Court denied US Trustee's motion for partial summary judgment in action seeking denial of debtor's discharge. The court had previously ruled that creditors would be best served by converting debtor's chapter 11 case to chapter 7 due, in part, to debtor's lack of financial records. The prior ruling had focused on the effect of the proceeding on creditors; there was no "law of the case" regarding the elements of section 727.
IRS moved for relief from the automatic stay to allow setoff of the chapter 13 debtor's postpetition claim to tax overpayment against prepetition priority tax liability of the debtor due to the IRS. The court granted the motion, finding the nonbankruptcy right to setoff continued postconfirmation and the debtor only had right to a refund after the government had credited the tax overpayment against the tax liability under 26 U.S.C. sec. 6402(a).
A creditor filed a motion to dismiss the chapter 13 case filed by same-sex spouses, arguing the debtors were not "spouses" for purposes of sec. 302 because Wisconsin did not allow or recognize same-sex marriages. The Court denied the motion to dismiss and found that same-sex spouses married in a state that allows them to do so (Iowa), may file a joint bankruptcy case in a state that does not recognize their union as a marriage (Wisconsin) under the "place of celebration" rule, which requires the recognition of an out-of-state same-sex marriage as valid when interpreting the Bankruptcy Code.
Chapter 13 debtors filed an adversary action against an entity holding a junior lien on their principal residence. The debtors are ineligible for a discharge because they received a discharge in a case filed three years before filing their chapter 13 case. The parties stipulated that the defendant's lien is "underwater"—that is, the value of the debtors' residence is less than the amount the debtors owe to the holder of the senior lien on the property—and there is no dispute that the debtors' personal liability to the defendant was discharged in their earlier chapter 7 case. The debtors' adversary complaint seeks a judgment that either (i) voids the defendant's lien under section 506(d) or (ii) declares that the defendant's claim is an "unsecured claim" for purposes of sections 506(a) and 1322(b)(2) so that the debtors may eliminate the lien through their chapter 13 plan. The defendant argued that its claim is not void under section 506(d) because the claim is a valid secured claim under state law and the debtors' chapter 13 plan cannot eliminate its lien because the debtors are ineligible for a discharge under section 1328(f).
Held: (1) section 506(d) does not allow a debtor to void a valid state-law lien based solely on the fact that there's no value in the property to which the lien can attach; and (2) the defendant's lien can be eliminated permanently by the full performance of a confirmed chapter 13 plan that so provides because the defendant's claim is an "unsecured claim" for purposes of sections 506(a), 1322(b)(2), and 1325(a)(5).
First National Bank - Fox Valley v. Gruber (13-2797)(April 2014) -- Judge Halfenger
Plaintiff purchased vacant land owned by the debtor at a pre-petition execution sale. When the debtor filed his bankruptcy petition, his right to redeem had expired, but lien-holding creditors still had one day to acquire the plaintiff's interest under Wis. Stat. §815.44. Because the §815.44 period had not expired, the plaintiff did not have the right to make a demand on the sheriff to issue a deed conveying the debtor's right, title, and interest in the land. The plaintiff filed an adversary proceeding seeking, in part, a declaration that the land purchased at the execution sale was not property of the debtor's bankruptcy estate, or in the alternative, a declaration that the bank did not need relief from the automatic stay to demand that the sheriff issue it a deed to the land.
The court ruled that (1) at the time the debtor filed his bankruptcy case he had both legal title and a possessory right in the land to use it in any manner that did not constitute waste; those interests were included in Gruber's bankruptcy estate pursuant to 11 U.S.C. §541(a)(1); and (2) the bank could not demand a deed conveying the debtor's right, title, and interest in the land without obtaining relief from the automatic stay under 11 U.S.C. §362(d), because any such demand by the bank would, at a minimum, violate 11 U.S.C. §362(a)(3) and would not be a ministerial act excepted from the automatic stay.
Debtors, with only one prior dismissal, who did not file motion to continue the automatic stay under 362(c)(3) in time to have it heard and decided within 30 days did not have standing to move to impose the automatic stay under 362(c)(4).
In re Ingram, 508 B.R. 98(March 2014) -- Judge Kelley
Attorneys' fees and punitive damages for stay violation denied when towing company held valid statutory lien on debtor's truck.
In re Ingram, 2014 Bankr. LEXIS 1217(March 2014) -- Judge Kelley
Debtor's attorney forced to refund entire fee when she gave inappropriate advice to file bankruptcy when a state court action was warranted, filed inaccurate schedules and fee disclosure and failed to appear at a hearing on enforcement of the stay taking the position that her fee did not cover that hearing.
The court sustained, in part, the debtor's ex-wife's objection to confirmation of the debtor's chapter 13 plan and overruled the debtor's objection to his ex-wife's proof of claim, concluding that (i) the plan's proposed treatment of the maintenance arrears owed to the debtor's ex-wife did not comply with 11 U.S.C. §1322(a)(2), and (ii) the debtor did not have a right of setoff under Wisconsin law that would allow him to reduce the amount of his ex-wife's proof of claim.
Court found judicial lien on chapter 13 debtors' homestead was avoidable to extent trust monies were not traceable to homestead. Wisconsin law regarding exception to homestead exemption statute was discussed. Additionally, Court noted that exemption by default under section 522(l) did not appy in the context of lien avoidance. Note: This is a Court Minutes Decision, only.