The debtor was entitled to reopen her bankruptcy case to disclose a post-confirmation, pre-discharge lawsuit where she successfully completed her 100% plan so there was no harm to creditors by her failure to timely disclose the lawsuit, and the debtor would benefit from the opportunity to comply with Eleventh Circuit disclosure requirements. In re Calixto, No. 17-18317 (Bankr. S.D. Fla. Jan. 31, 2023). Read More
Tag Archive: Disclosure
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No Harm in Failure to Disclose
Posted by NCBRC - March 16th, 2023
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Covid Mortgage Forbearance Justifies Plan Modification
Posted by NCBRC - August 2nd, 2022
The court granted the trustee’s motion to modify the debtor’s chapter 13 plan, finding that the debtor’s mortgage deferral due to Covid was an “unanticipated and substantial” change in his financial status which he had a duty to disclose and which increased his income for 18 months during the plan. In re Ilyev, No. 17-12987 (Bankr. E.D. Va. July 26, 2022). Read More
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Debtors Need Not File Annual Updated Schedules
Posted by NCBRC - July 13th, 2022
In a nice win for long-time NACBA member, Greggory Colpitts, the Bankruptcy Court for the Southern District of Oklahoma declined to place a prospective order requiring all chapter 13 debtors to submit annual tax returns and updated schedules I and J where the Code and local rules provide for annual filing of tax returns with the bankruptcy court, and section 521(f) requires debtors to file further financial information upon request by the trustee. In re Williams, No. 18-80539 (Bankr. S.D. Okla. July 5, 2022).
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Mandatory Discharge Trumps Discretionary Dismissal for Bad Faith
Posted by NCBRC - April 18th, 2022
The debtors were entitled to discharge despite their failure to disclose an asset where the trustee moved for dismissal for bad faith after the debtors completed all their plan payments but before they had received their discharge. In re Frank, No. 18-12812 (Bankr. D. Colo. March 30, 2022).
Less than one year after one of the debtors was injured in a car accident, the below-median debtors filed for chapter 13 bankruptcy. The debtors did not inform the trustee of the car accident or list the potential cause of action in their bankruptcy schedules. The debtors’ confirmed 39-month plan committed them to paying a priority tax debt, a small secured debt, trustee fees and their own attorney fees. The plan paid nothing to unsecured creditors. About one year after their plan was confirmed, the debtors received a $67,000 settlement in the personal injury case. They did not amend their schedules or inform the trustee of the settlement. One month before the final payment was due on the debtors’ plan, the trustee asked them whether they had received any payment on a separate wrongful discharge claim that they had listed in their schedules. They then informed the Trustee of the $67,000 payment on the personal injury claim. The debtors made their final plan payment the following month and the trustee then moved to dismiss on the grounds of bad faith for nondisclosure of the personal injury claim. The debtors claimed inadvertence based on their belief that the settlement proceeds were exempt. Read More
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9th Circuit BAP Finds Disclosure of Debtor’s Claim in the SOFA Sufficient for Abandonment (Subtitle: BAP Surveys Cases Nationally on Disclosure and Abandonment)
Posted by NCBRC - May 2nd, 2019
In an unpublished opinion entered on April 29, 2019, the 9th Circuit Bankruptcy Appellate Panel addressed the thorny issue whether a debtor’s disclosure of an asset in the SOFA but not in the Schedules of Assets and Liabilities precludes abandonment under 11 U.S.C. § 554(c).
Prior to filing for bankruptcy, the Debtor and his sister, lent money ($696,704.42) to Dr. Nasseri (the Doctor) which was secured by the Doctor’s real and personal property. The Debtor and his sister filed a state court collection action against the Doctor and the Doctor filed a counterclaim.
The Debtor then filed a chapter 7 bankruptcy. He did not list the state court action in his schedule B but did list it in the SOFA identifying the court, case name and number, describing the nature of the suit as “Title to Property” and noting that the case was “open.” The Debtor never listed the Doctor’s counterclaim in his schedules or SOFA nor did he list the Doctor as a creditor. The Doctor did not receive formal notice of Debtor’s bankruptcy filing.
At the 341 meeting, the Trustee questioned the Debtor about the state court action. The Debtor state he told the trustee that the case had not yet been tried and that the Doctor was living in Dubai. The Debtor obtained a discharge on February 11, 2011. On September 29, 2011, the trustee filed a notice of intent to specifically abandon the state court action. The Doctor was not served with the notice.
In April of 2012, when the Doctor learned of the bankruptcy, the parties filed a stipulation and order that agreed that the Doctor’s counterclaim would not violation the discharge and any debts owed to the Doctor (on account of his counterclaim) would not be discharged. Thereafter the trustee filed his final report. The bankruptcy was closed on May 4, 2012.
Subsequently, the Debtor and his sister continued the lawsuit against the Doctor and won a judgment against him in the amount of $547,173.44. The Doctor’s counterclaim was not successful. The Doctor argued for a directed verdict arguing Debtor lacked standing as the asset had never been abandoned under 11 U.S.C. §§ 554(a) or (c) which was denied by the state court.
The Debtor then attempted to collect the debt from the Doctor. He employed multiple attorneys both locally and in Dubai (where the Doctor lived) and twice bringing the matter before the Supreme Court in Dubai to have the Judgment domesticated there.
In 2017, the Doctor moved to reopen the Debtor’s bankruptcy hoping to come to an agreement with the trustee to compromise or set regular payments on the judgment amount. The bankruptcy court reopened the case and appointed a new trustee. The Debtor then moved for an order of abandonment of the state court action and to re-close his case. The court granted Debtor’s motion.
The issues before the BAP were as follows:
- Was the state court action sufficiently scheduled under 11 U.S.C. § 541(a)(1) so that the trustee could abandon it? Further, does an asset need to be formally listed in schedule B to be disclosed?
- Does laches apply to the Doctor’s assertion that the asset was not disclosed and therefore still part of the bankruptcy estate?
To read more click here.
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Failure to Report SS Award Results in Dismissal
Posted by NCBRC - February 19th, 2014
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
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