On October 8, 2009 Chief Judge Phillip J. Shefferly issued the “State of the Court” report for the U.S. Bankruptcy Court for the Eastern District of Michigan (which has divisions in Detroit, Bay City, and Flint).  The report discusses a number of issues of interest to bankruptcy practitioners.  For example, the Court reported statistics which revealed that the number of case filings in the district continued to grow at a very high rate. For the year ended June 30, 2009, 47,803 cases were filed in the district, an increase of just over 20% from the year ended June 30, 2008.  This was coupled with the fact that case filings for the year ended June 30, 2008 had increased by over 25% from the year before that.  Case filings for the year ended June 30, 2009, they breakdown by chapter as follows: 38,681 were Chapter 7 case filings. That represents 81% of the district’s total filings. That compares with 72% for the prior year. 8,961 were Chapter 13 case filings. That represents 18% of the total filings. 146 were Chapter 11 filings. That represents 1% of total filings. Overall, Chapter 7 filings were up by 40%, Chapter 13 filings are down by 7% and Chapter 11 filings are up by 6%. Those numbers continue a strong trend over the last several years that has seen Michigan’s Eastern District continuously finish first, second or third in the country in the gross number of cases filed.

The report also contained some interesting statistics about pro se petitions (i.e., persons filing for bankruptcy without an attorney). For the calendar year 2007, the district had 1,251 pro se cases filed, or about 3.5% of total cases. For the calendar year 2008, there were 1,871 pro se cases filed in the district, or about 4.5% of our total cases. For the first 8 months of calendar year 2009, the number of pro se cases has grown to 2,333, almost 9% of the total.  In Chapter 7, more than 10% of the district’s  cases are now pro se. The Court noted that “[p]ro se cases require extra judicial and other resources to process through the system. They pose unique challenges to our system. The Chapter 7 Trustees have raised with the bench a number of difficulties that the processing of these cases pose for them.”

The report also contained a significant discussion of reaffirmation areements.  One of the many changes brought about by the BAPCPA in 2005 pertains to reaffirmation agreements. The responsibilities of debtors’ attorneys in connection with reaffirmation agreements were altered greatly. Subsequent to BAPCPA, the district adopted a Local Rule to govern practice in our Court regarding those reaffirmation agreements that contain what is described as the presumption of undue hardship under § 524(m) of the Bankruptcy Code. Without addressing each of the issues that has arisen from time to time concerning reaffirmation agreements, it is worth noting that there has been some divergence in the case law and in the practices among the bankruptcy courts throughout the country since BAPCPA regarding reaffirmation agreements and, in particular, the so called presumption of undue hardship under § 524(m). At the request of the bench, the Consumer Bankruptcy Association was asked to make a recommendation to the Court regarding best practices for a debtor’s counsel to follow in Chapter 7 cases regarding reaffirmation agreements. The Consumer Bankruptcy Association provided the bench with a detailed report on recommended best practices.  Related to this issue, the Court recently adopted new procedures for reaffirmation agreements.

The report also discussed recent local court rule changes and a number of other issues.  A complete copy of the report is available here.

-Drew Broaddus