Contested Matters

June 2014 Newsletter

Contested Matters
Whenever there is an actual dispute, other than an adversary proceeding, before the bankruptcy court, the litigation to resolve that dispute is a contested matter. For example, the filing of an objection to a proof of claim, to a claim of exemption, or to a disclosure statement creates a dispute that is a contested matter. Even when an objection is not formally required, there may be a dispute. If a party in interest opposes the amount of compensation sought by a professional, there is a dispute that is a contested matter.
Adversary proceedings and contested matters are methods of handling disputes that may arise during a bankruptcy case. An adversary proceeding is basically a civil trial within the context of a bankruptcy case. It is initiated by a complaint, requires a filing fee, and follows rules much like the Federal Rules of Civil Procedure. Contested matters are more informal. Motions initiate contested matters, and most do not require a filing fee. The Bankruptcy Rules establish the types of disputes that fall into each category. Contested matters include objections to sales of the debtor’s property. Alternative dispute resolution is also available in some bankruptcy courts.
In a contested matter in a case under the Bankruptcy Code relief is to be requested by motion. Reasonable notice and opportunity for hearing is to be afforded the party against whom relief is sought. No response is required unless the court orders an answer to a motion.

Chapter 12 Hardship Discharge

May 2014 Newsletter

Chapter 12 Hardship Discharge
A family farmer may be excused from completing payments under a plan of reorganization if payments under the plan are not completed due to circumstances for which the family farmer cannot be held accountable and other statutory criteria have been met..
Grant of Discharge of All Unsecured Debts in Plan
The bankruptcy court may grant the debtor a discharge of all unsecured debts provided for in the plan or disallowed by the court, with the exception of those types of debts which are excepted from discharge, if the court finds that such circumstances exist and that unsecured creditors already have received at least what they would have received if the debtor’s estate had been liquidated under Chapter 7 of the Bankruptcy Code.
Illness that Precludes Employment may Serve as Basis for Discharge
Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a discharge. This type of discharge is often referred to as a “hardship discharge.” A Chapter 12 hardship discharge may only be granted if the unsecured creditors have received at least as much as they would have received through a Chapter 7 liquidation and if modification of the plan is not feasible.