2015 Bankruptcy Bench-Bar Retreat
November 6, 2015
__________________________________________
Discussion Outline for (I) Exemption Changes; and (II) Debtor Counsel Do’s & Don’ts
__________________________________________
I.
Exemption Changes

Effective July 1, 2015, Colorado made several amendments to its
exemption statutes.

Pursuant to C.R.S. § 13-54-107, Colorado debtors must use the
exemptions provided in the Colorado statutes.

What are the meaningful changes?
o
Clothing exemption increased $500 from $1,500 to $2,000 (C.R.S.
§ 13-54-102(a))
o
Jewelry exemption increased $500 from $2,000 to $2,500 (C.R.S.
§ 13-54-102(b))
o
Library, pictures, and books exemption increased $500 from
$1,500 to $2,000 (C.R.S. § 13-54-102(c))
o
Regarding tools of the trade exemption in C.R.S. § 13-54-102(i),
used to be $20,000 for tools that were used to carry on “any gainful
occupation.” Now, there is a $30,000 exemption for tools of the
trade used and kept for “the debtor’s primary occupation” and an
additional $10,000 used and kept “for any other gainful occupation.”
o
Regarding motor vehicle and bicycle exemption in C.R.S. § 1354-102(j), used to be an unlimited number of motor vehicles and
bicycles in the aggregate amount of $5,000 for non-elderly and
non-disabled, and $10,000 for elderly and disabled. Now, it is
limited to two motor vehicles and bicycles and aggregate amount is
-1-
increased to $7,500 for non-elderly and non-disabled, and $12,500
for elderly and disabled. Also, expressly states that motor vehicles
do not include snowmobiles, all-terrain vehicles, golf carts, boats or
other watercraft, travel trailers, or motor homes.

o
Regarding increase in cash value of life insurance policies in
C.R.S. § 13-54-102(l), presumably in response to In re Moosman,
473 B.R. 385 (Bankr. D. Colo. 2012), restricted the exception to the
exemption to increases in cash value during the previous four years
to increases attributable to contribution of “extraordinary moneys,”
which is defined to be “monetary contributions or loan payments in
excess of those contractually required under the policy or certificate
of life insurance.” Also, restricted exemption to policies that “have
been owned by a debtor for a continuous, unexpired period of fortyeight months or more.”
o
Public or private disability benefits exemption increased from
$3,000 to $4,000 (C.R.S. § 13-54-102(v))
o
Homestead exemption increased from $60,000 to $75,000 for nonelderly and non-disabled, and increased from $90,000 to $105,000
for elderly and disabled (C.R.S. § 38-41-201)
o
Definition of “earnings” deleted in C.R.S. § 13-54-101. Folded part
of definition of deleted “earnings” in relation to debtor’s engaged in
agricultural business from C.R.S. § 13-54-101 into C.R.S. § 13-54102(g)(I).
Discussion Topics
o
o
What are goals of exemptions?

Debtor’s fresh start

What else?
Do these amendments support such goals? If yes, in what
manner?
-2-
o
Are these amounts appropriate? Should they be more or less for
any specific exemption?
o
What about other exemptions that weren’t changed? For example:

Household goods ($3,000; C.R.S. § 13-54-102(e))

Provisions and fuel ($600; C.R.S. § 13-54-102(f))

Agricultural items – livestock, poultry, or other animals; all
crops, dairy products, and agricultural products grown,
raised, or produced; and all tractors, farm implements, trucks
used in agricultural operations, harvesting equipment, seed,
and agricultural machinery and tools ($50,000; C.R.S. § 1354-102(g))

Library of a debtor who is a professional person kept and
used in carrying on person’s profession ($3,000; C.R.S. §
13-54-102(k))
o
What exemptions, if any, should be added to the Colorado
exemptions?
o
Should Colorado have a “wildcard” exemption that debtors can use
on any property? If so, what would an appropriate amount be?

For example, Florida has an exemption that states: “A
debtor’s interest in personal property, not to exceed $4,000,
if the debtor does not claim or receive the benefits of a
homestead exemption under s. 4, Art. X of the State
Constitution. This exemption does not apply to a debt owed
for child support or spousal support.” Fla. Stat. § 222.25(4).
o
Is it fair that Colorado debtors must utilize the Colorado exemptions
and cannot use the exemptions in 11 U.S.C. § 522? Any instances
where your client would be better off with the federal exemptions?
o
Aware of any instances where debtor has abused his/her
exemptions? For example, should debtors be free to amend their
-3-
Schedule C at any time before theirs cases are closed as FRBP
1009(a) contemplates? Is it fair to the trustee/best interest of
creditors/estate to allow multiple amendments after trustees begin
to administer estates?
o
II.
What are remedies for trustee/US Trustee/creditors if debtors
abuse the exemption process?

Surcharge debtor’s exemption? No per Law v. Siegel, 134
S. Ct. 1188, 1198, 188 L. Ed. 2d 146 (2014).

Object to discharge under 11 U.S.C. § 727

Rule 9011(c)(2) - authorizes the court to impose sanctions
for bad-faith litigation conduct, which may include “an order
directing payment . . . of some or all of the reasonable
attorneys’ fees and other expenses incurred as a direct
result of the violation.”

Use of 11 U.S.C. § 105 or court’s inherent powers
Debtor Counsel Do’s and Don’ts

Perspective – does proper conduct depend on the perspective from which
it is considered? Court, client, opposing counsel, trustee, etc.?

How do you avoid losing credibility before the courts as an attorney?

When arguing before the court, how do you show respect
even to the most vicious or unprofessional adversary?

How do you avoid the hated discovery battles?

As an advocate, where is the line between overstating a
case holding and arguing persuasively? How far do you
have to go in citing adverse cases that are not directly on
point?

What are the best practices in preparing for trial?
-4-


When and to what extent do you need to inform the
court/opposing counsel as to use of technology, use of
exhibits, potential additions of rebuttal witnesses (that you
know you will/may call)?
Prepetition – what are prepetition do’s and don’ts in your view? Some
stages of the case and examples to consider are:
o
What changes in your practice have you implemented since
BAPCPA?
o
Initial Meeting
o


Analysis of issues

Discussion of fees and expenses

Set action plan with timeframes
What needs to be in your written fee agreement?

Compliance with unbundling Local Bankruptcy Rule 90101(c)

Paid in cleared funds prepetition to avoid any § 549 issues.
See, e.g., In re Ruiz, 455 B.R. 745 (B.A.P. 10th Cir. 2011)
(funds which, due to delay in payment of checks that debtors
had written prepetition, were still in their checking account
when petition was filed, rather than merely the promise of
bank to pay over those funds back to debtors, constituted
“property of the estate”)
What is reasonable due diligence?

Pulling credit report (for example, at
www.annualcreditreport.com)
-5-
o


Running owner and encumbrance (O & E) report on any real
property

Doing a UCC-1 search

Considering a litigation search to determine if debtors have
been involved in any state or federal court litigation
Drafting of bankruptcy documents – what steps are necessary to
ensure the Debtor tells you everything in a timely manner?
Post-petition – what are post-petition dos and don’ts in your view?
o
Timely and complete provision of information and documents – how
much do you have to investigate and interrogate your clients?
o
Section 341 meeting
o

How do you prepare your clients versus coaching them?

How do you ensure they answer questions truthfully and
completely?

How do you recover when the debtor provides the trustee
with information you have never heard?

What steps do you need to take to ensure that the trustee
will not have to continue § 341 meeting?

Free work—how much post-petition or post-§ 341 meeting
advising is required?

When can you insist on an additional fee?

When do you have to withdraw?
2004 examinations – how do you deal with abusive opposing
counsel?
-6-
o
Amendments to bankruptcy documents

o

What is timely and what is complete?
Discharge and dischargeability adversary proceedings: once you
are in litigation, what is your role with regard to opposing counsel,
debtor and trustee?
Professionalism
o
What does professionalism mean to you?

DBA/CBA Professionalism Coordinating Counsel defines it
to be:
Professionalism is conduct reflecting the values
embodied in the Colorado Attorney Oath of Admission,
the Colorado Principles of Professionalism, and the
Colorado Rules of Professional Conduct. These
values require attorneys always to act competently,
civilly, and with integrity and to commit themselves to
the public good and to furthering the interests of justice.
o
Do you agree with this definition? If not, why? What else, if
anything, would you add to it?
o
Utilizing this definition, can you think of examples where debtor’s
counsel has, and has not, been professional? If yes, in what
manner?
o
How does unprofessional conduct, when directed at you, make you
feel? What about in relation to the public perception of attorneys?
Any other adverse consequences?
-7-