Posted by NCBRC - November 18th, 2016
Where the debtor’s historical use of bankruptcy filings suggested improper purpose to hinder and delay creditors, the trustee’s adversary complaint stated a claim for violation of section 727(a)(2)(A). Rupp v. Pearson (In re Pearson), No. 15-4191 (10th Cir. Nov. 7, 2016).
Ms. Pearson filed a chapter 13 bankruptcy petition and had a plan confirmed in which she agreed to contribute her expected tax refund to the extent it exceeded $2,000. However, she kept the entire $4,829 refund and spent it on non-exempt personal items. As a result, the bankruptcy court dismissed her chapter 13 case. Two week later, she filed the current chapter 7 bankruptcy petition. The trustee filed an adversary complaint seeking to have Ms. Pearson’s discharge denied due to her misappropriation of the tax refund with intent to defraud creditors, in violation of section 727(a)(2)(A). Read More
Posted by NCBRC - October 5th, 2016
The Bankruptcy Appellate Panel for the Eighth Circuit affirmed that a prison inmate’s pay-to-stay debt was dischargeable in bankruptcy. County of Dakota v. Milan, No. 16-6012 (Sept. 22, 2016).
Section 523(a)(7) precludes discharge of a debt for a fine, penalty or forfeiture owing to a governmental unit unless it is compensation for actual pecuniary loss. While it is not necessary that the debt be explicitly stated to be in the nature of fine or penalty, key to the determination of dischargeability is whether the debt is tied to the debtor’s criminal conduct or whether it is tied to recoupment of the government’s actual expenses. Here, the Minnesota law establishing the pay-to-stay system was explicitly designed to help the county recoup some of its $100/day incarceration expenses. Other factors, while not dispositive in and of themselves, also supported a finding of dischargeability, including that the county had discretion to impose the fee or not depending upon the financial circumstances of the inmate and his family, and that the debt was treated through the county’s civil collection system.
The district court decision was blogged here.
Milan BAP 8th opinion Sept 2016
Posted by NCBRC - June 30th, 2016
The one-year look-back period for fraudulent transfers is not subject to equitable tolling. DeNoce v. Neff (In re Neff), No. 14-60017 (9th Cir. June 9, 2016).
In October, 2008, Douglas DeNoce obtained a $310,000.00 dental malpractice judgment against Robert Neff. Neff filed a chapter 13 bankruptcy petition in March, 2010, and the following month he quitclaimed property he owned to a revocable living trust that he had created. His bankruptcy was dismissed, and he filed a second chapter 13 petition in June, 2010, listing the revocable trust on his schedules. In August, 2010, he transferred the property back to himself. Neff subsequently voluntarily dismissed that bankruptcy case. In October, 2011, Neff filed a third bankruptcy petition, this time in chapter 7. DeNoce filed an adversary complaint under section 727(a)(2) arguing that the 2010 quitclaim of the property to the trust was a fraudulent transfer. The court granted Neff’s motion for summary judgment on the basis that the transfer had occurred more than one year prior to his chapter 7 bankruptcy. The BAP for the Ninth Circuit affirmed. In re Neff, 505 B.R. 255 (B.A.P. 9th Cir. 2014). Read More
Posted by NCBRC - May 24th, 2016
Issue preclusion provided a short-cut to finding that the debtor’s liability for the costs and penalties incurred under state consumer protection laws was nondischargeable in bankruptcy under section 523(a)(6). O’Rorke v. Porcaro (In re Porcaro), No. 15-26 (B.A.P. 1st Cir. Feb. 3, 2016). Read More
Posted by NCBRC - April 12th, 2016
A debt owed to the county under a pay-to-stay incarceration cost recoupment program was held to be dischargeable under section 523(a)(7). County of Dakota v. Milan, No. 15-3034 (Bankr. D. Minn. March 1, 2016). Read More
Posted by NCBRC - December 8th, 2015
Debtors whose chapter 13 plan included a provision for curing mortgage arrears through the plan with regular mortgage payments paid outside the plan, are not entitled to discharge when they fail to keep up with the mortgage payments. Kessler v. Wilson (In re Kessler), No. 15-40 (N.D. Tex. Nov. 19, 2015). Read More
Posted by NCBRC - October 6th, 2015
The bankruptcy court for the district of New Jersey bucked the current trend, and “agree[d] with those decisions that hold that the timing of the filing is not a factor in determining whether the document meets the definition of a ‘return.’”In re Davis, No. 14-26507 (Bankr. D. N.J. Sept. 29, 2015). See also, In re Maitland, 531 B.R. 516 (Bankr. D. N.J. 2015). Read More
Posted by NCBRC - April 9th, 2015
The element of “willful and malicious injury” in the discharge exception under section 523(a)(6) could not be established by issue preclusion where the state court judgment could have been based on negligence. Gerard v. Gerard, No. 14-1496 (7th Cir. March 12, 2015). Read More
Posted by NCBRC - April 7th, 2015
When a debt is the result of fraud may the debtor still discharge it if he was not complicit in the fraud? What if the fraudulent actor was an agent of the debtor? Judge Posner of the Seventh Circuit answered both questions in the negative. Sullivan v. Glenn (In re Glenn), No. 14-3213 (7th Cir. Apr. 2, 2015). Read More
Posted by NCBRC - January 16th, 2015
The Tenth Circuit has concluded that late-filed tax returns are not “returns” for dischargeability purposes unless filed by the IRS in cooperation with the debtor. Mallo v. IRS (In re Mallo), __ F.3d __, 2014 WL 7360130 (Dec. 29, 2014) (consolidated with In re Martin, 14-1488). Read More