June 2015

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On June 11, 2016, Governor Bentley (Alabama) signed into law ACT No. 2015-484 which became effective that same day. The law increases the personal property exemption available to individual debtors and surviving spouses to $7,500 and the homestead exemption to $15,000. These amounts will be adjusted every three years to reflect the change in the consumer price index.

The 1978 Bankruptcy Code was hailed as a comprehensive bankruptcy overhaul, designed, in part, to eliminate the uncertainty as to which matters could be handled by a bankruptcy referee depending on the outcome of a summary versus plenary analysis. The new system empowered bankruptcy judges to handle all bankruptcy matters, but it did not take long for the Supreme Court to wreak havoc on Congress’ new scheme. In Northern Pipeline Construction Co. v Marathon Pipe Line Co., 458 U.S. 50 (1982), the Supreme Court held that Congress violated Article III of the constitution when it gave Article I bankruptcy judges the power to hear cases that should only be heard by Article III judges. Since the Northern Pipeline ruling, Congress, litigants and courts have been attempting to understand the limits on the authority vested in bankruptcy judges. After 33 years, the Supreme Court may have offered definition in the recently decided Wellness International Networks, LTD, et al v Sharif 575 U.S. ____ (2015). (more…)

On June 1, 2015, the United States Supreme Court issued a unanimous ruling resolving a split amongst circuit courts in which the 11th circuit was the singular minority, addressing the permissibility of “lien-stripping” in chapter 7 bankruptcy cases. In Bank of America, N.A. v. Caulkett, U.S. Supreme Court, Case No. 13-1421 (2015) the Supreme Court reversed the 11th Circuit, holding that the majority of circuit courts were correct in concluding that a chapter 7 debtor cannot avoid junior liens on real property under 11 U.S.C. ยง 506(d). (more…)