The debtor’s ex-wife’s interest in the marital residence did not enter the bankruptcy estate even though the property was titled to the debtor, where their dissolution agreement gave her half interest and the debtor was prohibited from unilaterally disposing of the property. But the debtor’s ex-wife did not show that his failure to comply with the dissolution agreement generally, was an indication that he undertook the debts created by the agreement by fraud where the evidence did not support her contention that he never intended to comply. Williams v. Williams, No. 18-1197 (Bankr. D. Colo. Jan. 8, 2021). Read More
Tag Archive: dischargeability
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Ex-Wife’s Interest In Marital Residence Does Not Enter Debtor’s Estate
Posted by NCBRC - March 17th, 2021
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Notification to State Tax Board of Federal Tax Reevaluation is Return “Equivalent”
Posted by NCBRC - February 8th, 2021
A state-mandated notification with the state taxing authority of a change in the taxpayer’s federal taxes is a “return, or equivalent report or notice,” which, if not filed by the taxpayer, renders the state tax debt nondischargeable under section 523(a)(1)(B). Berkovich v. Calif. Franchise Tax Bd., No. 20-1025 (B.A.P. 9th Cir. Oct. 5, 2020). Read More
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Dischargeability of Sanctions Against Attorney
Posted by NCBRC - October 2nd, 2020
State law discovery sanctions owed to a non-governmental entity for compensatory purposes do not fall under section 523(a)(7)’s exception to discharge for fines or penalties, and are therefore dischargeable. Costs related to the State Bar’s disciplinary actions are owed to a governmental agency, are punitive rather than compensatory in nature, and are therefore excepted from discharge. Where the debtor’s law license suspension was contingent upon her paying nondischargeable costs, the suspension was not discriminatory in violation of section 525(b). Albert-Sheridan v. State Bar of Calif., No. 19-60023 (9th Cir. June 10, 2020). Read More
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10th Circuit – Student Loan Not Excepted from Discharge as Educational Benefit
Posted by NCBRC - September 3rd, 2020
An educational benefit is not a student loan for nondischargeability purposes under section 523(a)(8)(A)(ii). McDaniel v. Navient Solutions, LLC, No. 18-1445 (10th Cir. Aug. 31, 2020).
When the debtors filed their chapter 13 petition, they had many outstanding student loans including six private educational loans held by Navient totaling approximately $107,000 (the Loan). The trustee objected to confirmation of the plan citing its failure to provide for nondischargeable student loans. The debtors filed an amended plan specifically to correct certain inaccuracies not related to student loans. They also added the provision that “[s]tudent loans are to be treated as an unsecured Class Four claim or as follows: deferred until end of plan.” The plan defined unsecured Class Four claims as “[a]llowed unsecured claims not otherwise referred to in the Plan.” Navient agreed that class four claims were dischargeable. Read More
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Failure to Disclose Employment is not a Statement under 523(a)(2)(A)
Posted by NCBRC - January 24th, 2020
Failure to report a change in employment status is not a “statement respecting financial condition” within the meaning of section 523(a)(2)(A) and, therefore, a debt based on overpayment of public assistance benefits made in reliance on the non-disclosure, is nondischargeable. State of Oregon v. Mcharo, No. 19-1010 (B.A.P. 9th Cir. Jan. 9, 2020).
When applying for public assistance benefits, Blake Mcharo and his wife signed DHS0415R averring that they would inform the DHS of any change in their eligibility status. After signing the application and receiving Temporary Assistance for Needy Families (TANF) benefits, Mr. Mcharo found employment. Neither he nor his wife informed the DHS of his employment.
In the Mcharo’s chapter 7 bankruptcy, the DHS filed a claim for the amount it had overpaid in TANF benefits after Mr. Mcharo was employed. The DHS also sought an order that the debt was non-dischargeable under 523(a)(2)(A). The bankruptcy court issued a default judgment against Ms. Mcharo but declined to do the same against Mr. Mcharo, finding that his failure to report his employment was an unwritten statement respecting financial condition falling outside the purview of either section 523(a)(2)(A) or (B). The State of Oregon appealed to the Ninth Circuit Bankruptcy Appellate Panel. Read More
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Rejection of Unexpired Lease Equals Pre-Petition Breach of Lease Agreement
Posted by NCBRC - June 1st, 2019
Under section 365(g), rejection of an unexpired lease is treated as breach of the lease contract not termination of the lease. Therefore, the lessor’s claim against the debtors for rent based on post-petition, post-rejection occupancy of the leased property was part of the pre-petition breach and was discharged in the debtors’ chapter 7 bankruptcy. In re Roberson, No. 17-8041 (B.A.P. 6th Cir. May 30, 2019) (unpublished).
Joi and Anthony Roberson defaulted on their lease midway through their lease term. When the lessor, GCB Properties III, Ltd., initiated eviction proceedings, they filed for chapter 7 bankruptcy listing the defaulted rent as one of their debts. Neither the trustee nor the Robersons assumed the unexpired lease and the Robersons received their discharge. During the pendency of their bankruptcy case, GCB continued to try to evict them and the Robersons obtained a judgment against GCB for violation of the automatic stay. After discharge, GCB attempted to collect the rent for the months the Robersons lived in the property from the date of the statutory rejection of the lease through the date the Robersons moved out of the property. Furthermore, GCB applied the judgment against it as set-off against unpaid rent. The bankruptcy court found that the rental default up through the time the Robersons vacated the property was discharged in their bankruptcy and therefore the lessor was not entitled to set-off. Read More
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State May Reasonably Rely on Public Assistance Application
Posted by NCBRC - May 16th, 2019
When providing public assistance benefits, the State may reasonably rely upon the applicant’s assertions in the application form, despite access to an independent source of information concerning the applicant’s financial condition. Maxwell v. State of Oregon, No. 18-1286 (B.A.P. 9th Cir. March 27, 2019) (unpublished).
Antionette Maxwell was employed at Oregon Health and Science University, yet she was still entitled to various public assistance benefits, including SNAP benefits, Temporary Assistance for Needy Families, and Employment Related Day Care Program. At some point, the State conducted an investigation into Ms. Maxwell’s income and found that she had failed to list income she had earned as an occasional domestic worker, and that she received in child support payments. The State sought to recover the resulting overpayment of benefits in the amount of over $16,000. Ms. Maxwell filed for chapter 7 bankruptcy, and the bankruptcy court found the overpayment was nondischargeable under section 523(a)(2)(B) as having been acquired by fraud. Read More
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Eleventh Circuit Interprets Section 1328(a)’s “Provided for”
Posted by NCBRC - January 8th, 2019
A mortgage paid outside the plan is not “provided for by the plan” for purposes of discharge of the debtor’s personal liability under section 1328(a). Dukes v. Suncoast Credit Union, No. 16-16513 (11th Cir. Dec. 6, 2018).
When she filed her bankruptcy petition, Chapter 13 debtor, Mildred Dukes, was current on two mortgages held by Suncoast Credit Union. Though she listed both mortgages in her schedules, the credit union filed a proof of claim only for the second mortgage. Her confirmed plan stated that the mortgages would be paid outside the plan. Ms. Dukes successfully completed her plan payments and was granted discharge of all debts provided for by the plan. During the course of the plan, however, Ms. Dukes defaulted on both mortgages. The credit union foreclosed on the property under the second mortgage, and sought deficiency judgment against Ms. Dukes under the first mortgage. It moved to reopen her bankruptcy to obtain an order that her personal liability on the first mortgage was not discharged. The bankruptcy court found in favor of the credit union, and the district court affirmed. Read More
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Omissions on Written Applications Satisfies Writing Requirement for Non-Dischargeability
Posted by NCBRC - December 27th, 2018
A bankruptcy court found that the omission of income data from numerous applications for food stamps and other public-assistance benefits satisfies the requirement of a materially false written statement respecting the debtor’s financial condition for purposes of exclusion from discharge. State of Oregon v. Maxwell, (In re Maxwell), No. 17-32084, Adv. Proc. No. 17-03113 (Bankr. D. Ore. Oct. 18, 2018) (unpublished letter opinion).
In this case, Antoinette Maxwell failed, on numerous public-assistance applications, to disclose employment income and child support payments she was receiving. The State of Oregon filed an adversary complaint in her chapter 7 bankruptcy seeking an order of non-dischargeability of over $16,000 in benefits it claimed she received by reason of the fraudulent omissions. Read More
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Debtors Entitled to Discharge Despite Bad Faith Conduct
Posted by NCBRC - November 9th, 2018
The debtors were entitled to discharge once they completed their payments under the plan notwithstanding the fact that they “gamed the system” and conducted their bankruptcy in bad faith. Davis v. Holman (In re Holman), No. 17-1118 (D. Kans. Oct. 31, 2018).
During the course of their chapter 13 bankruptcy, debtors, Shala and Nathan Holman, failed to disclose assets and debts, employment status, post-petition debts, and other relevant information. They modified their chapter 13 plan numerous times and responded to challenges by the trustee based on bad faith. In one challenge, addressing the entirety of their misconduct to date, the court held a hearing and the parties reached a stipulated agreement resolving the issues. In July, 2016, the trustee again sought dismissal of their case based on bad faith. While that litigation was pending, the debtors successfully completed their payments in accordance with their confirmed plan. After trial on the motion, the bankruptcy court found that while the debtors’ conduct indeed constituted bad faith, the court was precluded from dismissing the case because the debtors’ successful completion of their plan payments entitled them to discharge. Read More
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