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Showing 21 posts in Eastern District of Michigan.

District Court Affirms that Civil Fraud Penalties are Nondischargeable in Chapter 13 Bankruptcy Cases

Many bankruptcy cases involve adversary proceedings in which creditors seek to have certain debts deemed nondischargeable. The United States District Court for the Eastern District of Michigan (the “District Court”) recently considered, on appeal, whether the Bankruptcy Court properly held that a debt owed by a debtor (the “Debtor”) to the State of Michigan Unemployment Insurance Agency (the “Agency”) is dischargeable in a Chapter 13 case.1 Read More ›

Categories: Chapter 13, Eastern District of Michigan

Chapter 7 Debtor’s Case Dismissed After Court Finds that She is Judicially Estopped from Arguing that Student Loan Debts are Non-Consumer in Nature

While bankruptcy relief is available as a tool for individuals to discharge debts, it is not available to everyone, under all circumstances. Before a debtor can, for example, discharge debts in a Chapter 7 bankruptcy, he or she must prove that debts and income are within certain statutory thresholds. When determining whether an individual is eligible for relief, the nature of the debts at issue is also relevant. Read More ›

Categories: Chapter 13, Chapter 7, Eastern District of Michigan

Bankruptcy Court Considers Whether Chapter 7 Trustee May Bring Private Cause of Action For Alleged Breach of Debtor’s Duties

The U.S. Bankruptcy Court for the Eastern District of Michigan recently considered the issue of whether a Chapter 7 trustee may bring a cause of action against a debtor for damages caused to the bankruptcy estate by the debtor’s alleged failure to comply with the debtor’s duties under section 521 of the Bankruptcy Code. Under the circumstances, the court held that no private cause of action existed and thus ruled in favor of the debtor on the issue.[1] Read More ›

Categories: Chapter 7, Eastern District of Michigan

Confirmation of Chapter 13 Plan that Favors Debtor's Attorney Over Homestead Mortgage Reversed on Appeal

Bankruptcy is all about the debtor’s assets, specifically how many and who gets them. The reason that many bankruptcy cases are contentious is that the parties often disagree about the amount of assets available for distribution to creditors, as well as how the assets should be divvied up. Read More ›

Categories: Chapter 13, Eastern District of Michigan

District Court Reverses Bankruptcy Court Ruling that State Criminal Restitution is Dischargeable

Bankruptcy is a process that permits people to discharge debts, but not all debts are dischargeable. In a recent opinion, the U.S. District Court for the Eastern District of Michigan (the “District Court”) reversed a U.S. Bankruptcy Court for the Eastern District of Michigan (the “Bankruptcy Court”) ruling that a state court criminal restitution claim is dischargeable. Read More ›

Categories: Chapter 7, Eastern District of Michigan

Penalty Owed to a Governmental Unit is Dischargeable in Chapter 13 - But Not Chapter 7 - Bankruptcy, Even if it Arises from Fraud

The scope and extent of debts that may be discharged is an often litigated issue in bankruptcy. In a recent Chapter 13 case in the U.S. Bankruptcy Court for the Eastern District of Michigan, the bankruptcy court considered whether an otherwise dischargeable government penalty debt is nondischargeable if the debt arises from fraud.[1] Read More ›

Categories: Chapter 13, Chapter 7, Eastern District of Michigan

Foreclosure Without Closure: Sixth Circuit Analyzes Claims Asserted by Borrower Following State Court Foreclosure Proceedings

The financial and housing crisis that began in 2008 led to a huge wave of foreclosures and foreclosure-related litigation. While foreclosure is rooted in state law, the initiation of a foreclosure proceeding by a lender often leads to federal bankruptcy proceedings initiated by a borrower, giving rise to interesting legal issues involving the interplay of state foreclosure law and federal bankruptcy law. Recently, the U.S. Court of Appeals for the Sixth Circuit (the "Sixth Circuit") considered the implications of a foreclosure on a residence following the borrowers' Chapter 7 bankruptcy proceeding.[1] Read More ›

Categories: 6th Circuit Court of Appeals, Chapter 7, Eastern District of Michigan

Michigan Bankruptcy Petition Preparer to Serve Jail Time for Criminal Contempt

Section 110 of the United States Bankruptcy Code provides that a non-attorney can assist in the preparation of the bankruptcy petition. However, as an Inkster, Michigan man just learned (the hard way), the Bankruptcy Code places numerous requirements on bankruptcy petition preparers and subjects those who do not comply to substantial penalties.

On Tuesday, February 25, Derrick Hills of Inkster was sentenced by U.S. District Court Judge Sean F. Cox to 46 months in prison after being convicted by a jury in September of five counts of criminal contempt. The contempt proceedings stemmed from repeated violations of orders issued by U.S. Bankruptcy Judge Steven Rhodes from 2007 to 2009. According to a press release issued by the U.S. Attorney's Office following Hills' conviction at trial:

The evidence presented at trial showed that Hills had acted as a bankruptcy petition preparer since 2007, assisting people in filing for bankruptcy. Hills continued to act as a bankruptcy petition preparer despite five bankruptcy court orders issued by Bankruptcy Judge Steven Rhodes, permanently enjoining Hills from doing so for various non-compliance with bankruptcy rules and complications caused by his acting in the capacity of a bankruptcy petition preparer. Hills assisted individuals with consumer debts in preparing and filing their Chapter 7 bankruptcy paperwork. However, his actions went well beyond what was allowed by law and clearly violated Judge Rhodes Orders.

Read More ›

Categories: Chapter 7, Did you Know?, Eastern District of Michigan

New Claims Transfer Fee Takes Effect May 1, 2013

Effective May 1, 2013, the Bankruptcy Courts for the Western and Eastern Districts of Michigan will begin charging a new fee of $25 for each claim transferred. The purpose of the fee, as stated by the Judicial Conference Committee, relates to the number of claims transferred and the impact they have on the workload of the Bankruptcy Courts, including Court time and resources.

The fee will be assessed upon the filing of the claim transfer, regardless of who files the claim transfer. The $25 fee will be charged for each individual claim transfer, and it will also apply to partial claims transfers.

Categories: Eastern District of Michigan, Western District of Michigan

Foster Swift Represents Prevailing Party: Chapter 13 Debtors May Not Exclude Voluntary Post-Petition Retirement Contributions From Disposable Income

In a recent Opinion, Judge Opperman from the Eastern District of Michigan Bankruptcy Court held that a Chapter 13 debtor cannot exclude voluntary post-petition retirement contributions from disposable income.  This Opinion is significant for debtors, trustees, and creditors as it systematically changes the way the Eastern District of Michigan will treat post-petition voluntary retirement contributions in a Chapter 13. Read More ›

Categories: Chapter 13, Eastern District of Michigan