Author Archives: NCBRC

First Circuit BAP Applies “Gavel Rule” to Foreclosure Sale

A panel for the First Circuit BAP found that the debtor could not cure and maintain her mortgage in bankruptcy because she had no interest in the property which was sold in a foreclosure sale prior to her bankruptcy petition, despite the fact that the mortgagee failed to record the deed of sale in accordance […]

IRA and 401(k) Obtained Through Divorce Not Exempt

Incorrectly relying on the decision in Clark v. Rameker, the Eighth Circuit found that the chapter 7 debtor was not entitled to exempt funds in his ex-spouse’s IRA and 401(k) which he obtained through a dissolution agreement but which had not been transferred to his name at the time of his bankruptcy petition. Lerbakken v. […]

Tax Debt from Late-Filed Tax Return Dischargeable

The Eleventh Circuit broke with the First, Fifth and Tenth Circuits to find that section “523 does not incorporate a mandatory precondition that a tax return must be timely filed to be dischargeable.” Mass. Dept. of Rev. v. Shek, No. 18-14922 (11th Cir. Jan. 23, 2020). The debtor filed his 2008 Massachusetts tax return seven […]

Fifth Circuit Approves Alternative to Judicial Estoppel Reaching Same Result

Finding its decision “odd” and “not the route we would have taken,” the Fifth Circuit affirmed the bankruptcy court’s order declining to apply judicial estoppel to put an end to the debtor’s personal injury litigation against Wal-Mart, but ordering the debtor to turn over any recovery he made through the lawsuit for distribution to creditors. […]

Non-Debtor Spouse’s Share of Tax Refund Not Part of Estate

The debtor’s non-debtor spouse had no obligation to contribute her share of their joint tax refund to the debtor’s chapter 13 plan even though her income was being used to fund the plan. In re Pelardis, No, 15-10949 (Bankr. S.D.N.Y. Jan. 2020) (unpublished). The debtor’s confirmed chapter 13 plan committed the amount in excess of […]

Diaz v. Viegelahn, No. 19-50982 (5th Cir.)

Type: Amicus Date: January 21, 2020 Description: Whether the district’s form Chapter 13 plan violated the Bankruptcy Code by requiring the debtor to turn over any tax refund to the extent the debtor’s total annual tax refunds exceeded $2,000, if the plan did not provide for full payment of unsecured claims. Result: Pending. Diaz NACBA […]

Illinois Workers’ Comp Settlement Proceeds Exempt

Answering a question certified to it from the Seventh Circuit Court of Appeals, the Illinois Supreme Court held that, under Illinois law, “the proceeds of a workers’ compensation settlement are still exempt from the claims of medical-care providers who treated the illness or injury associated with that settlement,” notwithstanding 2005 amendments to the Workers’ Compensation […]

Failure to Disclose Employment is not a Statement under 523(a)(2)(A)

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 […]

Denial of Motion for Relief from Stay is Final and Appealable

In a unanimous decision, the Supreme Court held that a bankruptcy court’s denial of a motion for relief from stay constitutes a final, appealable order under section 158(c)(2). Ritzen Group, Inc. v. Jackson Masonry, LLC, No. 18-938, 589 U.S. ___ (2020). NACBA filed an amicus brief in support of the Respondent. Ritzen Group and Jackson […]

Debtor Not Required to Turnover Proceeds From Sale of Appreciated Property

A chapter 13 debtor may not be compelled to turn over proceeds from the sale of appreciated real estate which had revested in him post-confirmation and was therefore no longer part of the bankruptcy estate. Black v. Leavitt (In re Black), No. 18-1351 (B.A.P. 9th Cir. Dec. 31, 2019). The debtor filed chapter 7 bankruptcy […]