Chapter 13 debtor objected to priority status of claim filed by attorney who represented the debtor's former spouse in state court proceedings. The debtor argued the state court awarded the attorney's fees with the intent to punish the debtor for misconduct in litigation, not for the purpose of enforcing the debtor's duty to support his former spouse and/or children. The court overruled the objection and allowed the claim as a priority domestic support obligation under sec. 507(a)(1)(A). The fees were incurred in litigation relating to the care, custody, and welfare of the minor children of the marriage.
Debt incurred was community claim but phantom discharge did not apply since creditor was not scheduled and did not have notice of deadline to file dischargeability complaint.
In re Rowell, 2015 Bankr. LEXIS 45(January 2015) -- Judge Kelley
Under § 707(b)(2)(D)(ii), as long as the 540-day exclusion from means testing for veterans has not expired when the petition is filed, the exclusion applies, and the debtor is exempt from the means test.
The defendant moved to dismiss the chapter 13 debtor's adversary proceeding to set aside a prepetition transfer of real estate pursuant to a tax foreclosure judgment. The defendant argued the debtor lacked standing to pursue the action because the property owner of record was the debtor's mother who had died six years prior to the judgment. The Court denied the motion to dismiss, finding the debtor had standing because she had acquired an interest in the real estate upon her mother's death.
Decision discussing good faith in the context of a section 362(c)(3) motion.
Liebzeit v. Intercity State Bank (In re Blanchard), 520 B.R. 740(October 2014) -- Judge Kelley
Trustee could not avoid recorded mortgage on Debtors' real property where Debtors had sold property on unrecorded land contract.
In re Thompson, 520 B.R. 713(October 2014) -- Judge Kelley
Creditor with disallowed claim required to refund all mortgage payments made on claim; debtors' requests for attorneys' fees and return of mortgage note denied.
The trustee objected to confirmation of the debtors’ proposed chapter 13 plan asserting that it failed to provide for all of debtors’ disposable income. The trustee argued that the debtors must pay into the plan (i) any increase in the cash surrender value of their whole life insurance policy, and (ii) an additional $25 per month representing a reduction of the debtors’ claimed recreation expense of $125 per month.
The court held that the cash surrender value was not “income.” And the trustee (i) did not contest current monthly income or reasonableness of the debtors’ expenditures (other than recreation), and (ii) failed to establish a basis for a Lanning adjustment.
The court concluded that the reasonableness of the recreation expense could not be determined as a matter of law, but the debtors have no disposable income even if the recreation expense is excluded in its entirety.
Consequently, the court ruled that the debtors’ plan did not offend 11 U.S.C. §1325(b)(1)(B)’s requirement that they devote all projected disposable income during the plan term to pay unsecured creditors.
In re Ryan, 517 B.R. 905(September 2014) -- Judge Kelley
In fee allowance dispute, Chapter 13 debtor's attorney bears burden of proving benefit of services to debtor, and in case that does not reach confirmation, the burden may be difficult to meet. Also, the disclosure requirements of § 329 and Rule 2016(b) are mandatory and strictly enforced.
The trustee objected to confirmation of the debtors’ proposed chapter 13 plan asserting that it failed to provide for all of the debtors’ disposable income. Debtors, who were repaying a 401k loan at the time their petition was filed, sought to commence making 401k contributions once their loan was fully repaid. The court held that because they were not making contributions during the look-back period, such contributions could not be factored into current monthly income. In theory, future contributions might justify a Lanning adjustment, but only if the expected contribution is both “reasonably necessary” for the debtors’ maintenance and support and “known and virtually certain to occur”. The court concluded that the record did not support a Lanning adjustment. Confirmation was denied.