OpinionsChapter 13 debtors proposed to use their Social Security benefits to cover their expenses and make their plan payments. The debtors’ plan proposed to pay the arrears owed on the debtors’ first and second mortgages, a loan secured by a vehicle, a tax claim filed by the Wisconsin Department of Revenue, the trustee’s fees, and the debtors’ attorney’s fees. The debtors’ plan further proposed to pay the IRS’s $31,000 priority claim, but did not propose to pay anything to the IRS on its $220,000 secured claim. The IRS requested that the court modify the automatic stay to allow the United States to levy from the debtors’ combined monthly Social Security payments “to implement its right of setoff and/or to enforce its statutory liens to the extent the Debtors have ‘rights to property’” under 26 U.S.C. § 6321. The court found that the IRS demonstrated an interest in the debtors’ property, a pre-petition federal tax lien on the debtors’ Social Security benefits, and this interest was entitled to adequate protection. Because the debtors did not propose adequate protection of the IRS’s interest in that property, the court held that the IRS was entitled to relief from the automatic stay. The court modified the stay to permit the IRS to enforce its federal tax liens on the debtors’ right to Social Security benefits in accordance with applicable nonbankruptcy law. The debtors have appealed this decision. In re Gerstner, No. 19-31628 (March 2023) -- Chief Judge G.M. Halfenger The debtors moved to reopen this chapter 7 case and amend the schedules to disclose a pre-petition personal-injury claim and exempt a portion of the net proceeds they received in a post-discharge settlement. The court concluded that after a case is closed, even if the case is reopened, a debtor may amend the schedules only if the court enlarges the time to do so, specified by Bankruptcy Rule 1009(a), which the court may do only if the debtor proves that the failure to amend the schedules before the case was closed was the result of excusable neglect, as required by Bankruptcy Rule 9006(b)(1). In re Charmoli, No. 22-24358 (January 2023) -- Chief Judge G.M. Halfenger After chapter 11 debtor Scott Charmoli removed state-court litigation to this court, the defendants moved to remand and abstain exercising jurisdiction over claims by and against a non-debtor LLC wholly owned by the debtor. Weeks before the deadline to file proofs of claim expired, two creditors who are parties to the removed litigation also filed a motion to extend the deadline to file proofs of claim until 14 days after they obtained a state-court judgment against the debtor. The creditors sought to postpone filing a proof of claim, recognizing that doing so would waive their right to a jury trial against the debtor. The court denied the motion to extend the deadline, ruling that the loss of a jury trial right that results from filing a proof of claim is not cause to extend the proof of claim filing deadline. Bach v. Office of Lawyer Regulation, No. 22-cv-0866-BHL, 2023 WL 372203 (E.D. Wis. January 24, 2023) (January 2023) -- District Court The district court affirmed the bankruptcy court's order granting Defendant Wisconsin Office of Lawyer Regulation's motion for summary judgment. Bach v. Milwaukee County, et al., No. 22-cv-0806-BHL, 2023 WL 372201 (E.D. Wis. January 24, 2023) (January 2023) -- District Court The district court affirmed the bankruptcy court's decision and order denying appellant's request for contempt sanctions against Milwaukee County, Sandra Butts, Jeaneen Mardak, Geri Lyday, and Kevin Madison. Bach v. JPMorgan Chase Bank NA, No. 21-cv-1394-BHL, WL 2023 315684 (E.D. Wis. January 19, 2023) (January 2023) -- District Court The district court affirmed the bankruptcy court's decision and order dismissing appellant's adversary claims against JPMorgan Chase Bank NA and Federal National Mortgage Association. WiscTex, LLC v. Galesky, Adv. Proc. No. 20-02146 (December 2022) -- Chief Judge G.M. Halfenger WiscTex, LLC, objected to Michael Galesky's discharge in his underlying chapter 7 case under 11 U.S.C.§727(a)(2), (3), (4) & (5). After a bench trial, based on the facts shown by the evidence presented, and considering the arguments for relief that WiscTex properly raised and developed in its post-trial briefs, the court concluded that WiscTex failed to prove that it is entitled to denial of Galesky's discharge under any of the cited paragraphs of §727(a). Ryan v. Branko Prpa MD, LCC, 55 F.4th 1108 (7th Cir. 2022) (December 2022) -- Seventh Circuit Court of Appeals Rodney Ryan signed a worker's compensation settlement with his employer that set aside $400,000 for disbursement to the doctors who treated him for his workplace injury. Ryan then filed for bankruptcy and tried to keep those funds for himself while having his debt to his doctors eliminated. The district court affirmed the bankruptcy court's orders sustaining the creditor's objection to the exemption and granting the creditor's motion for summary judgment. Affirmed. Ramos v. Lieske, No. 22-cv-1266-BHL, 2022 WL 17581830 (E.D. Wis. December 12, 2022) (December 2022) -- District Court The debtor sought the bankruptcy court's permission to modify the monthly payment amount of a chapter 13 repayment plan while maintaining the extended repayment period previously approved under the now-repealed Section 1329(d). The district certified the matter for direct appeal to the Seventh Circuit. Layng v. Aydt, No. 22-cv-0096-LA (E.D. Wis. December 5, 2022) (December 2022) -- District Court The district court affirmed the bankruptcy court's order denying debtor his discharge under 11 U.S.C. § 727(a)(4)(A). |