Friday, February 4, 2011

Individual Absolute Priority Rule Update

The Absolute Priority Rule, APR for short, is one of the things in bankruptcy that just seems to be overly complicated.  It is difficult to understand and even more difficult to explain.  I wrote a piece earlier on the APR and how Judge Jenneman in Orlando recently released an opinion that appeared to doom individual chapter 11 bankruptcy cases.  This piece is to follow up on that and show how other courts appear to be handling it.
                Unfortunately it appears that judges throughout the state and even the country are reading the code exactly like Judge Jenneman.  You may ask, what does that actually mean to me or my case?  A year ago when someone walked into my office to file an individual chapter 11 bankruptcy it was easy for me to say that their unsecured debt would only be paid a small portion based upon their disposable monthly income.  Now it is not that simple.
                Now it really depends on the particular facts of your case.  It depends on the amount of debt involved as well as the exact players.  Some cases seem to have no problem with only paying their disposable monthly income and some cases end up having to adhere to the APR.  Now more than ever it is important for you to seek quality counsel when making a decision of whether or not to file Chapter 11 bankruptcy.  If your attorney does not advise you of the risks involved with the APR then ask about it yourself.  If they tell you that you only have to pay your disposable monthly income, ask them about the developments that are occurring now in your area.  It is always a possibility that the attorney just does not understand the APR themselves. 
                If you need further information about the absolute priority rule or how it may affect your particular case please do not hesitate to contact me at or go to for more information.

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