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Chapter 12 is Chapter 13 on ‘Steroids’

Posted by David Falvey on Sunday, April 8th, 2012 - 529 views

I had never done a Chapter 12 bankruptcy case until quite recently. Actually, I’m preparing my 3rd Chapter 12 as I write this.

Like any CT bankruptcy lawyer, attorneys, I had never handled a Chapter 12 and that’s when a farmer or fisherman files for bankruptcy. Indeed, most consumer bankruptcy really don’t know about Chapter 12. Very few can tell you what it does but I’m in Connecticut and there are very, very few Chapter 12’s.I spent many, many nights being educated in Chapter 12.

Joe Peiffer who has testified before Congress for Chapter 12 legislation, and who is the author of the Chapter 12 in Wiley Bankruptcy Review and has edited Hart’s Agricultural Law Treatise and edited fourteen chapters of Norton’s Bankruptcy Law and Practice, 2d edition dealing with Chapter 12 (farmer) bankruptcy and who is Board Certified in Business Bankruptcy, and who has represented hundreds of farmers in Chapter 12, graciously and generously returned my emails and phone calls. And Joe Hawbacker from Nebraska was an amazing resource.

Joe even sent me a compendium of cases complied on all Chapter 12 and it was very, very helpful. I read and/or skimmed every case. It was like I was taking a Law School course on Chapter 12. I have had over 30 years experience in Consumer Bankruptcy and, of course, have handled thousands of Chapter 13 cases.

And even though I had never handled a Chapter 12, my previous experience in Chapter 13 paralleled the Chapter 12 procedures, coupled with my reading and research and consultation, I was able to deliver for my client an amazing result, one that is impossible to achieve in Chapter 13.

But then I stepped back and remembered that under President Obama when he was first elected the US House passed legislation which took my breath away. The Bankruptcy Judge in Chapter 13 would have had the power to re-write a mortgage which you can do in Chapter 12.

This legislation went to the US Senate and was defeated by 4 Democrats, 2 from the South and 2 from the West. And President Obama didn’t say ‘Bo’. And this was going to be the center piece of is legislation to save people’s homes.

He was going to give to Chapter 13 the ‘powers’ of Chapter 12!! This was as revolutionary as the first passage of the bankruptcy law which allowed consumers to get out of debt in 1897. That law was passed in response to an economic crisis like today.

But President Obama didn’t say ‘Boo’ when it was defeated. He let it die. And this was the center piece, the crown jewels of his effort to help people.

He failed. He failed to speak out and use the ‘Bully Pulpit’ of the Presidency to embarrass those Democrats who defeated the bill. And Harry Reed, leader of the Democratic majority in the Senate, who wrote so glowingly of himself in the book,

‘The Good Fight’ didn’t say ‘Boo’ either And ironically, the Connecticut legislature is allowing and helping through its mediation process for banks to re-write mortgages.

What was defeated by the US Senate is being done today in Connecticut Superior Court. President Obama has been a disappointed to the ‘liberal wing’ of the Democratic Party and, indeed, he hasn’t acquitted himself well on his promise, ‘Change You Can Believe’. He did try to appoint someone worthwhile to the Federal Department of Consumer Protection but he couldn’t back Elizabeth Warren, whom Wall St. dreaded.

And that’s just who we need in government. I hope and pray and will support Elizabeth Warren in Massachusetts who is running for Ted Kennedy’s seat in the Senate because then we would have a tireless advocate for the consumer.

Sad to say, Goldman Sachs is Barack Obama’s largest campaign contributor and that explains so much about what is still happening and why Eric Holder, Attorney General, has not prosecuted under criminal charges the mortgage fraud which caused our real estate bubble and the near collapse of our financial system.

I intend to write to our Congressman and ask that the bankruptcy code be revised as proposed in the last attempt and I want to challenge President Barack Obama and the Democrats to deliver on their promise of ‘Change you Can Believe’. Indeed, their proposal in amending the bankruptcy code was breath-taking. Let’s vote to put Chapter 13 on ‘steroids’ like Chapter 12.