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 court sua sponte considered whether to dismiss an adversary proceeding seeking a judgment declaring a claim to be non-dischargeable. The court concluded that dismissal was appropriate because a Virginia circuit court had ruled that the plaintiffs had no claim against the debtor.
A purported judgment creditor filed a motion to dismiss the debtor’s case pursuant to section 707(b)(3)(A) on the basis that the debtor was chargeable with bad faith in allegedly filing the bankruptcy for the sole purpose of escaping the creditor’s judgment. The court concluded that on strictly financial terms the debtor was clearly a candidate for bankruptcy relief and that the evidence offered in support of the motion to dismiss was simply insufficient to demonstrate that he made his decision to file in “bad faith.” The court thus denied the motion to dismiss.
The official committee of unsecured creditors filed a motion to dismiss the chapter 11 case pursuant to 11 U.S.C. § 1112(b), alleging that a majority of the debtor’s board did not authorize the filing of a chapter 11 petition. The court concluded that the motion to dismiss rested entirely on the allegedly flawed authorization for the petition due to a member’s individual bankruptcy filing. The court concluded that that member’s economic and non-economic interest in the debtor became property of his estate under section 541(c)(1) despite Virginia Code section 13.1-1040.1(6)(a) and revested in him upon the dismissal of his case pursuant to Bankruptcy Code section 349(b)(3). As such, his vote in authorizing the petition was valid.
The trustee and the debtors filed a complaint seeking to avoid the defendant’s alleged interest in the debtors’ real property and disallowance of the defendant’s proof of claim under section 502. The defendants asserted a counterclaim and a third party claim seeking six grounds of equitable relief, namely: declaratory judgment, equitable subrogation, specific performance, constructive trust, equitable lien, and relief under 11 U.S.C. § 105. The court thus considered whether a chapter 13 trustee’s strong arm powers under section 544(a)(3) may defeat an unrecorded deed of trust or whether equitable remedies may block the trustee’s powers. Both sides moved for summary judgment.
The court found that the defendant was without an interest in the debtors’ real property and was thus an unsecured creditor. The defendant’s proof of claim was not timely filed, and thus the court disallowed the claim. The court thus granted the plaintiffs’ motion for summary judgment and denied the defendant’s motion for summary judgment.
The court considered whether a chapter 13 below median income debtor has the unqualified right to pay off early the remaining payments due under the terms of a confirmed plan providing for payments over a term of thirty-six months when the total of such remaining payments would be insufficient to pay all allowed unsecured claims in full. The court concluded that there was no such unqualified right but that a debtor may seek modification of a confirmed plan for that purpose under the provisions of section 1329.
The debtors sought dismissal of the United States Trustee’s motion to dismiss because, according to the debtors, (1) section 707(b) does not apply to cases converted to chapter 7, and (2) section 707(a) is inapplicable to dismiss a case for “bad faith.” The court concluded that a case originally filed under chapter 13 and subsequently converted to chapter 7 is subject to 11 U.S.C. § 707(b) and that cause to dismiss a case pursuant to 11 U.S.C. § 707(a) includes bad faith.
The debtor moved again to reopen her case in order to enter into a reaffirmation agreement with her mortgage company, two years after the closing of her bankruptcy case. The court noted from its previous order denying a motion to reopen for this purpose that no purpose would be served in reopening the case to allow the debtor to enter into a reaffirmation agreement because under 11 U.S.C. § 524 a reaffirmation agreement to be legally effective must be entered into before a discharge is granted. The court again denied her request to reopen.
The debtor filed an application for waiver of the chapter 7 filing fee. The court found that the debtor, at the time the petition was filed, had income less than 150% of the official Federal guideline poverty level income and did not have the financial means to pay the filing fee. It further found that the debtor did not have the ability to pay in a lump sum or in installments. However, the court determined that this was not a routine case given that the debtor was not eligible for a discharge and there were no assets for a chapter 7 trustee to administer. The court thus denied the application concluding that to waive the filing fee for such a case would appear to condone the use of delay tactics by debtors, rather than to sanction them.
Debtor filed motion for contempt against Southern Virginia University (“SVU”) for continuing collection action after the issuance of the bankruptcy discharge order. SVU asserted that the debt was a qualified educational loan that was non-dischargeable under section 523(a)(8). Debtor then filed complaint alleging that a default judgment on a debt allegedly owed by debtor to SVU was void as debtor did not receive actual notice of the judgment proceedings and that even if judgment was not void, the debt had been discharged. Based on Massachusetts law, defendant failed to show that it was entitled to enforce the note. The Court held that without such a showing, it could not conclude that the debt underlying the state court default judgment was the same debt as evidenced by the note. Therefore, as creditor failed to meet its burden, the Court found that the debt was a dischargeable debt that was discharged by the discharge order.
The debtors had filed jointly by counsel, and subsequently they had a falling out with counsel who was allowed to withdraw. The debtors were unable to find alternate counsel and were appearing pro se. The debtors advised they were not seeking confirmation but wanted their attorney’s handling of their case to be reviewed. The trustee filed a motion to dismiss. In order to keep the case moving, the court concluded that, under the circumstances, the best resolution of this situation was to grant the debtors an opportunity to proceed with their chapter 13 case, if they so chose, by filing new Schedules I and J and a modified plan, or convert their case to one under Chapter 7. If they failed to do either, the chapter 13 trustee’s motion to dismiss would be granted.