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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Does a bankruptcy court have the discretion to deny an amendment of exemptions if the amendment is in bad faith or would prejudice creditors? (8th Cir.) What are the dangers in filing an emergency bankruptcy petition for a Debtor you never met and who didn’t sign the bankruptcy petition? (Bankr. N.D.TX.) Does the bankruptcy court have to sustain an objection to confirmation of a provision of the national uniform plan (Official Form 113), because the plan fails to include an additional non-standard provision specifically providing that the holder of the ‘910 claim’ retain the lien securing its claim until the earlier of payment of the underlying debt determined under nonbankruptcy law or discharge under section 1328? (6th B.A.P.) In a chapter 13 bankruptcy, can a debtor claim an expense on the means test for a monthly mortgage obligation for her elderly mother-in-law? (Bankr. E.D.VA.) In an above-median income chapter 13 bankruptcy, can the Trustee object to confirmation based on the necessity of expenses claimed solely on Schedule J? (Bankr. N.D.TX.)

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Does a chapter 7 debtor have standing to object to the trustee’s proposed sale of assets? (8th B.A.P.) Can a debtor exempt a rifle as “[n]ecessary apparel, bedding, foodstuffs, household furniture and appliances?” (Bankr. D.CT.). Is failure to disclose ownership of real estate grounds to deny a debtor’s motion to convert a chapter 7 to chapter 13? (Bankr. N.D.MS.) In a chapter 7 proceeding filed by one spouse only, what method should the Bankruptcy Court use to allocate tax refunds received from a joint tax return? (Bankr. N.D.IL.) Can a bankruptcy appeal be dismissed under the “fugitive disentitlement doctrine” for an appellant that has “skedaddled”? (1st Cir.). 

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Does a calendaring error made by Debtor’s counsel constitute “excusable neglect” under Civ. P. 60(b)(1) and Fed. R. Bankr. P. 9024? (Bankr. E.D.MI.) Can Debtors defend against a trustee’s tuition claw back by asserting they received the economic benefit of a financially self-sufficient child? (1st Cir.) In a dispute whether a chapter 7 case should be dismissed for “substantial abuse” does the Debtor’s voluntary plans to retire soon constitute “special circumstances” under the means test? (Bankr. N.D.GA.) Can judicial estoppel be used to dismiss an undisclosed lawsuit even if all creditors in the bankruptcy have been paid? (10th Cir.)
Are chapter 13 debtors required to file objections to unsecured claims that claim interest in Section 9 of Official Form 410 (Proof of Claim)? (Bankr. N.D.OH.) In a chapter 13 proceeding, should post-petition parking or moving violation tickets be treated as administrative expenses? (7th Cir.)

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Can a state agency argue that a debt is non-dischargeable under Section 523(a)(7) if it began criminal proceedings to collect the debt post-petition?(Bankr. N.D.AL.) Does a chapter 7 debtor have standing to object to a claim? (Bankr. E.D.NY.) Can debtor’s counsel be paid for work performed in a chapter 7 after the case is converted to a chapter 13 bankruptcy? (Bankr. E.D.MI.) Can the Court appoint counsel to assist a pro se debtor who is facing contempt sanctions including incarceration? (Bankr. D.ME.) Are a debtor’s alleged false verbal statements about his employment to a state unemployment agency enough to find the debt is non-dischargeable under 11 U.S.C. § 523(a)(2)(A)? (Bankr. D.CO.) Can a chapter 7 discharge be revoked under Sections 727(a)(6)(A) or 727(d)(3) (refusal to obey an order) if the debtor is unable to comply with the order? (Bankr. W.D.OK.) What is better evidence of real property value, a tax assessment or a broker price opinion? (Bankr. C.D.CA.)

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

In a chapter 13, does a car creditor violate the automatic stay if the storage lot owner does not release a repossessed vehicle? (Bankr. E.D.MI.) Is a homestead refund credit received post-petition on real estate taxes paid pre-petition part of the bankruptcy estate? (Bankr. MN.) Does “excusable neglect” under FRCP 60 and Rule 9023 include out-and-out lawyer blunders—the type of action or inaction that leads to successful malpractice suits by the injured client? (Bankr. E.D.MI.) In a chapter 13, does a creditor have an affirmative duty to return a pre-petition repossessed vehicle? (3rd Cir.) Post-discharge, is a collection letter with a bankruptcy disclaimer a violation of the discharge injunction? (Bankr. W.D.MI.) Can a debtor use § 522(f) to avoid a judgment lien against property she acquired after the creditor recorded its judgments? (Bankr. S.D.FL.) Can a bankruptcy court sua sponte dismiss a chapter 7 bankruptcy as a bad faith filing? (Bankr. D.CT.)

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Does a Defendant asserting judicial estoppel have standing to object to a motion to reopen a bankruptcy (11 U.S.C. § 503) to disclose the omitted claim? (D. W.D.WA.) Can a debtor pay off a car title pawn loan over the duration of a chapter 13 bankruptcy? (Bankr. M.D.AL.) Can a physically separated married couple, filing separately, each claim a homestead exemption in two homes? (Bankr. KS.) Does a Section 362(k) action (stay violation) survive the dismissal of the underlying bankruptcy? (3rd Cir.) Can a bankruptcy court enforce a discharge order entered in a different jurisdiction? (5th Cir.) Can a debtor discharge a private education loan for attendance at an institution not eligible to participate under Title IV of the Higher Education Act? (5th Cir.)

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

If a bankruptcy court denies a discharge under Section 727, does it have the authority to enter a money judgment against the debtor under a non-dischargeability proceeding under Section 523? (Bankr. E.D.MI.) Can a chapter 13 debtor cram down a residence which is part of a multi-use property? (10th B.A.P.) In a judicial estoppel situation, can the bankruptcy court infer an “intent to misuse the courts” just from a non-disclosure of an asset? (11th Cir.) In a 9011 sanctions proceeding, does a movant meet the “safe harbor” rule if it just serves the respondent with the motion for sanctions 21 days before filing it? (Bankr. C.D.CA.) Do bankruptcy courts have discretion to refuse to compel arbitration in proceedings seeking enforcement of a discharge injunction after the Supreme Court’s decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018)? (5th Cir.)

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District Court Confirms Debtor’s Absolute Right to Dismissal under Section 1307

Prior to filing bankruptcy, the Debtor was sued in state court for fraudulent misrepresentation and for breaching a contract to restore a vintage automobile. A default judgment was entered against her. Ten years later she filed a chapter 13 bankruptcy. The creditor filed an adversary proceeding to determine the debt was non-dischargeable and a motion to dismiss or convert. The Debtor then filed an application to voluntarily dismiss her case under 11 U.S.C. § 1307(b). The bankruptcy court dismissed the case. On appeal the creditor’s chief argument was that Section 1307(b) does not give the debtor an absolute right to dismiss. The District Court disagreed.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Can a debtor, post-deposition, make material, contradictory changes to his deposition transcript on the Errata Sheet? (Bankr. N.D.GA.) Can the bankruptcy court allow a late claim by a creditor omitted from a timely filed creditors list? (Bankr. MD.) Can a chapter 7 debtor invalidate a mortgage lien if the mortgage holder doesn’t maintain its files and delays 10 years before completing a non-judicial foreclosure? (Bankr. E.D.WA.) Can a chapter 13 debtor strip off an unsecured lien from real property that is titled as joint tenants with rights of survivorship, where the joint tenant is not a joint debtor in the bankruptcy case? (Bankr. E.D.VA.) Is an assignee of a consumer creditor contract liable for misdeeds of the originator of the contract under the “Holder Rule”? (Bankr. N.D.TX.) In a chapter 13 plan can a debtor cram down a 910-vehicle to value if the vehicle also secured other obligations to the credit union? (Bankr. S.D.FL.) Does the “weekend rule” in Bankruptcy Rule 9006(a)(1)(C) (deadline occurring on a weekend is extended to the next business day) apply to deadlines with a specific date? (Bankr. N.D.TX.) Can a Stern objection to the Bankruptcy Court’s authority be implicitly waived if not pled in a responsive pleading per Bankruptcy Rule 7012? (Bankr.N.D.IL.)

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11th Circuit Holds Trustee’s Knowledge of Fraud Before Discharge Does Not Bar Trustee From Later Seeking Revocation of the Discharge

In 2011 the Debtors filed a voluntary chapter 13 bankruptcy which was converted later that year to a chapter 11. Several years later it was converted to a chapter 7 bankruptcy. At the same time of the Debtors conversion, one of Debtor’s companies Nattco, LLC (“Nattco”) filed a chapter 11 bankruptcy. While the individual and corporate bankruptcy cases were pending, a former employee of Nattco submitted a fraud referral to the Trustee, alleging misconduct by the Debtors, including “stockpiling cash,” “taking trips to Hawaii, Puerto Rico, and Florida,” and undergoing plastic surgery. The Trustee received the referral and additional communications about alleged fraud between October 2013 and January 2014, and consequently initiated an investigation into the allegations.

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Bankruptcy Court holds a personal injury claim is not “abandoned” if disclosed on the bottom of Schedule I (possible increase of income) but not on Schedule B.

The Debtor was injured in a traffic accident in 2012. Later that year he filed a chapter 7 bankruptcy. He didn’t list the personal injury as an asset on Schedule B. Instead he listed it on Schedule I in response to the request to “Describe any increase or decrease in income reasonably anticipated to occur within the year following the filing of this document:”

“Debtor was hit by a car from behind and pinned between two cars in early 2012. He had to have surgery on his arm from the fall he took after the car backed up an [sic] he hit the ground. His forearm muscle has ripped in two right in the center so the operation to repair any damage was futile. Debtor is not working right now, but [sic] Debtor is able to, he intends to apply for employment.”

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

In a chapter 13, should debtor’s attorney’s fees be paid before commencing repayment to unsecured creditors? (S.D.Ind.) Can a debtor get reimbursed from estate assets for paying off a debt outside of the bankruptcy? (Bankr. N.D.Ohio) In a chapter 7 bankruptcy, when is the deadline for creditors to file claims? (Bankr. N.D. Ohio) Can a bankruptcy petition preparer side-step a temporary bar order by failing to notify potential clients of the bar order and by referring those clients to friends she had trained as petition preparers? (Bankr. E.D.Wis.) When considering whether a chapter 7 bankruptcy constitutes an abusive filing under 11 U.S.C. § 707(b)(3), should the court disallow retirement deductions to determine disposable income? (Bankr. W.D.Penn.) When a child support enforcement creditor was not sent notice of a chapter 13 confirmation order, can a debtor successfully hold a creditor in contempt of that order? (Bankr. E.D.Wis.) Is failure to repossess or release the lien on a surrendered vehicle constitute contempt of a chapter 7 discharge order? (Bankr. E.D.Ky.)
Can a Chapter 7 Debtor amend his bankruptcy petition to add his spouse? (Bankr. D.Ariz.

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Bankruptcy Court Allows Deduction of Debtor’s Attorney’s Fees in Means Test and Surveys Cases Allowing the Deduction.

Prior to filing bankruptcy, the Debtor hired NACBA member Jeffrey B. Kelly of the Law Office of Jeffrey B. Kelly, P.C. out of Rome, Georgia. Mr. Kelly successfully argued this case on behalf of the Debtor. The Debtor agreed to pay Mr. Kelly $4,500.00 for representation in a chapter 13 bankruptcy. The Debtor filed a chapter 13 bankruptcy and the attorney’s fees were provided to be paid in the chapter 13 plan. The Debtor had above median income and therefore was required to complete and submit Official Form 122C-2 listing his allowable expenses and calculating his projected disposable income (“PDI”).

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Are voluntary retirement contributions valid means test deductions in a chapter 13? (E.D.Mich.) Can a debtor claim a homestead exemption for sale proceeds received post-petition that were not reinvested timely? (D.ME.) Does the automatic stay stop a sanction proceeding by the United States Trustee? (Bankr. D.VT.) Is a “safe harbor” letter required before filing a 9011 motion if the conduct complained of involves the filing of the bankruptcy petition? (Bankr. D.N.J.) When are punitive damages warranted when a creditor violates the automatic stay? (Bankr. W.D.VA.) Can a bankruptcy court strike a 97 page pleading because it exceeded the 25 page limit in the local rules? (Bankr. N.D.GA.) Is a state court injunction prohibiting the filing of bankruptcy invalid? (Bankr. N.D.IL.)

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7th Circuit Explains Bankruptcy Court Jurisdiction to Address Tax Claims

Prior to filing bankruptcy, the Debtors were involved in a tax dispute with the IRS. The IRS demanded the Debtors pay $107,000.00 in taxes plus $80,000.00 in fraud penalties for tax years 2009-2011. The Debtors petitioned the Tax Court for review. Shortly before the trial, the parties agreed the Debtors owed $100,000.00 but were split over calculation of the penalties. The IRS sought a 75% fraud penalty under 26 U.S.C. §6663(a), while the Debtors argued for a 20% negligence penalty under 26 U.S.C. §6662(a).

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

In a student loan dischargeability proceeding, can a Debtor still demonstrate undue hardship if a student loan lender offers an IBRP of $0.00 per month? (Bankr. D.OR.) In a “Chapter 20” scenario, is it bad faith for the Debtor to file the chapter 13 if the plan will not strip off a wholly unsecured second mortgage? (Bankr. S.D.Fla.) In a chapter 13 confirmation context, can a creditor successfully move for summary judgment on the issues of bad faith plan and petition under 11 U.S.C. §§ 1325(a)(3) and (a)(7)? (Bankr. D.ME.) Is intentional concealment of a lawsuit in a bankruptcy grounds to bar the law suit under the judicial estoppel principle? (7th Cir.) Does a bankruptcy court have jurisdiction to enter a monetary judgment on a disputed state law claim in the course of making a dischargeability determination? (D.NV.) Can a chapter 7 trustee reopen a bankruptcy to administer a previously disclosed and abandoned asset? (Bankr. C.D.IL.) In a dischargeability sanctions proceeding, which party bears the burden to prove that there is no objectively reasonable basis for concluding the discharge makes a creditor’s actions unlawful? (Bankr. N.D.Ohio) In resolving a trustee plan objection to confirmation, can the parties agree to strike the offending language without service or notice to creditors? (Bankr. E.D.Tenn.) Does the means test allowance for mortgage expenses create a cap which disallows the extra amount of a higher mortgage payment? (Bankr. N.D.Tex.)

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Bankruptcy Court Discusses the Four Way Case Law Split of Interpretations of Section 109(g)(2) Affecting the Eligibility to be a Debtor Within Six Months of Voluntary Dismissal

The Debtor and his spouse were indebted to Standard Mortgage Corporation (“SMC”) which was secured by a mortgage on the Debtor’s real estate. The Debtor became delinquent on his mortgage payments and SMC instituted a foreclosure. Two days before sale, the Debtor filed his first chapter 12 bankruptcy. Approximately six months later, SMC moved from relief from stay which was resolved with an order for certain payments and included a “drop dead” order which allowed SMC to move ex parte for a default and obtain an order granting relief from stay.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Does a default judgment entered prior to bankruptcy have preclusive effect in a dischargeability proceeding? (2nd) Can a UCC lien be avoided if it doesn’t contain a description of the collateral and instead refers to a description in another document? (7th) Do five failed attempts of chapter 13 plan confirmation constitute per se unreasonable delay and cause for dismissal under 11 U.S.C. § 1307(c)(1)? (Bankr. E.D.Va.) After a chapter 13 discharge can the IRS collect on unpaid interest on its claim? (Bankr. Neb.) If a chapter 7 debtor’s attorney exercises control over an estate asset before abandonment, is he guilty of violating the automatic stay? (Bankr. Conn.)

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Bankruptcy Court Enforces Automatic Stay Award by Debiting Award From Creditor’s Claim, Collects Cases Reporting Damage Awards

Prior to filing bankruptcy the Debtor was paying Defendant Americar, Inc. d/b/a Auto Brokers (“Auto Brokers”) for the purchase of a 2007 GMC Yukon Denali and written notice was sent to Auto Brokers. Auto Brokers filed a proof of claim in the amount of $11,338.40. Approximately nine months later Auto Brokers contacted the vehicle insurance company and learned the insurance policy had been cancelled. Auto Brokers hired a towing company to repossess the vehicle.

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Bankruptcy Court Denies Chapter 7 Trustee’s Proposed $105,000.00 Settlement of Slip and Fall as Not Fair and Equitable

The married Debtors (Mr. Alfonso and Ms. Diaz) filed a chapter 7 bankruptcy. Prior to filing, Ms. Diaz had been injured in a slip and fall accident while working at Nordstrom. The claim was not listed in the schedules. Ms. Diaz hired a law firm to pursue her claim. The law firm (“Firm”) searched but did not find Ms. Diaz’ bankruptcy. The Debtors then received their bankruptcy discharge.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Whether a chapter 7 debtor, who wants to retain a leased vehicle, must sign a reaffirmation agreement to assume the lease. (Bankr. D.Mass.) Is an adversary proceeding required to avoid a wholly unsecured junior mortgage in addition to chapter 13 plan language doing the same? (Bankr. N.D.Ohio) Can a chapter 13 debtor who is a Successor-in-Interest to encumbered real estate, de-accelerate the mortgage in his chapter 13? (Bankr.E.D.Wis.) Can debtor’s counsel be forced to disgorge his entire fee for failure to provide notices to the debtor pursuant to 11 U.S.C. §§ 526-528? (Bankr. D.N.J)

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1st Circuit BAP Explains The Bankruptcy Rules Concerning Motions to Vacate Judgments

On August 28, 2019, the First Circuit Bankruptcy Appellate Panel affirmed a pair of orders from the Bankruptcy Court denying Debtor’s motions to vacate. This was an unpublished opinion. The Debtor filed a chapter 13 petition in September 2016 asserting an ownership interest in a two-family dwelling (the “Property”). Prior to the bankruptcy filing the Debtor and the Property were involved in foreclosure actions. The Debtor filed a plan that did not provide any treatment for the secured claims. He also asserted a homestead exemption on the Property.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Can a discharge be denied under 11 U.S.C. §§ 727(a)(2) and (4) when Debtors failed to disclose a $46,000.00 ring previously thrown into the lake behind their home? (D.ID.)
Are payments (received under the Adoption Assistance and Child Welfare Act of 1980) considered benefits received under the Social Security Act and therefore excluded from the means test? (Bankr. M.D.PA.) Does a debtor lose the exempt status of tax refunds if they are deposited and co-mingled in a non-exempt bank account? (Bankr. N.D. Miss.) Is it a violation of the automatic stay for a university to withhold a diploma and transcripts for unpaid student debt? (M.D.PA.)

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Bankruptcy Court Disallows Expense of $900.00 Per Month for Medical Marijuana on Means Test

On July 25, 2019, the Bankruptcy Court for the District of Colorado denied confirmation of a plan based on the failure of the Debtors to submit their disposable income per the means test. The Debtors claimed a special circumstance expense of $900.00 per month for a chronic and severely painful medical condition for which marijuana is the only effective remedy.

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Bankruptcy Court Partially Discharges Private Law School Debt Because Debtor Could Not Survive Creditor’s Potential Garnishment

On August 23, 2019, the Bankruptcy Court for the District of Oregon partially discharged an attorney’s private student loans in an unpublished opinion. NACBA member Richard Parker of Parker, Butte & Lane, P.C. of Portland Oregon argued on behalf of the Debtor. The Debtor is an attorney who has expertise in indigent criminal defense. She has no medical issues or children. At the time of filing her bankruptcy she owed $198,691.00 in federal loans to ECMC. She reached a settlement with ECMC under the REPAYE program for an affordable monthly payment.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Is property awarded but not transferred to a non-filing spouse considered property of the estate? (Bankr. W.D.PA.) Does the automatic stay prevent a creditor from deposing the debtor’s attorney? (Bankr. D.MD.) Does a secured creditor’s inaction indicate acceptance of a chapter 13 plan under Section 1325(a)(5)(A)? (Bankr. E.D.WI.) Is a dismissal with prejudice warranted when a jailed Debtor makes multiple false representations about her incarceration? (Bankr. S.D.GA.) Is a luxury secured debt expense an allowed deduction on the means test for an above median income chapter 13 debtor? (Bankr. W.D.LA.)

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Can a debtor waive a written affirmative defense to relief from stay by failing to argue or prove it at trial? (Bankr. E.D.Ark.) Is a DSO creditor entitled to object to a plan if the creditor didn’t timely file a proof of claim? (Bankr. N.D.OH.) Is a Debtor’s disclosure of property interests in his schedules considered a judicial admission that the property is property of the estate? (Bankr. N.D.GA.) Does a debtor have to prove a “change in circumstances” before a confirmed chapter 13 plan can be modified under Section 1329? (Bankr. M.D.Penn).

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7th Circuit Rules Creditor Should be Held in Contempt for Jailing Discharged Debtor but No Contempt for Creditor’s Counsel

On August 13, 2019, the Seventh Circuit Court of Appeals reversed in part and affirmed in part the lower courts. On appeal, NACBA board member Tara Twomey submitted an amicus brief on behalf the National Consumer Bankruptcy Rights Center (NCBRC) supporting the Debtor. The facts underlying the case started in 2001. Jacqueline M. Sterling (“Debtor”) was sued in state court for approximately $520.00 in membership fees owed to Southlake Nautilus Health & Racquett Club (“Creditor”). The Creditor was represented by the law firm Austgen, Kuiper & Associates (“Creditor’s Counsel”). After obtaining a judgment in 2002, Creditor’s Counsel filed “proceeding supplemental” in state court to collect on the judgment. The Debtor did not appear at the collection hearings and ultimately the state court issued a “body attachment” (bench warrant) against Debtor to show cause for violating the court’s orders.

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In an Unpublished Opinion, the 11th Circuit Discusses Rarely Used 523(a)(19) Exception to Discharge and Types of Default Judgments That Can Cause Issue Preclusion

On August 7, 2019, the Eleventh Circuit Court of Appeals determined that the Debtors were not eligible for discharge under 11 U.S.C. § 362(a)(19). Prior to the bankruptcy filing, the Debtors were sued by Plaintiffs in Illinois state court alleging that the Debtors sold them unregistered securities without a license and made material misrepresentations about the investment violating Illinois and Florida securities laws. The Debtors answered the state court complaint asserted affirmative defenses and responded to motions. However, they refused to respond to interrogatories or request for production despite orders compelling discovery. The state court ultimately sanctioned the Debtors by entering a default judgment against them for $981,010.63 plus $547.00 in costs.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

In a Chapter 20 cramdown of a junior lien, can the junior lienholder file an unsecured claim for the amount of the voided lien? (9th Cir. BAP) Can an heir to real estate cram down a reverse mortgage in chapter 13? (Bankr. S.D.Miss.) Does a non-filing ex-spouse have to ask the bankruptcy court for permission to modify a domestic support order in the divorce case? (Bankr. N.D.IL.) Is the confirmation of a chapter 13 plan res judicata on the amount of mortgage arrears? (Bankr. W.D.PA.) Can a bankruptcy abstain from reopening a bankruptcy when the Debtors have been litigating dischargeability in state court? (Bankr. N.D.GA.) Is surrender of secured collateral post-confirmation per se bad faith to justify denial of the plan amendment? (Bankr. E.D.WI.)

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Bankruptcy Court Penalizes Debtor’s Counsel For Filing Motions to Pay Filing Fee in Installments When Counsel Received $500.00 Pre-petition Retainers, Filing Petitions Without Wet Signatures and Commingling Funds

On August 5, 2019, the Bankruptcy Court for the Western District of Pennsylvania entered an order sanctioning Debtors’ counsel. In this miscellaneous proceeding, the Court examined the practices of a large volume bankruptcy filer in multiple cases. Compare this result with the disbarment and report to the UST, USA, and to other disciplinary bodies in In re Pina, No. 18-15928-JKO, 2019 Bankr. LEXIS 1915, at *1 (Bankr. S.D. Fla. June 25, 2019).

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Bankruptcy Court Discusses Novel Argument Contesting Cram Down of Totally Unsecured Mortgage

In 2004 the Debtors purchased their home with a $209,000.00 purchase money deed of trust held by Bayview Loan Servicing (Bayview). In 2006 the Debtors obtained a second mortgage from Madison Management Services (Madison). In 2017, the Debtors and Bayview entered into a loan modification agreement that provided for a new principal balance of $257,566.94.

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

Can a chapter 13 plan modify student loans so that interest does not accrue during the bankruptcy? (Bankr. D.CT. July 23, 2019) Can an above-median income debtor’s confirmed chapter 13 plan payment be modified 18 days post-confirmation using schedules I and J? (Bankr. S.D.IL.) Is an owner/manager of an incorporated creditor liable for a creditor’s violations of the automatic stay? (Bankr. S.D.TX.) Can a debtor change the venue of their case? (Bankr. D.Tenn.) Does a chapter 13 debtor have to file her tax returns before the deadline in order to have them available at the 341 meeting of creditors? (Bankr. E.D.WI.)

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Bankruptcy Court Denies Disqualification of Creditor’s Counsel/Co-Defendant in Adversary Proceeding for Violation of the Automatic Stay

The debtor filed a chapter 13 bankruptcy case the day before the foreclosure sale of his residence. The debtor notified creditor’s counsel of the filing but counsel proceeded with the foreclosure sale regardless. Creditors’ counsel believed the residence was not property of the estate based on the local land records.

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Bankruptcy Court Rules Judgment Lien Only Partially Avoided When Some Equity Exists Under Section 522(f)(1)(A)

The value of Debtor’s real estate was $90,147.00. The first mortgage was $70,100.13 and the judicial lien was $88,609.56. The Debtor’s homestead exemption is $15,000. 735 ILCS 5/12-901. The Bankruptcy Court addressed Debtor’s argument that when a judicial lien partially impairs an exemption, it can be fully avoided under Section 522(f)(1)(A).

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Case Bites: Interesting Issues and Decisions from This Week’s Cases

In an adversary discharge proceeding, can the bankruptcy court treat a motion for summary judgment (that asserts a new affirmative defense) as a motion to amend an answer? (Bankr. S.D.N.Y.) Can a chapter 7 trustee be awarded attorney’s fees incurred in defense of the trustee’s fee application? (Bankr. D.Colo.) Does a bankruptcy court have the authority to extend the time to file a dischargeability complaint on a motion filed after the deadline? (Bankr. N.D.Ga.) Does a pre-petition default judgment operate as collateral estoppel in a non-dischargeability complaint for fraud in bankruptcy? (Bankr. E.D.Mich.) Post-filing, can a mortgage company postpone scheduled nonjudicial foreclosure sales (rather than dismiss the action) without violating the automatic stay? (Bankr. D.Ut.)

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Siding with Minority, Bankruptcy Court Rules the 365-Day Anti-Modification Rule of Section 1325(a)(9) Applies to Vehicles

Within one year of filing his chapter 13, the Debtor jointly purchased a vehicle and cosigned a note with his son. The son does not live with the Debtor and the Debtor has not used the vehicle. At filing, the Debtor proposed to cram down the total amount owed to the value of the vehicle. The Debtor argued that the 730-day anti-modification provision in the hanging paragraph of Section 1325(a)(9) doesn’t apply because the vehicle was not purchased for his benefit.

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