A creditor and the United States Trustee filed separate complaints to deny the debtor a discharge on various grounds. The court denied the debtor’s discharge under Bankruptcy Code sections 727(a)(2)(A), 727(a)(2)(B), and 727(a)(4)(A), because the debtor fraudulently transferred and concealed property of the estate and knowingly and fraudulently made false oaths in connection with these actions.
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The summaries on this website are summaries of the opinions issued by the judges of the Bankruptcy Court for the Western District of Virginia from October 2004 to date. The opinions may be searched by year, judge, category and chapter. For a more detailed search, enter a keyword in the search box above. This opinion bank, however, is not an exhaustive list of opinions issued by the judges of the Western District. These summaries are not intended to replace other research methods, but may be used as a starting point for your research. These summaries do not contain information as to whether an opinion has been published, appealed or the disposition of any such appeal, or otherwise overruled or affected by subsequent case law or statute. These summaries have been prepared for the convenience of the researcher and in no way constitute an interpretation by the Court of the opinion summarized. Please rely on the opinion not the summary. Please contact Judge Connelly's chambers or Judge Black's chambers regarding any questions or errors.
The debtor filed a complaint against his two brothers, personal representatives of the estate of their mother, seeking entry of an order to permanently suspend any attempt to collect on a debt, to enjoin the continuance of a suit filed in state court and to enjoin the estate from offsetting a discharged debt from the debtor’s inheritance. The debtor requested the court hold the defendants in contempt for their willful violations of the discharge order and injunctive provisions of section 524.
Prior to filing bankruptcy, the debtor's mother loaned him $87,000. This amount was listed in debtor's schedules and the Court granted the debtor a discharge. Nearly two years later, the mother executed her will listing the outstanding loan. The defendants later sought to administer the will, to determine how much of the loan remained unpaid and to take into account the amount of the outstanding loan in the final distribution so that the children would each receive an equal share of her estate, but the debtor claimed that such attempt would be a violation of the Bankruptcy Court's discharge order.
The Court, treating the motion to dismiss as a motion for summary judgment under Rule 7056, held that the state court action, which seeks to administer the will, did not violate the discharge injunction and dismissed the complaint. The Court concluded that the defendants were not seeking to collect an obligation owed by the debtor, but merely seeking to carry out the intention of the mother as expressed in her will. Thus, the filing of the state court petition to administer the will was not an act to collect a debt, but merely a request to the state court to interpret the provisions of a will.
The United States Trustee moved to dismiss the case, among other reasons, as presumptively abusive according to 11 U.S.C. § 707(b)(2). The court concluded that issuance of a chapter 7 discharge to the debtors was presumptively abusive under Bankruptcy Code section 707(b)(2) and that the debtors had not rebutted the presumption. Additionally, the court found that they failed to prove special circumstance deductions under 11 U.S.C. § 707(b)(2)(B). The court granted the debtors an opportunity to convert to chapter 13, absent which the case would be dismissed.
The United State Trustee objected to the Debtor’s chapter 13 plan to the extent it provided $500 in duplicitous fees to Debtor’s counsel. The Court was empowered to allow reasonable compensation for representation under 11 U.S.C. §330(a)(4)(B). The Court was prohibited from allowing compensation for unnecessary duplication of services under §330(a)(4)(A)(i). The Court sustained the U.S. Trustee’s objection and reduced the compensation of Debtor’s counsel by $500.
The Court, noting the two different schools of thought on this issue, followed Sexton v. U.S. Dep't of Treasury (In re Sexton), 508 B.R. 646 (Bankr. W.D. Va. 2014), a recent decision from the Chief Bankruptcy Judge of this district, and held that the government cannot setoff a prepetition, non-tax debt against the debtor's federal tax refund pursuant to the Treasury Offset Program (26 U.S.C. § 6402), without first obtaining relief from the automatic stay. In particular, the Court reasoned that the language of 11 U.S.C.
Court granted the Trustee's motion to convert this case from Chapter 13 to Chapter 7 pursuant to 11 U.S.C. § 1307(c), in part because the Debtor had been sentenced to 27 months of incarceration. This case had been pending for 10 months and the debtor failed to obtain a confirmable plan during that time and unlikely that the debtor would be able to do so if he remained in Chapter 13. Therefore, cause existed to convert this case to Chapter 7 because the debtor’s inability to file a confirmable plan constituted “an unreasonable delay . . . that is prejudicial to creditors.” Further, conversion was in the best interests of the creditors and the estate because there may be equity of an undetermined amount in the debtor’s real property and, given the fact that the debtor was proceeding pro se, the “appointment of a disinterested Chapter 7 trustee would facilitate final resolution of the case.”
Two Movants filed motions for relief from the automatic stay, alleging "cause" under 11 U.S.C. § 362(d) to lift the stay to continue to prosecute their sexual harassment claims against certain debtor defendants in West Virginia state court. The Court analyzed the factors set forth in Robbins v. Robbins (In re Robbins), 964 F.2d 342 (4th Cir. 1992), and determined that all three factors supported lifting the stay for cause. Accordingly, the Court granted both motions in part. The Court lifted the automatic stay to allow the West Virginia state court actions to proceed so that the Movants can liquidate their claims against the debtor defendants, and allowed the Movants to seek recovery of their judgment up to the limits of insurance coverage and to file a proof of claim by the Bar Date and later amend the proof of claim for any amounts determined to be in excess of the available insurance coverage.
United States Trustee sought dismissal or conversion of the debtor's case under the totality of the circumstances test of section 707(b)(3)(B) based on her substantial monthly Social Security benefits. Court held on motion for partial summary judgment that because it could not consider such income in chapter 13, based on the definition in the Bankruptcy Code of "current monthly income" and the Fourth Circuit's opinion in Mort Ranta v. Gorman, it follows that the Court was unable to consider such income for purposes of the totality of the circumstances test as well.
District Court remanded for clarification of the Bankruptcy Court's prior decision holding the creditor had not established the debtor's willfulness and intent to cause her injuries. On remand, the Bankruptcy Court explained it disagreed with other courts finding an implied intent to injury in sexual assault and statutory rape (carnal knowledge) cases based on the nature of the crime and held that it would be improper to imply an intent to willfully and maliciously cause such an injury when mere negligence would suffice for the state court judgment.
Debtor filed a motion to dismiss pursuant to section 1307(b). Immediately after the debtor filed his motion, a creditor filed a motion to convert the case to Chapter 7 pursuant to section 1307(c). After review of Law v. Siegel, the Court granted the debtor's motion to dismiss. The Court denied the creditor's competing motion to convert, but barred the debtor from filing a new petition for 180 days under section 109(g)(2) as sufficient nexus existed between a prior order granting relief from stay and the motion to dismiss.