OpinionsA creditor sought a determination that a portion of the state court money judgment against both the debtors and a non-debtor was non-dischargeable under 11 U.S.C. § 523(a)(6), based on the debtors’ conduct during their tenancy in the creditor’s home. The Court disregarded the debtors’ attempt to deny the existence of the debt as well as their inapplicable affirmative defenses. Where the creditor established by a preponderance of the evidence that the debtors caused willful and malicious injury, the Court determined that the damages flowing therefrom were non-dischargeable. The damages ranging from routine wear and tear to gross uncleanliness are dischargeable. In re Dean, No. 19-30112-kmp (Bankr. E.D. Wis. Feb. 10, 2020) (February 2020) -- Judge K.M. Perhach The Debtor had not filed past-due tax returns by the first date set for the meeting of creditors. She requested that the Trustee hold open the meeting pursuant to 11 U.S.C. § 1308(b)(1)(A) to allow her to file the returns. The Trustee continued the meeting for 35 days and made a docket entry stating, “The Meeting of Creditors has been held open pursuant to 11 U.S.C. §1308(b)(1).” After the continued date passed, the Trustee concluded the meeting. The Debtor still had not filed her tax returns, so she filed a motion requesting that the Court grant an extension of time pursuant to § 1308(b)(2). Because the Debtor did not file her motion until after the deadline established by the Trustee, the Court did not have the authority to enter an order granting a further extension. Since the Debtor had not filed the returns as required by § 1308, she could not satisfy § 1325(a)(9), and cause existed under § 1307(c) for conversion or dismissal of the case because the Court could not confirm a plan. See In re Long, 603 B.R. 812, 819-20 (Bankr. E.D. Wis. 2019). CQM, Inc. v. Vandenbush (In re Vandenbush), Case No. 18-31066, Adv. No. 19-02041, 2020 WL 609609 (February 2020) -- Judge B.E. Hanan Creditors holding a large judgment debt against the debtor’s now ex-wife, attributable to the ex-wife’s theft-by-fraud, sought to retain their ability to collect the debt against the marital property the debtor retained in the parties’ subsequent divorce, and filed an action premised on 11 U.S.C. §§ 523(a)(2)(A) and (a)(15). The parties cross-moved for summary judgment. The Court granted summary judgment in favor of the debtor-defendant because (1) the complaint’s allegations under section 523(a)(2)(A) were premised solely on fraud committed by the debtor’s ex-wife, which could not be imputed to the debtor, and (2) the underlying judgment, which was assigned to the debtor’s ex-wife in the divorce, was not a debt owed to a spouse, former spouse or child, nor was it created by the parties’ divorce. The Court also rejected a new factual theory that the creditors raised for the first time in their brief opposing the debtor’s motion for summary judgment—that the debtor engaged in a post-judgment fraudulent transfer scheme through the parties’ marital property division. First, the Court noted that it is improper for parties to raise new factual, rather than legal, theories in opposition to summary judgment briefing. Then, the Court rejected the new theory on the merits because it did not link the underlying judgment debt that the creditors sought to except from discharge to the later asserted fraudulent conduct. Finally, to the extent the plaintiffs were attempting to invoke their rights under 11 U.S.C. § 524(a)(3) to collect against post-petition martial property, that section of the Code did not apply because the debtors were no longer married and thus there could be no non-exempt post-petition marital property from which to collect. Layng v. Pansier (In re Pansier), Adv. No. 18-2222, Case No. 18-22297, 2020 WL 268582 (January 2020) -- Judge B.E. Hanan The U.S. Trustee filed a complaint to deny the discharges of a married debtor couple, based on their conduct in creating several trusts and entities into which they transferred their home, personal property and income, while continuing to live in the home and retaining control over the alleged trust property. The U.S. Trustee asserted causes of action under 11 U.S.C. sections 727(a)(2) (concealment of assets), (a)(3) (failure to maintain adequate books and records), (a)(4)(A) (false oaths), and (a)(5) (failure to explain a loss or diminution of assets), and sought summary judgment on all four causes of action. The Court granted summary judgment on two of those causes of action, denying the debtors’ discharges under sections 727(a)(2) and (a)(4)(A). In re Brian and Katie Mulder, Case No. 19-30817 (January 2020) -- Chief Judge G.M. Halfenger The debtors moved under 11 U.S.C. sec. 522(f)(1)(B) to avoid the fixing of a lien on their interests in certain household items. The court denied the motion without prejudice because most of the items described in the motion were not properly listed in the debtors' schedules of assets and exemptions, the motion otherwise sought relief that is not available under sec. 522(f)(1)(B), and the debtors did not provide proof that the motion was served on the lien holder in the manner provided by Rule 7004(b)(3). In re Brewer, No. 15-29081-kmp (Bankr. E.D. Wis. Dec. 31, 2019) (December 2019) -- Judge K.M. Perhach The Court overruled the Debtors’ objection to attorneys’ fees itemized on two Notices of Postpetition Mortgage Fees, Expenses, and Charges filed by the Debtors’ mortgage creditor. Bankruptcy Rule 3002.1(e) provides that within one year after service of a Notice, a debtor may request a determination of whether fees are required “by the underlying agreement and applicable nonbankruptcy law to cure a default or maintain payments in accordance with § 1322(b)(5).” The Debtors’ objection to the first Notice was filed more than one year after service of that Notice and as such was untimely. The Debtors’ objection to the second Notice was timely, and the Debtors requested a determination about a $200 charge for attorneys’ fees for the mortgage creditor’s review of a modified plan. The Court determined that these fees were required by the mortgage and applicable nonbankruptcy law and that they were reasonable. In re Jones, Case No. 19-31539-beh, 2019 WL 7342455 (December 2019) -- Judge B.E. Hanan The Chapter 13 debtor originally filed his bankruptcy petition without identifying a spouse, but eleven days later, he filed an “amended petition” to include a joint debtor spouse. Though Federal Rule of Bankruptcy Procedure 1009(a) allows a debtor to amend his or her petition “as a matter of course at any time before the case is closed,” the Rule does not trump the plain text prescriptions for filing joint cases under 11 U.S.C. section 302(a). Accordingly, the Court struck the amended petition and related documentation including the spouse. Moon v. Iowa Student Loan Liquidity Corporation, Adv. Proc. No. 18-2249 (December 2019) -- Judge B.H. Ludwig Nonprofit lender holding debtor’s consolidated student loan did not willfully violate the debtor’s discharge injunction by acting to collect on the debt post-discharge. The consolidated student loan was found to be nondischargeable under §523(a)(8)(A)(i) and thus was excepted from the debtor’s discharge issued in February 2012. In re Kielman, Case No. 19-21900-beh, 2019 WL 6880082 (December 2019) -- Judge B.E. Hanan The Chapter 13 debtor inadvertently failed to provide notice of her bankruptcy case to a creditor, the lender on her non-filing husband’s vehicle. As a result, the creditor filed its proof of claim after the bar date and the Court disallowed the claim as untimely. Later, upon default of post-petition payments, the creditor moved for relief from the automatic stay and co-debtor stay. In resolving the motion, the creditor and the debtor stipulated to allow the post-petition arrearage to be paid through the plan pursuant to a claim under 11 U.S.C. § 1305. The Court determined that post-petition default on a pre-petition car loan did not constitute consumer debt arising after the date of the order for relief, as required to constitute a claim under § 1305. The Court also declined to reconsider the prior disallowance of the creditor’s proof of claim, noting that the debtor’s invocation of 11 U.S.C. § 521(j) at a hearing was not procedurally proper, nor was it likely to succeed on the merits. Alternatively, the Court noted that an option not yet pursued by the parties was for the debtor to seek an extension of the deadline to file a claim under Rule 3004, which may be enlarged under Rule 9006(b)(1). In re Zoromski, 19-20752-beh, 2019 WL 6869628 (December 2019) -- Judge B.E. Hanan After the Chapter 7 debtors received their discharges, and before the assets of the estate were fully administered, the debtors moved to convert their case to a Chapter 13. The Court ordered the debtors to file a supporting brief establishing their right to convert in the circumstances. The debtors then moved to vacate the discharge order under Civil Rule 60(b). The debtors asserted, among other things, that their attorney’s failure to stipulate to an extension of the deadline to object to their discharge for a third time—and thus to prevent the entry of the discharge order—amounted to excusable neglect. The debtors wished to save their non-exempt vacant land, which was appraised post-petition at a value much higher than they anticipated, by paying unsecured creditors in full through a Chapter 13 plan. After weighing the equitable factors identified in Pioneer Inv. Servs. v. Brunswick Assocs., Ltd. P’ship, 507 U.S. 380, 395 (1993), the Court concluded that excusable neglect existed and granted the motion. |