In the face of a good faith challenge to the debtors’ eligibility for chapter 13 bankruptcy under section 109(e), the bankruptcy court considered evidence beyond the debtors’ schedules and conducted its own eligibility calculation. In re Beach, 2022 Bankr. LEXIS 313, Case no. 21-10762 (Bankr. D. N.M. Feb. 7, 2022). [Read more…] about Calculating Values for 109(e) Bankruptcy Eligibility
Discharge of Judgment Related to Ponzi Scheme
A judgment against the debtor based on fraudulent transfer of funds arising out of his gains in a Ponzi scheme was dischargeable where the court found that only a debt traceable to a securities law violation committed by the debtor is excepted from discharge under section 523(a)(19) and the debtor in this case was not liable for a securities violation. In re Simons, 2021 WL 5225940 (Bankr. D. Minn. Nov. 9, 2021) (case no. 4:20-bk-40631; adv. proc. no. 4:21-ap-4027). [Read more…] about Discharge of Judgment Related to Ponzi Scheme
Post-Petition Appreciation Not Part of Converted Estate
In the absence of bad faith, post-petition appreciation does not enter the chapter 7 estate upon conversion from chapter 13. Rodriguez v. Barrera (In re Barrera), No. 20-1376 (10th Cir. Jan. 9, 2022). NCBRC filed an amicus brief on behalf of the NACBA membership in support of the debtor in this case.
When the debtors filed for chapter 13 bankruptcy, the value of their home was less than the sum of the liens plus their homestead exemption. However, the value of their home appreciated such that, when they sold it during their bankruptcy, the sale proceeds exceeded the liens and exemption by $140,251. They then converted to chapter 7, and the trustee moved for turnover of the non-exempt portion of the proceeds. The bankruptcy court denied the motion and the BAP affirmed. [Read more…] about Post-Petition Appreciation Not Part of Converted Estate
Estate Cannot Continue To Collect Trust Distributions after Debtor Dies
The bankruptcy court erred in finding that the portion of the debtor’s interest in ongoing Trust distributions that were part of the bankruptcy estate would continue to enter the bankruptcy estate after the debtor died and the Trust was distributed to his children. In re Rens, — B.R. —-, 2021 WL 5049829 (B.A.P. 9th Cir. Oct. 29, 2021) (case no. 20-1131). [Read more…] about Estate Cannot Continue To Collect Trust Distributions after Debtor Dies
Debtor Not Entitled to Attorney Fees Under State Statute for Alleged Bankruptcy Misconduct
The debtor was not entitled to an award of attorney fees under a state fee-shifting provision when she prevailed on her opposition to the creditor’s time-barred claims where the bankruptcy litigation was not connected to the substance of the claims but was a procedural issue dependent on misconduct of parties or attorneys and, therefore, federal law was controlling. LVNV Funding, LLC v. Andrade-Garcia, No. 21-1115 (B.A.P. 9th Cir. Jan. 11, 2022). [Read more…] about Debtor Not Entitled to Attorney Fees Under State Statute for Alleged Bankruptcy Misconduct
No Stay in Effect where Co-Debtor Had Two Previous Cases within Year of Filing
No stay arose in the bankruptcy case as to either the debtor husband or the debtor wife, where the husband had filed and dismissed two cases in the preceding year, in which the wife had not joined, and then the husband and wife filed the present joint case. In re Koval No. 1:21-bk-11170 (Bankr. C.D. Cal. Nov. 10, 2021).
The debtor, Maryna Koval, and her husband, Anatoliy Chizmar, filed for chapter 13 bankruptcy on May 26, 2021 in the Southern District of California. At that time, Chizmar had two bankruptcies he had filed and dismissed within the previous year. The second of the two bankruptcies was dismissed on May 25, 2021, with a 180-day bar to refiling. Koval had no previous bankruptcies. The co-debtors moved the court for an order stating that the stay was in effect in their case. The court found that, due to his prior bankruptcy filings, the stay was not in place with respect to Chizmar. It made no finding with respect to Koval. The case was then transferred to the Central District of California and Chizmar was dismissed as a debtor due to the 180-day filing bar. [Read more…] about No Stay in Effect where Co-Debtor Had Two Previous Cases within Year of Filing
ACTC and EITC Tax Refund Exempt under Washington Law
The debtor’s tax refund consisting of her Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) falls under the category of “public assistance” within the meaning of Washington’s exemption law and is therefore exempt from distribution to creditors in bankruptcy. Ellis v. Moreno (In re Moreno), No. 21-1124 (B.A.P. 9th Cir. Dec. 23, 2021) (unpublished).
The debtor filed for chapter 7 bankruptcy on December 30, 2020, and filed her 2020 tax return post-petition. She received a tax refund that included $1,709 from the ACTC, and $5,550 from the EITC, both of which she claimed as exempt. The trustee sought turnover of the refund in the amount of $5,169.11 representing the prorated amounts of the ACTC and EITC tax credits. The bankruptcy court denied the debtor’s motion to certify the question to the Washington State Supreme Court and denied the trustee’s motion for turnover after finding the tax credits were exempt. [Read more…] about ACTC and EITC Tax Refund Exempt under Washington Law
Faxed Copies of IRS Tax Adjustments Not a “Return” for Discharge Purposes
The debtor’s faxed copies of the IRS adjustment to his federal taxes did not constitute a “return” within the meaning of section 523(a)’s hanging paragraph because the California law process with which his faxes complied was not “similar” to 26 U.S.C. § 6020(a), which authorizes the IRS to prepare a tax return when a taxpayer fails to do so. Sienega v. Calif. Franchise Tax Bd., No. 20-60047 (9th Cir. Dec. 6, 2021). [Read more…] about Faxed Copies of IRS Tax Adjustments Not a “Return” for Discharge Purposes
Local Standards Apply but Trustee Need Not Be a Sumpsimus
Despite higher actual vehicle operating costs, when calculating disposable income on the means test, above-median debtors must use the exact numerical values for expenses that are specified in the IRS’s National and Local Standards. Rodriguez v. Bronitsky (In re Rodriguez), No. 20-1085 (B.A.P. 9th Cir. Oct. 16, 2020). [Read more…] about Local Standards Apply but Trustee Need Not Be a Sumpsimus
The Case of the Vanishing Homestead Exemption
When the debtor failed to reinvest the proceeds from the sale of his exempt homestead within the period required by state homestead exemption law, the exemption vanished. McCallister v. Wells (In re Wells), No. 20-86 (D. Idaho Oct. 14, 2020).
The debtor filed for chapter 13 bankruptcy and listed the equity in his home as exempt under Idaho law. During his bankruptcy, he sold the home in order to use the proceeds to pay off one of his creditors. He did not reinvest in a new home as required by Idaho exemption law. The trustee sought to capture the proceeds of the sale for the bankruptcy estate on the basis that the debtor’s homestead exemption vanished when the debtor sold the home without reinvesting within one year. The bankruptcy court overruled the trustee’s objection to the exemption. The trustee appealed to the district court. [Read more…] about The Case of the Vanishing Homestead Exemption