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 Ellis v. Moreno (In re Moreno), No. 21-1124 (B.A.P. 9th Cir. Dec. 23, 2021) (unpublished).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
Sixth Circuit Discusses Appellate Jurisdiction
Where the BAP remanded to the bankruptcy court for a finding on whether the creditor violated the automatic stay by failing to prevent the continuation of a contempt hearing against the debtor, the Sixth Circuit relied on precedent to conclude that the BAP’s order was not final and appealable. Wohleber v. Skurko (In re Wohleber), No. 19-3223/3225 (6th Cir. Nov. 18, 2020) (unpublished). In her concurring opinion, Judge Batchelder argued that the precedent relied on by the majority was erroneous and advocated for adopting a rule that “we have appellate jurisdiction if either the bankruptcy court’s judgment or the intermediate appellate judgment is final.” [Read more…] about Sixth Circuit Discusses Appellate Jurisdiction
Lien for Incarceration Costs Is Avoidable Judicial Lien
The State Treasurer’s lien based on a statute authorizing the state to seek reimbursement from a prisoner for the costs of his incarceration was not a statutory lien but a judicial lien which the debtor could avoid as impairing his exemptions. State Treasurer v. Wigger, No. 19-732 (W.D. Mich. Nov. 16, 2020).
The debtor was a prisoner in the Central Michigan Correctional Facility. The Michigan State Treasurer sought to recover some of the costs of his incarceration under the State Correctional Facility Reimbursement Act (SCFRA). After a bench trial, the state court found the State Treasurer was entitled to reimbursement from the debtor’s IRA funds and from proceeds from a judgment the debtor had against his son. The debtor initiated a chapter 7 bankruptcy and filed an adversary proceeding seeking to have the state’s lien voided as a judicial lien impairing his exemptions under section 522(f)(1). The bankruptcy court granted the debtor’s lien avoidance motion finding that the lien impaired his exemption for retirement funds under section 522(d)(12), and his exemption for property valued up to $13,100 under section 522(d)(5). [Read more…] about Lien for Incarceration Costs Is Avoidable Judicial Lien
Debtor’s Post-Discharge Pre-Closure Motion to Convert Denied
The debtor was not permitted to convert from chapter 7 to chapter 13 post-discharge but prior to administrative closure of his case where the court found the attempted conversion to be an abuse of process and his conduct in his chapter 7 case to indicate bad faith. In re Chamoun, No. 20-5069 (C.D. Cal. Dec. 2, 2020). [Read more…] about Debtor’s Post-Discharge Pre-Closure Motion to Convert Denied
Unlawful Possession of Real Property Does Not Create Property Interest
Where the debtor was subject to a state court judgment cutting off his right to cure the default on an installment land contract, he had no interest in the property despite his continued unlawful possession and, therefore, the bankruptcy court erred in confirming the debtor’s chapter 13 plan that provided for payment of the default judgment. In re Peralta, No. 20-2380 (E.D. Pa. Dec. 4, 2020).
The debtor entered into an installment contract with the creditor for the transfer of real property. After the debtor defaulted on the contract, a new agreement was reached obligating the debtor in the event of future default to submit to a default judgment and vacate the property. He defaulted and the creditor obtained a judgment in the amount of $41,151.70, as well as a Judgment for Possession in state court. But rather than vacate the property, the debtor filed for chapter 13 bankruptcy and proposed a plan under which he would pay off the judgment and obtain possession of the property free and clear of the creditor’s interest. The bankruptcy confirmed the plan over the creditor’s objection. [Read more…] about Unlawful Possession of Real Property Does Not Create Property Interest
Med School Loans Partially Discharged after Debtor Fails to Match for Residency
Finding that the debtor’s string of very bad luck unrelieved by his concerted efforts to increase his earnings, satisfied the Brunner test, a bankruptcy court granted him a partial discharge of his student loan, reducing the debt from $440,000 to $8,291.67. Koeut v. U.S. Dept. of Ed., No. 12-7242, Adv. Proc. No. 18-90130 (Bankr. S.D. Cal. Dec. 4, 2020). [Read more…] about Med School Loans Partially Discharged after Debtor Fails to Match for Residency
9th Circuit Limits Walls, Permits FDCPA Action for Post-D/C Collection
Declining to extend its 2002 holding in Walls, the Ninth Circuit found that a chapter 13 debtor who fully paid the creditor’s claim prior to completion of his plan was not precluded from pursuing an FDCPA claim based on the creditor’s post-discharge collection efforts. Manikan v. Peters & Freedman, L.L.P., No. 19-55393 (9th Cir. Nov. 25, 2020).
The debtor entered chapter 13 bankruptcy after receiving a notice of foreclosure from Peters & Freedman, a debt collector, based on HOA arrears. Through P&F, the HOA filed a claim in his bankruptcy, and the debtor provided for the arrears in his plan. He fully paid off the debt approximately two years prior to completion of his plan. After the debtor received his discharge, P&F hired Advanced Attorney Services (AAS) to re-serve a Notice of Default based on the debt that the debtor had paid off in his bankruptcy. AAS served the notice by breaking through a gate, entering the debtor’s backyard and banging on his windows, causing the debtor to call the police. [Read more…] about 9th Circuit Limits Walls, Permits FDCPA Action for Post-D/C Collection