In this case, both debtors (on consolidated appeal) were making payments to a 401(k) loan, which would be paid off during the life of the Chapter 13 plan.  Neither debtor was making contributions to their 401(k) retirement accounts at the time the petitions were filed.  The debtors proposed to use the income (available after full repayment of the 401(k) loan) to start making contributions to their 401(k) retirement accounts.  The Trustee objected on the issue of whether the debtors must include the income resulting from the payoff of the 401(k) loans to their respective plans considering neither debtor was making 401(k) contributions at the time the petitions were filed. Read More ›

When the sole member of a limited liability company files Chapter 7 bankruptcy, the membership interest is property of the bankruptcy estate that the trustee may liquidate, subject to claimed exemptions and liens.  But if the LLC owns property, can the trustee also liquidate that property for the benefit of the sole member's creditors? Read More ›

When Congress adopted BAPCPA, it added an exemption for "[r]etirement funds to the extent that those funds are in a fund or account that is exempt from taxation" under certain provisions of the Internal Revenue Code.  11 U.S.C. § 522(d)(12).  Although broader than the exemption previously available for retirement funds, § 522(d)(12) is not limitless – as the Bankruptcy Court for the Western District of Michigan recently emphasized. Read More ›

FRBP 3001 will be amended to increase the types of information required to be attached to a proof of claim.  While Rule 3001 has always required a claimant to produce a writing to support its claim, now a claimant must also attach information relative to the principal, interest, fees, and any other expenses incurred pre-petition - including arrearages.  Read More ›

The Bankruptcy Appellate Panel of the Sixth Circuit ("BAP") has rejected a trustee's efforts to avoid a mortgage that was mistakenly discharged because the discharge was rescinded before the debtor's bankruptcy filing. Read More ›

The Eastern District Bankruptcy Court denied the Trustee's objection to an exemption claimed pursuant to § 522(d)(12) by a debtor in IRAs that she had inherited from her father.  The Court further rejected the Trustee's argument that inherited IRA funds cannot be considered "retirement funds" under § 522(d)(12) because the funds were not contributed to the IRA by the debtor.  Rather, the Court adopted the debtor's reasoning that the explicit language of § 522(d)(12) does not make a distinction between "inherited IRAs" and IRAs to which the debtor made the contributions. Read More ›

Vickie married J. Howard Marshall approximately a year before his death, and although he gave her many gifts, he did not leave her anything in his will.  Before J. Howard passed away, Vickie sued his son, Pierce, in state probate court for tortious interference with J. Howard's will.  Vickie then filed bankruptcy.  Pierce filed a nondischargeability action and a proof of claim in Vickie's bankruptcy case, asserting that Vickie had defamed him.  Vickie filed a counterclaim against Pierce, essentially restating the tort allegations from her state probate court action. Read More ›

In Five Star Laser, Inc., the District Court for the Eastern District of Michigan upheld Judge Rhodes' decision granting a debtor's motion to dismiss a nondischargeability complaint as untimely and holding that a stipulation entered into by the debtor and the bankruptcy trustee to extend the deadline for filing a nondischargeability complaint applied to the trustee only. Read More ›

Previously on this blog, we discussed In re Rahim, a case in which Judge Rhodes dismissed the Chapter 7 case of debtors with primarily non-consumer debts "for cause" under 11 U.S.C. § 707(a) because the case was not filed in good faith. The debtors, both practicing physicians, brought home an annual income of more than $500,000 and had multiple homes and luxury vehicles. Read More ›

When a creditor has a state court judgment, garnishing the judgment debtor's state income tax refund is a common collection method.  If the judgment debtor files bankruptcy, issues often arise as to whether the creditor can keep the refund or whether the debtor is entitled to recover and exempt the refund. Read More ›