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 Ellis v. Moreno (In re Moreno), No. 21-1124 (B.A.P. 9th Cir. Dec. 23, 2021) (unpublished).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
Discharge Despite Unpaid Mortgage Fees
The chapter 13 debtor was entitled to discharge despite the fact that she had incurred but not paid fees and assessments under her mortgage contract while she was paying the mortgage outside the plan, where the creditor had not sought payment of those fees and assessments prior to plan completion. In re Brown, — B.R. —-, 2021 WL 4480832 (Bankr. D. S.C. Sept. 15, 2021) (case no. 16-4122).
In this case, the debtor’s plan provided for the trustee to pay off the mortgage arrears through the plan and the debtor to maintain all other payments according to the mortgage agreement outside the plan. After she successfully completed her plan, the mortgage creditor, Citizen’s Bank, objected to discharge arguing that the debtor owed $1,085 in post-petition fees and assessments.
While the debtor did not dispute that she had incurred the fees and assessments, she argued that they were not “payments under the plan,” as contemplated by section 1328(a), which would preclude discharge if not paid at plan completion. [Read more…] about Discharge Despite Unpaid Mortgage Fees
Debtor Entitled to Attorney Fees from Defense of Motion for Relief from Stay
The chapter 13 debtor was entitled, under Oregon’s reciprocal fee statute, to recover attorney fees for successfully defending a motion for relief from stay where the motion required interpretation of the terms of the motor vehicle lease. In re Gilgan, 2021 WL 4047463 (Bankr. D. Or. Sept. 3, 2021) (case no. 19-32009). [Read more…] about Debtor Entitled to Attorney Fees from Defense of Motion for Relief from Stay
Debtor Lacked Standing to Appeal Order Approving Agreement between Trustee and Creditor
The debtor lacked standing to appeal the bankruptcy court’s order approving an agreement between the chapter 7 trustee and a creditor under which the creditor agreed to fund litigation on behalf of the bankruptcy estate, where the order would not have a direct, adverse, financial effect on the debtor. Dean v. Seigel (In re Dean), No. 21-10468 (5th Cir. Dec. 7, 2021).
Lacking funds to pursue litigation on behalf of the bankruptcy estate, the chapter 7 trustee entered into an agreement with one of the debtor’s creditors, Reticulum Management, LLC, under which Reticulum supplied the funds for the litigation in exchange for a percentage of any recovery the trustee might make. The debtor objected on the grounds that the arrangement unfairly altered distribution of the estate in favor of Reticulum to the detriment of other creditors. The bankruptcy court approved the agreement and the district court affirmed. The debtor appealed to the Fifth Circuit. [Read more…] about Debtor Lacked Standing to Appeal Order Approving Agreement between Trustee and Creditor
Pre-Petition Increase in Retirement Account Contributions
A chapter 13 debtor’s post-petition contributions to his qualified retirement account may be deducted from the calculation of his projected disposable income and the amount of those contributions is presumed to be the average contribution made during the six months preceding bankruptcy. Where, as here, the debtor substantially increased his contributions on the eve of bankruptcy, he bears the burden of proving that his projected disposable income calculation should be reduced by the increased retirement account contributions. In re Huston, 2021 WL 4528883 (Bankr. N.D. Ill. Sept. 30, 2021) (case no. 20-81689). [Read more…] about Pre-Petition Increase in Retirement Account Contributions
Standing Trustee Must Return Fee if Plan Not Confirmed
The standing chapter 13 trustee must return his percentage fee to the debtor when the debtor’s plan is not confirmed. Doll v. Goodman (In re Doll), No. 21-731 (D. Colo. Dec. 6, 2021).
The debtor filed for chapter 13 bankruptcy and made $29,900 in plan payments to the standing trustee prior to confirmation. Of that amount, $19,800 went to his counsel, $7,503.30 was disbursed to the Colorado Department of Revenue on a priority tax claim, and the remaining $2,596.70 was retained by the standing trustee as part of his statutory 10% trustee fee. The plan was not confirmed and the bankruptcy court allowed the trustee to retain his fee over the debtor’s objection. The debtor appealed to the district court. [Read more…] about Standing Trustee Must Return Fee if Plan Not Confirmed
Debtor Need Not Provide for Secured Claim in Plan
Nothing in the Code requires a debtor to provide for a claim secured by his principal residence in his chapter 13 plan. In re Jones, 2021 WL 4465554 (Bankr. E.D. N.C. Sept. 29, 2021) (case no. 20-03607).
When he filed for chapter 13 bankruptcy, the debtor listed food stamps and VA disability benefits as his only source of income. He also listed his principal residence as securing a debt to Bank of New York Mellon (BONY). The debtor’s second amended proposed plan omitted any provision for BONY’s claim relating to the residence. The plan also specified that the debtor could sell the property without notice to the court or the chapter 13 trustee. BONY objected to confirmation arguing that section 1325(a) required the debtor to provide for its secured claim in the plan. The trustee also objected to confirmation on feasibility grounds and because of the provision relating to non-notification in the event of sale. The standing chapter 13 trustee filed an amicus brief on the issue of notice and on the grounds that the debtor’s failure to treat the secured claim in his plan violated section 1325(a)(3) and (5). [Read more…] about Debtor Need Not Provide for Secured Claim in Plan