In re Steven Gregg Peake; Case No. 03-10805-7 (D. Lund; M. Morris) (R. Nugent) (November 30, 2004)
Facts:
The debtor Steven Gregg Peake (“debtor”) sought confirmation of his amended Chapter 13 plan, and a certain creditor objected to confirmation, asserting that the amended plan was not proposed in good faith. The amended plan would yield almost $16,000.00 over forty-eight months, and after the payment of the trustee’s fees and priority claims, almost $12,000.00 would be paid to unsecured creditors. The total unsecured claims are in the aggregate amount of almost $63,000.00, and the objecting creditor’s claim is in an amount of over $42,500.00. The Court overruled the objection and confirmed the plan.
Holding:
Flygave v. Boulder, 209 F.2d 1344 (10th Cir. 1983) articulated factors to examine whether a Chapter 13 plan is filed in good faith. The debtor offered to make approximately a 18.5% dividend to his unsecured creditors; there is no evidence to suggest that the debtor’s income will increase radically in the near term; the underlying judgment held by the objecting creditor may not be entirely dischargeable in a Chapter 7 bankruptcy; and the debtor has not failed his duties to the Court or creditors and has been sincere in seeking Chapter 13 bankruptcy relief.
In re Lewis Eugene Semmel and Judy Ann Semmel; Case No. 01-14433-7 (C. Roberts; M. Morris) (R. Nugent) (December 16, 2004)
ORDER ON TRUSTEE’[S] MOTION TO RECONSIDER EXTENT OF EXEMPTION OF SEMMEL TRUST INCOME
Facts:
The debtor Judy Ann Semmel (“debtor”) received regular income from a trust and improperly claimed the income as exempt, in the amount of “$10,000 – estimate only.” The Chapter 7 trustee failed to timely object and later sought to recover the trust income. The Court determined that the income was not exempt and allowed the trustee to recover any amount in excess of the claimed $10,000.00.
Holding:
Several bankruptcy courts have made an effort to define the parameters of an exemption improperly claimed but to which the Chapter 7 Trustee failed to object. In general, the trend has been to limit the extent of these exemptions to the amounts referenced in the debtors’ schedules. In this case, the debtor claimed, and is entitled to retain, $10,000.00 of assets that were non-exempt assets, and the trustee is allowed to recover the excess.
In re Robert Lee Gibbons; Case No. 04-11200-13 (M. Hesse) (R. Nugent) (January 6, 2005)
Facts:
The debtor Robert Gibbons (“debtor”) filed a Chapter 13 plan in which his former wife objected on the basis that the plan was not proposed in good faith. Pre-petition, the debtor and his ex-wife exhausted energy litigating a divorce proceeding. During the divorce process the State Court recognized the debtor’s ability to pay both maintenance and child support and ordered that the debtor not remove or otherwise spend marital assets. In contradiction to the order, the debtor proceeded to shift certain retirement savings. The Court denied confirmation and ordered the parties to confer and devise an amended plan that would provide for the ex-wife.
Holding:
Applying the factors articulated in Flygave v. Boulder, 709 F.2d 1344 (10th Cir. 1983), the Court held the dividend proposed to unsecured creditors was paltry; the debtor had the ability to maintain employment at a reasonably strong wage and that the failures of the debtor to recognize and abide an order of the State Court to not shift marital assets was a willful violation and likely cause to deny confirmation. However, the plan filed may ultimately provide the ex-wife with the greatest source of recovery, and all effort needs to be expended to find terms in the Chapter 13 forum.
In re Bemis Construction, Inc.; Case No. 02-14893-11 (E. Nazar) (R. Nugent) (January 19, 2005)
Facts:
The debtor Bemis Construction, Inc. (“debtor”) is in the road construction business and came to terms with a sub-contractor Floyd Summers (“sub-contractor”) to blast rock. The sub-contractor performed and a dispute arose over the terms of the agreement. On September 27, 2002 the debtor filed for Chapter 11 bankruptcy and the sub-contractor filed a poof of claim. The debtor objected and claimed it owed nothing further to the sub-contractor.
The sub-contractor provided evidence that he deserved some compensation under the theory of quantum meruit.
Holding:
The sub-contractor’s proof of claim is prima facie evidence of the validity and amount of its claim, and the evidence adduced by the debtor is sufficient to place the claim in question and shift the burden to the sub-contractor. The sub-contractor is entitled to additional compensation under quantum meruit and his claim is allowed.
In re Bob Anderson and Margarita Anderson; Case No. 04-40685-13 (W. Metcalf; C. engel) (J. Karlin) (January 14, 2005)
Facts:
The debtors Bob and Margarita Anderson (“debtors”) were in a Chapter 12 bankruptcy resulting in a confirmation order that provided Western Kansas Bancshares (f/n/a Southwest Bank) certain payments with a drop dead clause in the event of default. The debtors were late on payment and agreed to terms with a Bank representative Rod Krie to make a single arrearage payment, place a certain deed and bill of sale in escrow, and produce certain financial documents in consideration for a modified payment schedule. Rod Krie testified that he never agreed to the terms, but accepted the funds regardless. The debtors filed a Chapter 13 bankruptcy and claim the real estate and personal property as property of the estate.
Holding:
There is a material issue of fact as to which party owned the real and personal property when the Chapter 13 petition was filed and whether the debtors may modify a confirmed Chapter 12 plan in a Chapter 13 bankruptcy.
Larry Lee Woody v. U.S. Department of Justice (In re Larry Lee Woody); Adv. No. 02-6095; Case No. 02-21662-7 (K. Gay; M. Caro) (R. Berger) (December 6, 2004)
Facts:
The debtor Larry Lee Woody filed a Chapter 7 bankruptcy petition on May 14, 2002 and on October 7, 2002 he filed an adversary complaint to determine whether certain student loan obligations are dischargeable. The debtor holds a B.S. degree in accounting and has been employed twice in a full-time, permanent capacity since 1983. The debtor amassed certain student loans, in the amount of approximately $17,500.00. The debtor is currently working as a seasonal employee and has had adjustable gross income of less than $20,000.00 per year over the course of the last three years. The debtor has annual living expenses of almost $20,000.00. In 2002, the debtor suffered a heart attack, suffers from heart disease and is unable to work more than forty hours a week. The Court held that the factual determination of whether the obligation is unconscionable is well-suited for disposition at an evidentiary hearing and denied the respective party’s motion for summary judgment.
Holding:
To support a 42 U.S.C. § 292(f)(g) claim, the debtor must show, in part, that not discharging the loan would be unconscionable. Unconscionability is fact-driven and is not appropriate to determine at summary judgment.
Margaret Fay Carlin v. United States of America (In re Margaret Fay Carlin); Adv. No. 02-6101; Case No. 02-22890-7 (W. Peters; P. Gervasio) (R. Berger) (December 20, 2004)
Facts:
The debtor Margaret Fay Carlin (“debtor’) filed her Chapter 7 bankruptcy petition on August 14, 2002 and later filed a complaint to determine the dischargeability of certain federal income tax liabilities for the years 1999, 2000 and 2001. Generally, the debtor argued that due to her insufficient gross income she was not required to file federal income tax returns, and §507(a)(8) and §523(a)(1) mandate that the tax debt be associated with required tax returns to be priority claims.
Holding:
The Court held that the word “required” relates to whether the specific type of tax required the filing of a return, not whether the individual was required to file a return. The debtor elected to file a joint return with her husband, requiring the filing of a return. Please review for a thorough discussion of dischargeability of tax obligations.
Blue Ridge Bank and Trust v Victor M. Cascio (In re Victor M. Cascio); Adv. No. 01-6035; Case No. 01-20231-7 (M. Suter) (R. Berger) (December 20, 2004)
Facts:
The debtor Victor M. Cascio (“debtor”) filed a Chapter 7 bankruptcy petition, and Blue Ridge Bank and Trust (“Bank) filed an adversary complaint seeking to discharge certain obligations pursuant to 11 U.S.C. § 523(a)(2)(b). The debtor and the Bank had previously been engaged in a business relationship spanning more than thirty-six years in which the debtor sought a number of loans. In September 1994, the debtor provided a financial statement to the Bank that represented certain assets and receivables that did not exist. The Court entered judgment in favor of the debtor.
Holding:
The Court held that while the debtor’s financial statement was materially false, the Bank cannot prove by a preponderance of the evidence that it reasonably relied on the information or that the debtor presented the information to the Bank with the intent to deceive the Bank.
In re Donna C. Mazzoni; Case No. 03-24141-13 (D. Frackowiak) (R. Berger) (December 20, 2004)
Facts:
The debtor Donna C. Mazzoni (“debtor”) filed a Chapter 13 bankruptcy petition, and several creditors filed timely proofs of claim but failed to attach supporting documentation evidencing the claims. The debtor objected to each proof of claim on the grounds that the writing on which the respective claims were based was not attached to the claims. The Court overruled the debtor’s objections.
Holding:
A claim may not be denied on a Chapter 13 debtor’s objection solely because the writing on which the claim is based is not attached to the proof of claim. The filed proofs of claim provided evidence of a demand for payment from the estate included the creditor’s name, account number and the amount of the claim at the time the case was filed, satisfying their initial burden of proving the existence and amount of their claims. The debtor has failed to produce evidence challenging the validity of these claims.
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