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Showing 58 posts in Chapter 7.

Significant Changes to Bankruptcy Rules Effective December 1, 2017

Numerous changes to the Federal Rules of Bankruptcy Procedure (the “Rules”) take effect on December 1, 2017. The changes significantly impact the administration of consumer bankruptcy cases, and Chapter 13 cases in particular. Read More ›

Categories: Chapter 13, Chapter 7

Trustee’s Avoidance of Transfer by Chapter 7 Debtors Does Not Necessarily Preclude Debtors from Claiming an Amended Exemption

The United States Bankruptcy Court for the Western District of Michigan recently issued an opinion in a bankruptcy case involving a husband and wife who filed for Chapter 7 bankruptcy protection. Read More ›

Categories: Chapter 7, Collections

Reserve it or Lose it: Sixth Circuit BAP Reverses Bankruptcy Court on Issue of Whether Trustee Abandoned Asset in Chapter 7 Case

In a recent decision, the Bankruptcy Appellate Panel of the Sixth Circuit (the “Court”) considered the issue of asset “abandonment” in a Chapter 7 case[1]. The Court reversed the bankruptcy court’s decision to allow the Chapter 7 trustee to compromise a claim that the debtor argued the trustee had abandoned.

[1] In re: Wayne L. Wright, Docket No. 16-8019 (6th Cir. BAP, April 17, 2017). Read More ›

Categories: 6th Circuit Court of Appeals, Chapter 7

Sixth Circuit Affirms Decision to Deny Chapter 7 Debtor’s Proposed Exemption Because She Lacked Equity in Property After a Sale

In the case of Susan G. Brown v. Douglas Ellmann [1], the U.S. Court of Appeals for the Sixth Circuit (the “Sixth Circuit”) recently affirmed a bankruptcy court’s decision to deny a Chapter 7 debtor’s proposed exemptions for the value of redemption rights she enjoyed under Michigan law related to the sale of a property she surrendered to the bankruptcy estate.

[1] Case No. 16-1967 (6th Cir., March 20, 2017). Read More ›

Categories: 6th Circuit Court of Appeals, Chapter 7

Bankruptcy Court Upholds Contemporaneous Exchange for New Value Defense in Preference Action

The Bankruptcy Code grants a trustee (or a debtor in possession) certain “avoidance” powers to recover payments to creditors made shortly before a bankruptcy filing where the payment gave the creditor more than other, similarly situated, creditors would receive through the bankruptcy process. 

In a recent case in the United States Bankruptcy Court for the Western District of Michigan (the “Court”), the Court considered whether a payment made by a Chapter 7 debtor to her son in advance of the debtor’s bankruptcy filing was “preferential” and thus subject to recovery by the Chapter 7 trustee. Read More ›

Categories: Chapter 7, Western 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

Fraudulently Obtained Unemployment Benefits are not Dischargeable in Bankruptcy

State unemployment benefits are paid pursuant to a system that relies on trust. Benefits are paid based on representations made by claimants that they are out of work and that they continue to seek out full-time work. If a claimant finds part-time work, then benefits are reduced accordingly.

A recent opinion from the United States Bankruptcy Court for the Western District of Michigan (the “Court”) addresses a Chapter 7 debtor’s attempt to discharge a debt owed to the State of Michigan for overpaid unemployment benefits, and penalties and interest stemming from the overpayment.  Read More ›

Categories: Chapter 7, Western District of Michigan

The Provisional Nature of Discharge: Trustee's Knowledge of Fraud May Not Be Imputed to United States Trustee

The purpose of filing for Chapter 7 bankruptcy is to discharge debts. But even after obtaining a discharge, a debtor is not totally in the clear. A recent case in the United States Bankruptcy Court for the Western District of Michigan involves an adversary proceeding in which the United States Trustee sought to revoke a Chapter 7 debtor’s (the “Debtor”) discharge.[i] Read More ›

Categories: Chapter 7, Fraud & Abuse

Supreme Court Adopts a Broad Reading of “Actual Fraud” Under the Bankruptcy Code

On May 16, the U.S. Supreme Court decided Husky International Electronics, Inc. v. Ritz[1], ruling that the term “actual fraud” in section 523(a)(2)(A) of the Bankruptcy Code includes forms of fraud that do not involve a fraudulent misrepresentation.

In this case, Husky International Electronics, Inc. sold products to and was owed money by Chrysalis Manufacturing Corporation. Daniel Ritz, one of the owners of Chrysalis, transferred money from Chrysalis to other entities that he owned, draining Chrysalis of its assets and making it impossible for Chrysalis to pay its debts owed to Husky and other creditors. Read More ›

Categories: Chapter 7, U.S. Supreme Court

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