Debtors filed a chapter 13 plan which separately classified their unsecured student loan debts. Debtors contended that under 11 U.S.C. § 1322(b)(5), they could maintain contractual payments (even if such payment would result in a substantially higher dividend to the student loan creditors than to other unsecured creditors) because it is a long-term debt that will continue after the final plan payment is due. The chapter 13 trustee objected to the plan claiming that such separate classification constitutes “unfair discrimination” under 11 U.S.C. § 1322(b)(1). The court held that 11 U.S.C. §§ 1322(b)(5) and 1322(b)(1) must be read in conjunction with one another and that, while such separate classification may be allowed in certain instances, based on the facts and circumstances in this case, the plan did unfairly discriminate against other unsecured creditors. The court further held, that pursuant to 11 U.S.C. § 1322(b)(10), the plan could not provide for payment of interest on the unsecured student loan debts when all claims were not being paid in full. The trustee’s objection to confirmation was sustained.
"Minutes from October 25, 2010 hearing in an adversary case, inwhich the Court held that debtors who were not eligible for a Chapter 13 discharge because they'd received a Chapter 7 discharge within four years of filing the Chapter 13 petitions could not use the Chapter 13 proceeding to avoid wholly-unsecured junior mortgage liens."
Because law firm LLC had not been dissolved, chapter 7 debtor husband's former law firm retained liens in contingent fee contracts the debtor took with him when he left the firm.
While the fact that a debt is "disputed" does not make it "unliquidated" for the purposes of determining whether a debtor has exceeded the Chapter 13 debt limit, a dispute over whether the debt ever existed or will exist can render the nature of the debt "unliquidated." Even applying that test, however, the Court found that the particular debt in question was "liquidated," and needed to be included in the calculation of the debt limits.
When a creditor files its proof of claim pre-petition and the debtor (a) proposes a plan that specifically articulates how it will treat that creditor's claim, (2) that treatment is different than the treatment in the proof of claim, and (3) the debtor serves the plan on that creditor, the treatment in the confirmed plan controls over the proof of claim if the creditor does not object to its treatment pre-confirmation.
In a nondischargeability action under §523(a)(4), the plaintiff failed to prove the element of defalcation in a fiduciary capacity, because it failed to prove that the defendant's violation of Wisconsin's theft-by-contractor (Wis. Stat. §779.02(5)) law involved more than mere negligence.
The defendant committed theft by contractor when he used trust funds to pay himself and to pay the overhead expenses of his business. Accordingly, his debt to the materials supplier was nondischargeable pursuant to 11 U.S.C. section 523(a)(4). The defendant's attempt to argue that he paid the materials supplier "proportionally" was not successful; the evidence did not demonstrate either that he paid the material supplier proportionally to himself, or that he paid the supplier proportionally to what he received from the project owners. Nor was the fact that he used the funds to pay his overhead, and thus, to enable him to complete the jobs, a defense to the theft-by-contractor claims. The plaintiff, however, did not prove the necessary intent to justify treble damages.
State Department of Corrections did not violate the automatic stay when it deducted funds from chapter 7 debtor's prisoner trust account postpetition and applied them against an obligation to pay for medical services received while he was in prison. The obligation was a nondischargeable penalty, as well.
Debtor proved his affirmative defense of self-defense to willful and malicious injury claim under Bankruptcy Code § 523(a)(6).
Debtors were not eligible for chapter 13 because their unsecured debts exceeded cap set forth in section 109(e). The debtors' liabilities relating to their personal guarantees of corporate debt were not contingent.