Showing 29 posts in Western District of Michigan.
6th Circuit B.A.P.: Michigan's bankruptcy-specific exemption statute is unconstitutional.
In re Schafer, 6th Cir. B.A.P., Feb. 17, 2011 (2011 WL 534752, authored by Hon. Marci B. McIvor).
Under the Bankruptcy Code, debtors may choose between the federal exemptions listed in 11 U.S.C. § 522(d) or exemptions available under state law, unless their state has "opted out" of the federal exemption scheme. Michigan has not opted out, so debtors may choose between federal and state exemptions. Since 2005, Michigan law has provided two alternative state-law exemption schemes: Read More ›
Categories: 6th Circuit Court of Appeals, Western District of Michigan
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Bankruptcy Court Clarifies Scope of Exemptions for Life Insurance Policies
In re Zerbi, Bankr. W.D. Mich., Jan. 6, 2011 (Case No. 09-14649, Hon. Scott W. Dales)
A recent decision from the Bankruptcy Court for the Western District of Michigan provides some practical guidance for debtors and their attorneys about exempting unmatured life insurance policies.
In In re Zerbi, the debtor owned and was the insured under a life insurance policy. The policy had both a "cash value" or investment component and an insurance component. When the debtor filed his Chapter 7 case, the insurance policy had a cash surrender value of approximately $19,248.02. The debtor claimed exemptions in the policy under sections 522(d)(5) (the "wildcard" exemption), 522(d)(7), and 522(d)(8): Read More ›
Categories: Chapter 7, Western District of Michigan
New Opinion Creates Split in Western District as to Whether Debtors Can Exempt Undisclosed Tax Refund That is Spent Post-petition.
In re O'Brien, Bankr. W.D. Mich., Jan. 4, 2011 (Case No. 09-00426, Hon. James D. Gregg).
As previously discussed on this blog, debtors should include a good-faith estimate of an anticipated tax refund in their bankruptcy schedules. In prior cases, the Hon. Jeffrey R. Hughes and the Hon. Scott W. Dales suggested that debtors may not be able to amend their schedules to exempt tax refunds that have already been spent at the time of the amendment. But in a recent opinion, the Hon. James D. Gregg disagreed with those cases and held that, depending on the circumstances, debtors may be able to exempt a tax refund that was not originally disclosed, even if the tax refund has been spent. Read More ›
Categories: Chapter 7, Western District of Michigan
Chapter 7 Trustee May Avoid Mortgage on Platted Land Where Legal Description Fails to Identify Plat
Richardson v. Wells Fargo Home Mortgage, Inc. (In re Brandt), Bankr. W.D. Mich., Nov. 30, 2009 (Adv. Pro. No. 08-80342, 421 B.R. 426, Hon. James D. Gregg), affirmed, W.D. Mich., Aug. 25, 2010 (Case No. 1:10-CV-55, Hon. Robert Holmes Bell).
Outside of bankruptcy, errors in legal descriptions in mortgages often can be corrected. But when a mortgagee files a Chapter 7 bankruptcy case, a mistake in a legal description can open the door for a trustee to avoid the mortgage and potentially liquidate the property for the benefit of the debtor's unsecured creditors. Read More ›
Categories: Chapter 7, Western District of Michigan
Bankruptcy courts split as to dischargeability of personal guaranty liability
In re Lipa, E.D. Mich., Aug. 17, 2010 (Case No. 04-74608, Hon. Steven Rhodes).
In re Weeks, W.D. Mich., Jan. 23, 2009 (Case No. 05-02298, 400 B.R. 117, Hon. Jeffrey R. Hughes).
It is not uncommon for debtors - particularly those who own businesses - to sign personal guaranties before their bankruptcy filing. Pre-petition obligations under those guaranties are generally discharged in bankruptcy. But when a post-petition obligation arises under such a guaranty, the Bankruptcy Courts for the Western and Eastern Districts of Michigan are divided as to whether a guarantor-debtor is protected by his or her discharge. Read More ›
Categories: Eastern District of Michigan, Western District of Michigan
Espinosa Does Not Excuse Compliance With Bankruptcy Rules When Defect is Detected Pre-Confirmation
In re Peckens-Schmitt, Bankr. W.D. Mich., July 16, 2010 (Case No. 10-04164, Hon. Scott W. Dales).
In a notable decision, the United States Supreme Court recently upheld a bankruptcy court's confirmation of a Chapter 13 plan that discharged part of a student loan debt without an adversary proceeding where the student loan creditor had notice of the plan but did not object. United Student Aid Funds, Inc. v. Espinosa, 130 S. Ct. 1367 (2010). Read More ›
Categories: Chapter 13, U.S. Supreme Court, Western District of Michigan
Debtors' Counsel Take Heed: Chapter 7 Debtors Must Schedule a Good Faith Estimate of the Value of Their Anticipated Income Tax Refund
In re Trudell, Bankr. W.D. Mich., Feb. 19, 2010 (Case No. 09-00340. Hon. Jeffrey R. Hughes).
Attorneys for bankruptcy debtors have a duty under the Bankruptcy Code to ensure that the information in the debtors' schedules is accurate. A recent decision from the Bankruptcy Court for the Western District of Michigan cautions debtors' attorneys that this duty extends to the disclosure of anticipated income tax refunds.
When the chapter 7 debtors filed their schedules, they indicated that they did not expect to receive an income tax refund. Several weeks later, the debtors filed their tax return, which showed that they were entitled to a $5,000 refund. The debtors subsequently amended their schedules to disclose the refund and to fully exempt it. Thereafter, the debtors spent their refund. Read More ›
Categories: Chapter 7, Western District of Michigan
Michigan Constitution Does Not Create Independent Personal Property Exemption
In re Caperton, Bankr. W.D. Mich., Dec. 21, 2009 (Case No. 09-09540, Hon. Scott W. Dales).
The Bankruptcy Court for the Western District of Michigan recently rejected a debtor's attempt to exempt property based on a provision of the state constitution. The chapter 7 debtor elected to rely on state exemptions and, in addition to those statutory exemptions, claimed an exemption in $750 in personal property under Article X, § 3 of the Michigan Constitution ("Section 3"). Section 3 provides in part that "personal property of every resident of this state in the amount of not less than $750, as defined by law, shall be exempt from forced sale on execution or other process of any court." Read More ›
Categories: Chapter 7, Western District of Michigan
Action for Injunctive Relief is Not "Claim" Subject to Discharge For Purposes of Obtaining Relief From the Automatic Stay
In re Hillenbrand, Bankr. E.D. Mich., Feb. 4, 2010 (Case No. 09-75574, Hon. Steven Rhodes).
Although the commencement of a bankruptcy case usually stays a pending state court action against the debtor, a recent decision of the Bankruptcy Court for the Eastern District of Michigan concluded that the stay does not preclude an action seeking an injunction. Read More ›
Categories: 6th Circuit Court of Appeals, Chapter 7, Western District of Michigan
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