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Justia.com Opinion Summary:
Wisconsin smelting plant owed more than $1.3 million in delinquent utility charges to the local municipal utility when it filed for Chapter 11. Months later, despite the Automatic Stay, a utility company implemented a process pursuant to Wisconsin Statutes and Local Ordinances 66.0809 and 66.0627 by which the plant’s unpaid utility bills became a lien against the Debtor‘s property. Both the Bankruptcy and District Courts found that none of the exceptions to the Automatic Stay applied to make their actions. They were, in fact, a violation of the Stay. The 7th Circuit Court of Appeals affirmed, holding that no exception to the Stay applied and the offending utility company creditor did not obtain a pre-petition security interest in the plant’s property by providing services or by giving notice in the form of billing. Finally, the 7th Circuit agreed with the District Court that the utility bills produced did not amount to a “tax or special assessment” that would have exempted them from the operation of the Stay.
Click here to download this Opinion in PDF format
Posted in automatic stay, business, business filings, case update, ch 11, cir 7, current-events, data, docket, Fed. R. Bankr. Proc., opinion, WIS
Tagged Automatic Stay, Bankruptcy, Debtor, Local ordinance, Public utility, United States, United States Court of Appeals for the Seventh Circuit, Wisconsin
The Facts: Chapter 11 Debtor failed to segregate its employee’s wages and apply a portion toward a group health insurance premium. When those funds were seized later by a creditor, the employees left with a 5th priority wage claim and a lapsed insurance policy.
The Issue: Employee alleged that the funds taken should be classified as a contribution to an employee benefit plan arising from services rendered within 180 days before the filing date of the case.
The Upshot: The Court agreed that the funds had been earned with the 180 days before the case was filed, and also ruled that employees also had an administrative expense claim for wages that were withheld but not applied during the post-petition. Finally, the Court ruled that employees had a claim for un-reimbursed medical expenses that would have been covered under the policy, had it not expired.
Posted in bankruptcy, ch 11, cir 7, consumer, corporation, creditor, current-events, ED, Fed. R. Bankr. Proc., Fed. R. Civ. P., IL, individual, ND
Ransom v. FIA Card Services, N.A., f/k/a MBNA America Bank, N.A.
Certiorari from the U.S. Court of Appeals for the 9th Cir., Case 09–907
Argued October 4, 2010—Decided January 11, 2011
The Issue: Here the question was whether a Chapter 13 debtor could deduct the allowable auto payment from his monthly budget even though he did not have a car payment (i.e the vehicle was paid for). Put another way, is it fair for all debtors to be entitled to the maximum allowable deduction from their monthly disposable income, or must debtors establish what they actually pay?
The Answer: The Court ruled 8 to 1 (Scalia J. dissenting) that if a debtor makes more than the median income for his State then he must establish that he incurrs the amounts deducted from his monthly living expenses. No more automatic deductions if debtor cannot prove what he pays.
The Gist: To determine “disposable income” BAPCPA gave us the Means Test, which starts with gross monthly income then deducts living expenses – i.e. “amounts reasonably necessary for maintenance or support” of the debtor. In a Chapter 13 case the expenses considered “reasonably necessary” are identified in 11 U.S.C. §1325(b)(2)(A)(i) and include “applicable monthly expense amounts” as specified in National and Local IRS standards. Since BAPCPA was adopted, it has become common practice to include expenses at the maximum allowable level even if the debtor does not have, or pay for, that type of asset. This case appears to say that the party is over for Chapter 13 debtors.
See Also: this post from Chicago Attorney Steve Jacobowski on the Bankruptcy Litigation Blog regarding the Scalia dissent.
Posted in 101, 109(h), 11 U.S.C. § 707(b)(3), 11 U.S.C. section 365(a), 1112(b), 1307, 1308, 1322(b)(11), 1325(a)(5), 1325(a)(9), 1326(a)(1)(C), 1328, 15 USC 1692k(c), 28 U.S.C. 1927, 362(c)(3)(A), 362(c)(3)(B), 362(c)(4)(A)(i), 363, 451, 502(b)(6), 510, 521, 522, 523, 526(a), 527(a)(2), 528(a), 528(a)(4), 528(b)(2)(B), 547(b), 550, 550(a), 707, 727, 9019, 9023, 9037, adequate protection, administrative, Administrative Office of the Courts, amendment, appellate court, Bankruptcy Rules, BAPCPA, ch 13, cir 9, confirmed plan, Congress, consumer, conversion, cramdown, credit, credit card, credit cards, credit counseling, creditor, current affairs, current-events, data, debt, docket, economics, economy, Executive Office of the UST, fair credit reporting act, FDCPA, Fed. R. Bankr. Proc., Fed. R. Civ. P., individual, interest, legislation, means test, median income, memorandum opinion, Middle class, modification, opinion, research
Tagged BAPCPA, disposable income, IRS, J, Kagan, means test, Scalia, SCotUS
Reed v. City of Arlington (Sep.17) (Cir. 5)
In a Chapter 7 case in which debtors omitted a pending $1 Million+ judgment from sworn statements and filings, district court’s order discharging debts and allowing the Trustee to collect on behalf of the Estate is reversed to protect the integrity of the judicial processes.
Deutsche Bank v. Tucker (Sep. 15) (Cr. 6)
Chapter 13 Debtor claims that she need only cure the amount of her mortgage default that is secured, and that all additional fees and expenses should be treated as unsecured. The bankruptcy court agreed, but the district court vacated and remanded. Following remand the bankruptcy court held that bank fees and advances allowed under the Note, Mortgage, and applicable State law, should be included in the cure amount set forth in the Chapter 13 Plan.
In re: Gebhart (Sept. 14) (Cir. 9)
Court may have property sold and any non-exempt equity distributed even if the property only rose in value after the filing date. In this case the value of debtors’ home increased during his Chapter 7 and the bankruptcy court’s order approving appointment of a broker was affirmed on appeal. The fact that the value of the debtor’s homestead exemption, plus encumbrances, had been equal to the market value of the residence at the time of filing did not prevent the trustee from taking advantage of the windfall.
Posted in adversary, amendment, assets, avoidance, bad faith, bankruptcy, Bankruptcy Rules, BAPCPA, ch 7, chapter 7, cir 5, cir 6, cir 9, confirmed plan, consumer, cramdown, current-events, data, discharge, dismissal, disposable, docket, due process, economics, economy, estate, Fed. R. Bankr. Proc., foreclosure, fraud, fraudulent transfers, individual, liability, Middle class, modification, mortgage, opinion, plan, property, reaffirmation, real property, state court, Westlaw
State-by-State Median Income thresholds as of November 1, 2010
can now be found online at the US Trustee site.
Click on the image below to be taken to the underlying chart on the UST’s Website.
Posted in administrative, Administrative Office of the Courts, attorneys, bad faith, bankruptcy, code, confirmed plan, Congress, consumer, conversion, current affairs, current-events, data, disposable, economy, Executive Office of the UST, Fed. R. Bankr. Proc., filings, government unit, IL, income, individual, IRS, jobs, labor, labor force, lists, means test, median income, Middle class, research, treasury department, trustee, UST
Adversary Decided: October 5, 2010
Holding: A proof of claim filed in bankruptcy court cannot form the basis for a claim under the Fair Debt Collection Practices Act.
Download and read a copy of the Opinion in .pdf format here.
Posted in adversary, appellate court, bankruptcy, business, business filings, case update, cir 2, consumer, credit, creditor, current-events, debt, default, executory contract, fair credit reporting act, FDCPA, Fed. R. Bankr. Proc., Fed. R. Civ. P., fees, individual, opinion, research, small business
All motions and proposed orders presented on or after November 1, 2010 must include one of the following fillable “Proposed Order” forms
Form Order for use in bankruptcy case (rev. 10-08)
Form Order for use in adversary case (rev. 10-08)
Questions, Comments, Suggestions? Use the “E-Order Feedback” tool provided by the Court on this page.
Posted in administrative, Administrative Office of the Courts, adversary, attorneys, bankruptcy, Bankruptcy Rules, barbosa, black, ch 11, ch 13, ch 7, current affairs, current-events, data, ED, Fed. R. Bankr. Proc., filings, Gecker, goldgar, grochocinski, hollis, IL, Inskeep, judge, leibowitz, ND, order, squires, stearns, t. vaughn, trustee, UST, WD, wedoff