Jernigan v. Household Finance Corporation II (In re Jernigan)

(Bankr. W.D. Ky. July 22, 2015)

The bankruptcy court grants summary judgment in favor of the mortgage holder. The debtor commenced the adversary complaint seeking to avoid the creditor’s mortgage lien. The debtor argued that, because the note and mortgage had been assigned, the note and mortgage had been separated and thus the mortgage was no longer valid. The court reviewed the evidence and concludes otherwise. Opinion below.

2015-07-22 – in re jernigan

Author: Matt Lindblom

In re Aubiel

(6th Cir B.A.P. July 22, 2015)

The bankruptcy appellate panel affirms the bankruptcy court’s determination that the debtor was not entitled to claim the Ohio homestead exemption for his 46-foot boat. While the statute permits the homestead exemption to be applied to personal property, the bankruptcy court determined that the trustee met his burden of rebutting the presumption that the exemption was allowable and the debtor failed to establish that the boat was his primary residence. Opinion below.

2015-07-22 – in re aubiel

Author: Matt Lindblom

Tetzlaff v. Educational Credit Management Corporation

(7th Cir. July 22, 2015)

The Seventh Circuit affirms the bankruptcy court’s determination that the $260,000 student loan debt was not dischargeable. The debtor had obtained a business degree and a law degree, but had not been able to pass the bar exam. The debtor claimed mental illness prevented him from securing employment and earning sufficient income in the future. The court applies the Brunner test and finds that the debtor failed to show an undue hardship. Opinion below.

2015-07-22 – tetzlaff v educational credit management

Author: Matt Lindblom

In re Thiel

(Bankr. W.D. Ky. July 21, 2015)

The bankruptcy court grants the creditor’s motion to file a late response to an objection to its proof of claim. The creditor’s attorney attempted to file the response on the deadline, but through error the objection was not filed. The next day, the court entered the order disallowing the claim at almost the same time the creditor successfully filed the response and a motion to allow the late filing. The bankruptcy court grants the motion. Opinion below.

2015-07-21 – in re thiel

Author: Matt Lindblom

In re Taylor

(7th Cir. July 20, 2015)

The Seventh Circuit holds that the bankruptcy court abused its discretion in issuing a contempt order and awarding damages to the debtor for the creditor’s alleged violation of the discharge injunction. The creditor’s adversary proceeding had been dismissed for failure to establish the creditor had standing to enforce a state court judgment. The judgment was then discharged. The creditor then went back to state court and obtained an order that stated a prior assignment of the judgment to the creditor had always been valid. The bankruptcy court held this violated the injunction. This court holds that obtaining the state court order was not an act to collect a discharged debt and it was not a collateral attack on the bankruptcy court’s orders. Opinion below.

2015-07-20 – in re taylor

Author: Matt Lindblom

Cory v. Leasure

(W.D. Ky. July 15, 2015)

The district court grants the appellee’s motion and dismisses the appeal. The appellant had executed a settlement agreement with the Chapter 11 trustee, which was approved by the bankruptcy court under Bankruptcy Rule 9019. The agreement contained a provision whereby the appellant released claims against the trustee. The district court finds that the appeal relates to claims released and thus dismisses the appeal. Opinion below.

2015-07-15 – cory v leasure

Author: Matt Lindblom

In re Sheppard

(6th Cir. B.A.P. July 9, 2015)

The Bankruptcy Appellate Panel for the Sixth Circuit reverses the bankruptcy court’s order denying the creditor’s motion for extension of time to file a complaint to determine the dischargeability of a debt and/or file an objection to the debtor’s discharge. The debtor’s counsel had been working with the creditor’s counsel prior to the bankruptcy filing but failed to notify the creditor’s counsel of the bankruptcy. Instead, the debtor gave notice to the creditor by sending a notice to the creditor’s out-of-state corporate headquarters. The creditor and its counsel had actual notice of the bankruptcy after they filed a complaint against the debtor in state court after the petition was filed and two days before the deadline. The bankruptcy court found that the creditor failed to show sufficient cause justifying an extension. The B.A.P. holds that such motions should be liberally granted when the circumstances merit such a finding, and in this case there was sufficient justification. Opinion below.

2015-07-09 – in re sheppard

Author: Matt Lindblom

Peterson v. McGladrey LLP

(7th Cir. July 7, 2015)

The Seventh Circuit affirms the bankruptcy court’s decision recognizing the in pari delicto defense and dismissing the trustee’s suit against the accounting firm for malpractice. The debtors were mutual funds that were essentially a vehicle for a ponzi scheme. The accounting firm argued that under Illinois law the trustee’s claims were barred by the in pari delicto doctrine. The trustee argued that Illinois courts only apply the doctrine when the parties have committed the same wrong. He argued it should not apply here, where the debtors committed fraud and the firm committed malpractice for failing to detect the fraud. The court applies the doctrine, finding Illinois law does not have such a requirement. Opinion below.

2015-07-07 – peterson v mcgladrey

Author: Matt Lindblom

Ellmann v. Baker (In re Baker)

(6th Cir. July 2, 2015)

The Sixth Circuit applies the Supreme Court’s 2014 decision in Law v. Siegel and affirms the bankruptcy court’s order allowing the debtors to amend their bankruptcy schedules and claim an exemption in a cause of action they failed to disclose in their original schedules. The debtors had received a discharge and the case was closed with the original schedules in place. They then pursued the cause of action. The trustee moved to reopen the bankruptcy case, and the debtors sought to amend their schedules and claim an exemption in the cause of action. The trustee objected, arguing the debtors acted in bad faith and with fraudulent intent in concealing the asset. Relying on Law v. Siegel, the court holds a debtor’s exemption cannot be taken away as a sanction. The court also finds the trustee’s objection was untimely. Opinion below.

2015-07-02 – in re baker

Author: Matt Lindblom

In re Birdwell

(Bankr. W.D. Ky. June 29, 2015)

Judge Lloyd confirms the Chapter 13 plan at 100% on condition that the debtors remit all tax refunds during the plan term to the Chapter 13 trustee for distribution to creditors. The court requires this because the debtors refused to justify the telecom expense of more than 5% of the debtors monthly net income ($400 per month). Opinion below.

2015-06-29 – in re birdwell

Author: Matt Lindblom