One step forward, two steps back. Two courts out of Massachusetts reached opposite conclusions on the issue of whether a late-filed tax return may be discharged in bankruptcy. Although both courts ostensibly relied on the same Massachusetts tax law, the issue ultimately came down to differing interpretation of language in BAPCPA. In a parenthetical that packs a punch, section 523(a)(*) defines a return as “a return that satisfies the requirements of applicable nonbankruptcy law (including applicable filing requirements).” The question before both courts was whether “applicable filing requirements” refers only to proper forms and documentation, or includes a timeliness factor. The BAP for the First Circuit found the former, Gonzalez v. Mass. Dept. of Rev., No. 13-26 (March 6, 2014), while a Massachusetts District Court found the latter, Perkins v. Mass. Dept. of Rev. (In re Perkins), No. 13-30107, consolidated with, Fahey v. Mass. Dept. of Rev. (In re Fahey), No. 13-11875 (D. Mass. March 7, 2014). [Read more…] about Two Cases on Late-Filed Tax Returns – McCoy Limps On
Bankruptcy Specific Exemption Triumphs Again
For the seventh time Kansas’s bankruptcy-specific exemption for earned income tax credit (EITC) has emerged unscathed from constitutional challenge. Williamson v. Murray (In re Murray), No. 13-34 and Williamson v. Beach (In re Beach) No. 13-37 (B.A.P. 10th Cir. March 4, 2014) (cases administratively merged). [Read more…] about Bankruptcy Specific Exemption Triumphs Again
Supreme Court Finds that Court May Not Surcharge Homestead Exemption
In a unanimous decision authored by Justice Scalia, the Supreme Court found that a bankruptcy court may not surcharge the homestead exemption as a result of the debtor’s misconduct. Law v. Siegel (In re Law), No. 12-5196, 571 U.S. ___ (March 4, 2014). [Read more…] about Supreme Court Finds that Court May Not Surcharge Homestead Exemption
Property of Estate Includes Inheritance More Than 180 Days Post-Petition
The chapter 13 debtor inherited $30,000.00 from his mother more than 180 days post-petition but before the close of his chapter 13 case. When the debtor failed to turn over the inheritance for the benefit of creditors, the trustee moved to dismiss. Finding that section 1306(a)(1) brought the inheritance into the estate, the court granted the motion. The BAP for the Ninth Circuit agreed. Dale v. Maney (In re Dale), No. 13-1251 (B.A.P. 9th Cir. Feb. 5, 2014). [Read more…] about Property of Estate Includes Inheritance More Than 180 Days Post-Petition
Refusal to Transfer Title in Jeep is Stay Violation
The creditor violated the automatic stay by refusing to take the steps necessary to transfer title of the vehicle he had sold to the debtor prior to bankruptcy. Parker v. Smith (In re Parker), No. 12-1324, AP 13-32 (Bankr. S.D. Miss. Jan. 6, 2014). [Read more…] about Refusal to Transfer Title in Jeep is Stay Violation
Denial of Confirmation of Fee-Only Plan
The Eleventh Circuit upheld the lower court’s denial of confirmation in the debtor’s fee-only chapter 13 plan finding that it did not satisfy the good faith requirements of section 1325(a)(3) and (7). Brown v. Gore (In re Brown), No. 13-10260 (11th Cir. Feb. 14, 2014). [Read more…] about Denial of Confirmation of Fee-Only Plan
Failure to Report SS Award Results in Dismissal
A debtor must report a new award of social security benefits during the course of her chapter 13 plan without regard to whether that income can be used to fund the plan. In re Wheeler, No. 09-13597 (Bankr. N.D. Ind. Dec. 18, 2013). [Read more…] about Failure to Report SS Award Results in Dismissal
Court Defines “Residence” Generously for Exemption Purposes
In two cases out of North Carolina, the bankruptcy court interpreted the state definition of “residence” for exemption purposes. In re Davila, No. 13-3246 (Bankr. E.D. N.C. Jan. 30, 2014) and In re Whitney, No. 13-05671 (Bankr. E.D. N.C. Jan. 15, 2014). [Read more…] about Court Defines “Residence” Generously for Exemption Purposes
Court Rejects Proposed Order for Payment of Attorney Fees in Event of Dismissal
Language in a proposed order for attorney fees that, in the event of dismissal or conversion, the fees were to be paid out of undistributed funds held by the trustee was rejected by the bankruptcy court as unsupported by the Code. In re Weatherspoon, No. 11-46755 (Bankr. W.D. Wash. Jan. 3, 2014). [Read more…] about Court Rejects Proposed Order for Payment of Attorney Fees in Event of Dismissal
Chapter 13 Debtor May Exercise Trustee’s Avoidance Power
A chapter 13 debtor may exercise the trustee’s avoidance powers under section 544 if doing so will benefit the bankruptcy estate. In re Aiwohi, 13-90038 (Bankr. Haw. Jan. 31, 2014). [Read more…] about Chapter 13 Debtor May Exercise Trustee’s Avoidance Power