between the Buyers Guide and the sales contract. The Rule requires Spanish language versions of the Buyers Guide when dealers conduct sales in Spanish.

III. Issues for Comment
The Commission requests written comment on any or all of the following questions. The Commission requests that responses to its questions be as specific as possible, including a reference to the question being answered, and reference to empirical data or other evidence wherever available and appropriate.
A. General Issues
(1) Is there a continuing need for the Rule? Why or why not?
(2) What benefits has the Rule provided to consumers? What evidence supports the asserted benefits?
(3) What modifications, if any, should be made to the Rule to increase its benefits to consumers?
0 F(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the costs the Rule imposes on businesses, and in particular on small businesses?
(c) How would these modifications affect the benefits to consumers?
(4) What impact has the Rule had on the flow of truthful information to consumers and on the flow of deceptive information to consumers?
(5) What significant costs has the Rule imposed on consumers? What evidence supports the asserted costs?
(6) What modifications, if any, should be made to the Rule to reduce the costs imposed on consumers?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the benefits provided by the Rule?
(7) How have the 1995 amendments to the Rule affected purchasers of used motor vehicles? How have the 1995 amendments to the Rule affected used motor vehicle dealers? Please provide any evidence that has become available since 1995 concerning the costs, benefits, and effectiveness of the Rule. Does this new information indicate that the Rule should be modified? If so, why, and how? If not, why not?
(8) What benefits, if any, has the Rule provided to businesses, and in particular to small businesses? What evidence supports the asserted benefits?
(9) What modifications, if any, should be made to the Rule to increase its benefits to businesses, and in particular to small businesses?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the costs the Rule impose on businesses, and in particular on small businesses?
(c) How would these modifications affect the benefits to consumers?
(10) What significant costs, including costs of compliance, has the Rule imposed on businesses, and in particular on small businesses? What evidence supports the asserted costs?
(11) What modifications, if any, should be made to the Rule to reduce the costs imposed on businesses, and in particular on small businesses?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the benefits provided by the Rule?
(12) What evidence is available concerning the degree of industry compliance with the Rule? To what extent has there been a reduction in deceptive oral representations and unfair omissions made by used car dealers concerning warranty coverage since the Rule was issued? Please provide any supporting evidence. Does this evidence indicate that the Rule should be modified? If so, why, and how? If not, why not?
(13) What modifications, if any, should be made to the Rule to account for changes in relevant technology or economic conditions? What evidence supports the proposed modifications?
(14) Does the Rule overlap or conflict with other federal, state, or local laws or regulations? If so, how?
(a) What evidence supports the asserted conflicts?
(b) With reference to the asserted conflicts, should the Rule be modified? If so, why, and how? If not, why not?

child support enforcement - medical support - federal regs

http://edocket.access.gpo.gov/2008/pdf/E8-15771.pdf

SUMMARY: This regulation revises Federal requirements for establishing and enforcing medical support obligations in Child Support Enforcement (CSE) program cases receiving services under title IV–D of the Social Security Act (the Act).

The changes: require that all support orders in the IV–D program address medical support; redefine reasonable-cost health insurance; require health insurance to be accessible, as defined by the State; and make conforming changes to the Federal interstate, substantialcompliance audit, and State selfassessment requirements.

DATES: Effective Date: This regulation is effective July 21, 2008.

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