Skip to main content


    In re Ackerman, Case No. 23-22510-beh, 2024 WL 1925980 (May 2024) -- Judge B.E. Hanan
    The Chapter 13 debtor filed a plan proposing to “cure and maintain” a claim secured by a reverse mortgage on her homestead under 11 U.S.C. § 1322(b)(5). Several years prior to the petition date, the debtor and her now-deceased husband had signed the reverse mortgage on the property, while only her husband had signed the promissory note. The debtor’s husband passed away a little more than a month before she filed her case. The mortgage creditor objected to confirmation of the debtor’s plan, arguing that the entirety of the note had been called due prepetition, based on the death of her husband, combined with her failure to cure a prepetition tax arrearage on the property, and had to be paid in full through her plan. The Court examined the language of the mortgage and note at issue, as well as the applicable federal laws and regulations in existence when the note and mortgage were signed, and concluded that the parties intended that the maturity date of the note would be fixed upon the occurrence of one of two events: (1) the later of either (a) the death of the borrower or (b) the death (or ineligibility) of the nonborrowing spouse (the debtor); or (2) the sale of the property. Because the loan had not matured on its own terms due to the debtor’s failure to cure the property tax arrearages, the Court concluded that the debtor could cure the contractual default through her plan, and overruled the creditor’s objection.

    In re Oshkosh Refurb, Inc., Case No. 23-25769-beh (oral ruling) (February 2024) -- Judge B.E. Hanan
    The Chapter 11 debtor’s primary secured creditor moved for relief from the automatic stay as to only a portion of the collateral securing its claim (aged inventory and used vehicles), arguing that the property was not necessary for an effective reorganization under section 362(d)(2) because the debtor could successfully reorganize without it. The Court rejected such a narrow construction of the word “necessary,” which would allow for stay relief any time a single piece of property could be taken away from the debtor’s assets without jeopardizing the overall success of a contemplated reorganization. Instead, the Court considered whether the property contributed to, or had a role to play, in the debtor’s reorganization efforts. Because the evidence established that the property at issue would aid in the debtor enterprise’s overall income-producing capabilities, it was necessary for a reorganization that contemplated preservation of that enterprise, and stay relief was inappropriate.

    Rogers v. TitleMax of Wisconsin, Inc. (In re Rogers), Adv. No. 22-2129, Case No. 22-25190, 2023 WL 5354417 (August 2023) -- Judge B.E. Hanan
    Creditor’s failure to return debtor’s repossessed vehicle for 26 days postpetition, until after the Court considered the creditor’s concerns regarding adequate protection, did not amount to an act to “exercise control” over property of the estate in violation of 11 U.S.C. section 362(a)(3), nor did the creditor’s conduct violate section 362(a)(4) (prohibiting acts to “enforce a lien against property of the estate”) or section 362(a)(6) (prohibiting acts to collect a prepetition claim).

    In re Mahler, Case No. 22-21674-beh, 2023 WL 3880465 (June 2023) -- Judge B.E. Hanan
    The Chapter 13 trustee objected to the debtor's amended plan, specifically the provision for direct payments to Freedom Mortgage Corporation. Disbursement by the trustee, however, is not mandatory. 11 U.S.C. §§ 1322(a) and 1326(c) do not prohibit direct payments. Rather, the Court may exercise its discretion to require payment via trustee disbursement. Matter of Aberegg, 961 F.2d 1307, 1308 (7th Cir. 1992). In determining whether to confirm a plan providing for debtor-direct payments, courts have devised several factors by which to apply their discretion. In re Perez, 339 B.R. 385, 409 (Bankr. S.D. Tex. 2006), aff'd sub nom., Perez v. Peake, 373 B.R. 468 (S.D. Tex. 2007). After considering the Perez factors relevant to this debtor's history and proposed amended plan—such as the debtor's reason for filing the case, whether it is a consumer loan, the number of payments to be made, and whether the trustee's ability to perform her duties will be hindered—the Court held that disbursement of payments by the trustee to Freedom Mortgage offered a greater likelihood of achieving the debtor's goals for her Chapter 13 plan.

    In re Teclaw, Case No. 22-24591-beh, __ B.R. __, 2023 WL 3331553 (May 2023) -- Judge B.E. Hanan
    The individual chapter 13 debtor scheduled an interest in several LLCs, two of which owned commercial buildings with mortgage debt owed to Summit Credit Union. Summit filed a motion for relief from the co-debtor stay under § 1301(a)(1), arguing the stay did not apply to the LLCs because they were not individual debts. Alternatively, Summit asked for adequate protection. The debtor conceded the co-debtor stay did not extend to his LLCs, but asked the Court to invoke its equitable powers under § 105(a) to find that the automatic stay of § 362(a) was in effect, arguing there were unique circumstances. The Court agreed that the co-debtor stay did not apply to the LLCs, as the debts were not incurred for a household purpose as defined in § 101(8), and LLCs are routinely distinguished from individuals, as discussed in Consol. Rail Corp. v. Gallatin State Bank, 173 B.R. 146, 147 (N.D. Ill. 1992) and In re McCormick. 381 B.R. 594, 598 (Bankr. S.D.N.Y. 2008). The Court declined to exercise its equitable powers to find the automatic stay applied to the LLCs because doing so would create a substantive right that conflicts with another applicable provision of the Bankruptcy Code (§ 1301), citing Law v. Siegel, 571 U.S. 415, 421 (2014). The Court also did not view the debtor’s circumstances as any more unusual than those that plague debtors in similar circumstances, and in any event, the LLCs had the option of filing their own bankruptcy petitions.

    SLK Capital, LLC v. Beach et al. (In re Beach), Case No. 21-2103, 2023 WL 2780880 (April 2023) -- Judge B.E. Hanan
    The state court had entered a judgment in favor of creditor SLK Capital, LLC for $220,948.18 against debtor Brian Beach and his LLC for defaulting on business loans that were issued to Mr. Beach and his restaurant. Mr. Beach had personally guaranteed the loans. As part of the loan application, Mr. Beach had represented to SLK that the real property on which the restaurant operated was not encumbered by any liens or mortgages, the restaurant had no other significant debts, and that he made a capital investment of $160,000 with his cash purchase of the restaurant one year earlier. His mother had given him the cash. Two years later, shortly before his marriage to the joint debtor, Mr. Beach granted a mortgage on the real estate to his mother. After Mr. and Mrs. Beach filed their joint Chapter 7 petition, SLK filed an adversary proceeding under § 523(a)(2)(B), alleging that the debtor made misrepresentations on his SLK loan application, when he should have acknowledged a loan from his mother. After a trial, the court concluded that the debt was dischargeable because SLK had not established that the representation was false or that Mr. Beach intended to deceive the creditor. At the time of the loan application, there were no “hallmarks of a loan” attaching to the funds Mr. Beach’s mother had given him.

    In re Lewis, Case. No. 18-26550-BEH, 2022 WL 7171238 (October 2022) -- Judge B.E. Hanan
    The Chapter 13 debtor sought to amend two prior court orders: (1) the order confirming his most recent Chapter 13 plan—which provided for a plan payment period of 84 months, under now-expired 11 U.S.C. section 1329(d)—and (2) a “doomsday” order requiring him to make timely plan payments to the trustee for six months. The debtor sought to amend the prior confirmation order to change the amount of his required plan payments for a several-month period, and also sought relief from the doomsday order by asking that the trustee’s ability to seek immediate dismissal of his case be predicated on whether he made payments under his proposed revised payment schedule, rather than the payment schedule imposed by his confirmed plan.

    Although the debtor avoided describing his first request as a plan modification under 11 U.S.C. section 1329, the Court considered that the substance of the relief sought appeared to qualify as a modification of the type described in section 1329(a). To the extent the debtor's request to amend the confirmation order was the equivalent of a plan modification, it would result in a plan payment period exceeding 60 months, in contravention of the plain language of 11 U.S.C. § 1329(c), and could not be granted. Alternately, if the debtor’s request to amend the confirmation order were viewed solely as a motion for relief under Civil Rule of Federal Procedure 60(b)(1) or (6), it did not establish excusable neglect or any extraordinary circumstances sufficient to warrant relief from a final order. As for the debtor's companion request for relief from the prior “doomsday” order, the Court found that the moving papers appeared to state a basis for relief, but held its ruling an abeyance to allow the debtor an opportunity to supply evidence—rather than counsel argument—to convince the court that there was a compelling reason to reconsider its prior non-final order.

    In re Nelson, Case No. 19-24458-beh, and In re Ramos, Case No. 20-21169-beh, 646 B.R. 810 (on appeal) (October 2022) -- Judge B.E. Hanan
    Chapter 13 debtors who previously extended their plan payment periods beyond 60 months under now-expired 11 U.S.C. section 1329(d) could not modify another aspect of their plans (such as the amount of plan payments) while retaining the extended payment period. Under the plain language of 11 U.S.C. section 1329(c), a court cannot confirm a plan that expressly provides for payments over a period that exceeds 60 months.

    In re Peete, Case No. 21-23863-beh, 642 B.R. – , 2022 WL 2387652 (June 2022) -- Judge B.E. Hanan
    The City of Milwaukee filed an amended proof of claim and an objection to confirmation of the debtor’s Chapter 13 plan. The City asserted that special charges included on the debtor’s tax bill were entitled to priority status under 11 U.S.C. sec. 507(a)(8)(B), as property taxes. The special charges were for past due water/sewer bills, health hazard abatement and related services. The debtor objected to the amended claim, arguing that because the special charges reflected the City’s attempt to recoup monies for specific services, and were not collected for the general benefit of the public, they were not taxes and should be treated like other general unsecured claims. Seventh Circuit caselaw directs courts to undertake a functional analysis and consider the purpose of each charge in determining whether such charge is a tax or a fee. Generally, if a charge levied by a taxing authority is designed to generate public revenue, it is a tax; if the charge is designed to punish or to compensate for specific services, it is not a tax. The City submitted multiple affidavits but none of them explained the nature or purpose of the underlying special charges imposed, and consequently the City did not meet its burden to establish that those charges were taxes entitled to priority treatment. The City’s proof of claim also asserted that interest and penalties on the unpaid balance for these special charges were entitled to priority status under 11 U.S.C. sec. 507(a)(8)(B). The City did not offer authority to entitle the penalties to priority status as taxes, and its argument that the penalties were not dischargeable under 11 U.S.C. sec. 523(a)(7) was countermanded by 11 U.S.C. sec. 1328(a). As for the interest charges included on the tax bill, the Court held that to the extent they were attributable to the actual property tax principal owed (and not the special charges), they were entitled to priority status.

    In re Roberts, Case No. 22-20766-beh, 641 B.R. 613 (June 2022) -- Judge B.E. Hanan
    The debtors proposed to pay debts owed to Lebakkens Inc. of Wisconsin, a rent-to-own furniture dealer, in Section 3 of their Chapter 13 plan, the section reserved for secured claims. Lebakkens objected to plan confirmation, arguing that the debts owed it belong in the section of the plan reserved for unexpired leases. Lebakkens reasoned that the rent-to-own agreements did not grant the debtors a secured interest in the property until they had completed payments under the contracts or paid down a significant portion of the balance. The agreements, titled “Rental Agreement[s]with ownership provisions,” stated that Lebakkens would maintain title to the goods and afforded the debtors the monthly option either to return the property or to maintain possession of it in exchange for a payment. Applying Wis. Stat. s. 401.203, the statute distinguishing leases from security interests, as well as caselaw recognizing that a unilateral ability to cancel an obligation is a hallmark of a lease, the Court concluded that the agreements gave the debtors a unilateral right to terminate and thus were leases, not security instruments. Alternatively, using the analysis adopted by some courts which weigh factors beyond the unilateral ability to cancel, the Court likewise concluded that the facts of record demonstrated that the agreements were leases. The Court found that the presence of an option to acquire the goods for a nominal price did not convert the agreements into security instruments, noting that the value of the items is greater than the first “renewal” payment, that Lebakkens is required to maintain and service the property, and the likelihood that the consumer goods have useful lives beyond the duration of the agreements. The debtors’ argument that the Wisconsin Consumer Act, which applies to certain consumer credit transactions, controlled the determination that the agreements are credit sales and not leases, was not persuasive. The Court sustained the objection and required debtors to amend their plan.