National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

bankruptcy

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Sixth Circuit Reverses Denial of Amendment to Exemptions

The Sixth Circuit found that prejudice to creditors was unlikely to be a legitimate basis for denying a debtor’s motion to amend her schedules to increase her exemption claim and that even if it were a legitimate basis, the trustee failed to show the existence of such prejudice. Westry v. Lim (In re Westry), No. 14-1440 (6th Cir. Dec. 30, 2014). [Read more…] about Sixth Circuit Reverses Denial of Amendment to Exemptions

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Bankruptcy Reopened to Add Insurance Proceeds to Estate

The bankruptcy court properly reopened the debtor’s Chapter 7 case to permit the trustee to administer insurance proceeds where the debtor’s interest in the funds pre-dated his bankruptcy even though he did not acquire the funds until post-discharge. Wojcik v. Gold (In re Daher), No. 14-8028 (B.A.P. 6th Cir. Dec. 4, 2014). [Read more…] about Bankruptcy Reopened to Add Insurance Proceeds to Estate

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National Bankruptcy Conference Chimes in on Wellness and the Constitutional Validity of Consent

In Wellness International Network Ltd. V. Sharif, a creditor (WIN) sought a finding that a state court judgment against the debtor was non-dischargeable in the debtor’s Chapter 7 bankruptcy and that a trust for which the debtor was the trustee was, in fact, an alter ego of the debtor and therefore liable for his debts. In the bankruptcy court, the debtor failed to respond to discovery requests and court orders, and, as a result, the court ordered default judgment to WIN. The debtor appealed to the district court of Illinois and during the pendency of that appeal, the Supreme Court decided Stern v. Marshall. The district court dismissed the debtor’s Stern objection as untimely. At the Seventh Circuit, the court found that the dischargeability of the debt was a core matter properly decided by the bankruptcy court. The court remanded the alter ego issue to the district court for a determination of whether it was core or noncore and concluded that, if it was core, the bankruptcy court lacked constitutional authority to decide it and the parties could not waive objection to the lack of authority. Wellness International Network Ltd. v. Sharif, 727 F.3d 751, 774 (7th Cir. 2013), cert. Granted, 134 S. Ct. 2901 (July 1, 2014) (No. 13-935). [Read more…] about National Bankruptcy Conference Chimes in on Wellness and the Constitutional Validity of Consent

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Homestead Exemption May Not Be Denied Based on Bad Faith, but . . .

Absent a statutory basis for doing so, a bankruptcy court may not deny a debtor’s homestead exemption based on bad faith or prejudice to creditors. Elliott v. Weil (In re Elliott), No. 14-1050, 14-1059 (consolidated) (B.A.P. 9th Cir. Dec. 10, 2014). [Read more…] about Homestead Exemption May Not Be Denied Based on Bad Faith, but . . .

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Charitable Contribution in Excess of 15% Avoidable in its Entirety

In a sharply circumscribed opinion, the Tenth Circuit found that the trustee could avoid in their entirety charitable contributions in excess of 15% of the debtors’ gross annual income. Wadsworth v. The Word of Life Christian Center (In re McGough), No. 12-1142 (Dec. 16, 2013). [Read more…] about Charitable Contribution in Excess of 15% Avoidable in its Entirety

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Fifth Circuit Finds Defensive Appellate Rights Property of Estate

In a case of first impression, the Fifth Circuit Court of Appeals found that a chapter 7 debtor’s right to appeal a state court judgment against him was property of the estate that could be sold by the trustee. Croft v. Lowry (In re Croft), No. 13-50020 (Dec. 10, 2013). [Read more…] about Fifth Circuit Finds Defensive Appellate Rights Property of Estate

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Supreme Court to Decide Inherited IRA Exemption Issue

In other Supreme Court news, the Court granted certiorari in the case of Clark v. Rameker (In re Clark), No. 13-299. In that case, the Seventh Circuit created a split in the circuits when it held that a debtor may not exempt her inherited IRA in bankruptcy. In re Clark, No. 12-1241 & 12-1255 (April 23, 2013). The Fifth Circuit had reached the opposite conclusion in Chilton v. Moser, 674 F.3d 486 (5th Cir. 2012). NCBRC will file an amicus brief on behalf of the NACBA membership in this important case.