I saw a? story this week about things that never go on sale ;? I would have put legal filing fees on that list, and I would have been wrong.? Or sort of wrong.

Bankruptcy filing fees go up November 1.? Yes, the brokest among us must pay more for the privilege.

So, one could view it as a sale on bankruptcy cases til November 1.

Chapter 7 filing fee goes from $299 to $306.? The Chapter 13 filing fee moves from $274 to $281.

Here’s a link to the complete list of fee increases.

Image courtesy of renaisancechambara.

Car lenders who finance car loans including the excess debt on a trade in lost some of their protected status in bankruptcy when the Supreme Court declined to review a? 9th Circuit decision;? Californians? will continue to benefit from the debtor friendly decision in Penrod, arising out of a San Francisco bankruptcy case.

At issue was whether the prohibition on cramming down the debt on a vehicle purchased within 910 days of a bankruptcy filing protected “negative equity” financed in the car purchase.

“Negative equity” is the debt in excess of the trade in’s value.? That left over debt is added to the total of the new car loan and is unrelated to the value of the purchased vehicle. In Penrod, the Redwood City resident? had traded in a car worth $6,000? on which she owed? $13,000.? The new car loan included $7000 necessary to pay off the debt on the trade in.

The legal issue is whether that left over debt should enjoy the projections extended car sellers in BAPCPA for purchase money loans on the debtor’s car.

Every other circuit that addressed the question has given purchase money protection to the entire debt including the negative equity portion of the new loan. The 9th Circuit held the negative equity was not purchase money as to the current car and remanded the case for the bankruptcy court to figure out how to apportion the payments made before bankruptcy between the purchase money element and the leftover debt element.

It’s surprising to me that SCOTUS didn’t accept cert on Penrod, since there is clearly a split among the circuits and it seems? to this California bankruptcy lawyer that the Supremes take great pleasure in overturning the 9th Circuit.

But I’ll take a victory however it presents itself and await a decision on how to calculate what can be trimmed from a debtor’s car loan in bankruptcy.

Image ? ArchMen – Fotolia.com

In the Mravik case, the debtor’s Chapter 7 means test, which does not provide for retirement savings as an allowable deduction, concluded that their case was presumed to be an abuse.? The trustee sought dismissal of the case.

No, the judge held.? We are not required to dismissed every case that is presumptively abusive, and Congress indicated its support for retirement savings by making them an allowable expense in Chapter 13.? [Someone should tell me why the expense isn't allowable in Chapter 7, but then, I know how BAPCPA was drafted and by whom.]

In the bankruptcy world before the means test, debtors were expected to pay to creditors in a Chapter 13 every penny over their budgeted expenses.? I railed at that on the grounds that 1) life isn’t like that; the unexpected does happen; and 2) the Chapter 13 experience should be building good habits for life after bankruptcy.? Spending every penny that comes in the door is not the path to financial rehabilitation.

So, I’m exceedingly pleased to see the tide turning, even a small bit, here.

Credit Counseling Agencies. Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment plans or impose high set-up fees or monthly service charges that may add to existing debt. The IRS Tax Exempt and Government Entities Division is in the process of revoking the tax-exempt status of numerous credit counseling organizations that operated under the guise of educating financially distressed consumers with debt problems while charging debtors large fees and providing little or no counseling.

The debt settlement model heads my personal list of scams, since it so seldom produces any meaningful settlement, provides no protection to the consumer while the money is accumulating, and lines the pockets of the organization in the meantime.

This is the industry that Congress made the gatekeeper to bankruptcy for individuals. Go figure.

Cathy Moran