In a disturbing trend favoring personal injury defendants over debtors who, without actual intent to deceive, fail to inform the bankruptcy court of a potential lawsuit, the Fifth Circuit applied the doctrine of judicial estoppel to prevent the debtor from benefiting from her state lawsuit. Flugence v. Axis Surplus Ins.(In re Flugence), No. 13-30073 (5th Cir. Oct. 4, 2013). [Read more…] about Fifth Circuit Applies Judicial Estoppel Doctrine
Student Loan May Be “Special Circumstance” under Section 707(b)(2)(B)(i)
In a fact-specific analysis, the court in In re Bradley found that the debtors’ nondischargeable student loan debt constituted a “special circumstance” that could be used to adjust current monthly income to rebut the presumption of abuse otherwise created by the means test calculation under section 707(b). 2013 WL 4663125 (Bankr. S.D. Ala. Aug. 30, 2013). [Read more…] about Student Loan May Be “Special Circumstance” under Section 707(b)(2)(B)(i)
Nondischargeability of Debt Not Per Se “Cause” for Lifting of Stay
The Eleventh Circuit vacated the district court’s finding that nondischargeability of a debt, standing alone, is “cause” to grant relief from stay under section 362(d)(1). Disciplinary Board of the Supreme Court of Pa. v. Feingold (In re Feingold), No. 12-13817 (Sept. 17, 2013). [Read more…] about Nondischargeability of Debt Not Per Se “Cause” for Lifting of Stay
District Court in Colorado Declines to Adopt McCoy Approach to Late-Filed Tax Returns
In In re Mallo, No. 13-98 (Sept. 11, 2013), and In re Martin, No. 12-3380 (Sept. 23, 2013), the District Court in Colorado was faced with determining under what circumstances a late-filed tax return, filed after the IRS had conducted its own assessment, could be deemed a “return” within the meaning of section 523(a)(1)(B)(i). [Read more…] about District Court in Colorado Declines to Adopt McCoy Approach to Late-Filed Tax Returns
Hardship Test Supports Discharge of Student Loan
The Bankruptcy Appellate Panel for the Eighth Circuit found that there was insufficient evidence of the student loan debtor’s “reasonably reliable future” income to support the bankruptcy court’s finding that her student loan was nondischargeable. Conway v. National Collegiate Trust (In re Conway), No. 13-6016 (Aug. 21, 2013). [Read more…] about Hardship Test Supports Discharge of Student Loan
SunTrust Consent Order Payment Not Part of Estate
After the chapter 7 debtors received their discharge they disclosed to the trustee that they had received funds as a result of a settlement agreement between the Federal Reserve and SunTrust Mortgages. They moved to reopen their bankruptcy and amend their schedules to reflect the payment. They also sought to exempt the payment as related to a “potential wrongful foreclosure claims against SunTrust Mortgage” under applicable state exemption laws. The trustee objected to the exemption and sought to administer the payment as part of the bankruptcy estate.
The issue turned on whether the payment was a “legal or equitable interest” of the debtors that existed as of the commencement of the case. The bankruptcy court found that it was not. In re Vanwart, No. 13-515 (Bankr. E.D. N.C. Aug. 27, 2013).
[Read more…] about SunTrust Consent Order Payment Not Part of Estate
Creditor Lacks Standing to Move for Dismissal under 707(b)
In In re Gandy, No. 11-30369 (Bankr. E.D. Tenn. July 12, 2013), the court found that a creditor had no standing under section 707(b) to seek dismissal of a chapter 7 petition, after conversion from chapter 13, where debtor’s petition documents showed him to be below-median. [Read more…] about Creditor Lacks Standing to Move for Dismissal under 707(b)
Proceeds of Settlement for Stay Violation Part of Bankruptcy Estate
The district court for the southern district of Georgia held that settlement proceeds from post-confirmation violation of the automatic stay under section 362(k) are property of the chapter 13 estate under section 1306(a)(1). Crouser v. BAC Home Loans Servicing, No. 12-156 (S.D. Ga. Aug. 21, 2013). [Read more…] about Proceeds of Settlement for Stay Violation Part of Bankruptcy Estate
Lower Court Sides with “Majority View” with respect to Inherited IRAs
Despite the recent holding to the contrary by the seventh circuit, the court in In re Trawick, No. 12-12581 (Bankr. C.D. Cal. Aug. 29, 2013), held that inherited IRAs may be exempt under section 522(b)(3)(C). Exemptibility is contingent upon two elements: 1) that the IRA has received a favorable determination under IRC section 7805, or is otherwise in compliance with the requirement of the IRC, and 2) that the funds in the account are “retirement” funds. Here, the court noted that there is a split in the circuits as to whether inherited IRAs can ever be exempt, under the second factor, since the debtor himself did not contribute the funds toward his own retirement. See, e.g. Chilton v. Moser, 674 F.3d 486 (5th Cir. 2012); Mullen v. Hamlin, 465 B.R 863 (B.A.P. 9th Cir. 2012); Doeling v. Nessa, 426 B.R. 312 (B.A.P. 8th Cir. 2010) (exempt); In re Clark, 714 F.3d 559 (7th Cir. 2013), petition for cert. filed, No.13-299 (Sept. 6, 2013) (never exempt).
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Ninth and Tenth Circuits Differ on Judicial Estoppel Considerations
When determining whether judicial estoppel should be applied in cases where a debtor has failed to disclose a pending lawsuit in her bankruptcy schedules, the ninth circuit expanded the inquiry into what constitutes “inadvertence” or “mistake” to include a subjective component. [Read more…] about Ninth and Tenth Circuits Differ on Judicial Estoppel Considerations