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 denied an alleged debtor's motion seeking an order compelling the petitioning creditor to file a bond because the alleged debtor introduced no evidence supporting an allegation that the petitioning creditor filed the involuntary petition in bad faith under 11 U.S.C. § 303(i).
The Court held that, due to the hanging paragraph of 11 U.S.C. § 1325(a)(5), a Chapter 13 debtor may surrender collateral in full satisfaction of a secured creditor's claim when: (i) the value of the collateral is less than the amount of the claim, (ii) the collateral is a vehicle purchased during the 910-day period pre-petition, (iii) the vehicle is for the debtor's personal use, and (iv) the creditor's interest is a purchase money security interest (a "910 vehicle"). Further, the Court held that if a debtor elects to retain a 910 vehicle under 11 U.S.C. § 1325(a)(5)(B), the debtor is required to pay the claim in full during the pendency of the plan because the hanging paragraph eliminates the mechanism (11 U.S.C. § 506(a)) of bifurcating a claim secured by collateral of a value less than the amount of the claim, and therefore, the claim is treated as a fully secured claim.
The Court held that, due to the hanging paragraph of 11 U.S.C. § 1325(a)(5), a Chapter 13 debtor may surrender collateral in full satisfaction of a secured creditor's claim when: (i) the value of the collateral is less than the amount of the claim, (ii) the collateral is a vehicle purchased during the 910-day period pre-petition, (iii) the vehicle is for the debtor's personal use, and (iv) the creditor's interest is a purchase money security interest (a "910 vehicle"). Further, the Court held that if a debtor elects to retain a 910 vehicle under 11 U.S.C. § 1325(a)(5)(B), the debtor is required to pay the claim in full during the pendency of the plan because the hanging paragraph eliminates the mechanism (11 U.S.C. § 506(a)) of bifurcating a claim secured by collateral of a value less than the amount of the claim, and therefore, the claim is treated as a fully secured claim.
The Court denied (without prejudice to any rights the debtor may have under non-bankruptcy law) the debtor's objection to a creditor's claims because the debtor failed to provide sufficient evidence to rebut the presumption of validity accorded to the creditor's properly filed claims by 11 U.S.C. § 502(a) and Bankruptcy Rule 3001(f).
The Court denied debtor's motion to amend (under Federal Rule of Civil Procedure 59, as made applicable under Federal Rule of Bankruptcy Procedure 9023) an order granting the Chapter 7 trustee's motion to compel the turnover of one-half of the debtor's tax refund generated during the pre-petition period under 11 U.S.C. § 542(a) because (1) debtor's wife did not petition for bankruptcy with debtor, (2) the tax refund is property of the estate based on In re Shearin, 224 F.3d 353 (4th Cir. 2000) because debtor had an ownership interest in at least some portion of the tax refund that he could have asserted against his wife, (3) debtor failed to timely file a homestead deed exempting the refund or any portion thereof, and (4) there is no exclusion for earned income credits in the Bankruptcy Code.
The matters before the Court are counter-motions for summary judgment. A motion for summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c); Fed. R Bankr. P. 7056.
The Court denied summary judgment as to the first cause of action, which was brought under 11 U.S.C. § 727 (denial of discharge) because there was a genuine issue of material fact as to whether the defendant owned the company, what the value of the company was at that time, and whether the defendant violated § 727(a)(2).
The Court granted the defendant's motion for summary judgment as to the second count, which was brought under 11 U.S.C. § 523 because § 523(a)(19) applies only to judgments entered pursuant to claims asserting violations of federal or state securities laws, which is not relevant to this case.
The United States Trustee filed a motion to dismiss this case as an abuse of the provisions of Chapter 7 of the Bankruptcy Code, pursuant to 11 U.S.C. § 707(b). Section 707(b)(1) provides that a court may dismiss an individual case under Chapter 7 if (1) the debtor’s debts are primarily consumer debts and (2) it would be an abuse of the provisions of chapter 7 of the Bankruptcy Code to grant relief to the debtor. Section 707(b)(2) provides that abuse is presumed if a debtor's net monthly income exceeds a certain threshold amount as determined by the means test. Section 707(b)(3)(B) provides that if the presumption in Section 707(b)(2) does not arise or is rebutted, the court must consider the totality of the debtor's financial circumstances in determining whether proceeding in Chapter 7 would be an abuse. The United States Trustee has the burden of proof to prove by a preponderance of the evidence that allowing the Debtor to continue in Chapter 7 would constitute abuse.
In considering Section 707(b)(3), the Court applied the factors enumerated by the Fourth Circuit in Green v. Staples (In re Green), 934 F.2d 568 (4th Cir. 1991). The Court concluded that it would not be a substantial abuse to permit the Debtor to continue under Chapter 7. The Debtor has disposable income that could fund a Chapter 13 plan; however, unsecured creditors would receive a dividend equal to less than 20%. Accordingly, the Court denied the United States Trustee's motion to dismiss this case for abuse.
The matter before the Court is the trustee's objection to the debtor's claim of exemption in real property. The debtor and his non-debtor spouse own two parcels of real property as tenants by the entireties, and the debtor claimed both properties as exempt in his schedules. Prior to filing bankruptcy, the debtor and his spouse executed a Post-Nuptial Property Settlement Agreement, which provided the debtor with a 60-day option to refinance the couple's credit line deed of trust, removing his wife as an obligor. In turn, his wife had to convey her interest in the property to the debtor. The trustee objected to the debtor's claim of exemption in the property, seeking disallowance of any tenancy by the entireties exemption claimed by the debtor. The trustee sought to sever the tenancy by the entities interest so that the debtor cannot properly claim the property as exempt. The Court held that the trustee cannot assume the refinancing agreement pursuant to 11 U.S.C. § 365(a) in order to destroy the debtor's tenancy by the entireties interest because the agreement does not constitute an "executory contract."
The Court granted the trustee's motion to turn over property (the debtor's pro rata portion of federal income tax refund) because, as held in In re Whitmer, 228 B.R. 841 (W.D. Va. 1998) and based on Beaman v. Shearin (In re Shearin), 224 F.3d 346 (4th Cir. 2000), the broad language of 11 U.S.C. § 541(a)(1) considers the earned income credit (“EIC”) to be property of the estate and thus, the EIC must be turned over to the trustee. In reaching this decision, the Court found that even though the debtor could not receive the EIC until after the petition date when she filed her tax return, the EIC is rooted in the pre-petition past because the amount of the EIC was calculated based on the debtor's total income for the taxable year and the EIC is rooted in the post-petition time period because 26 U.S.C. § 32(e) prevents the EIC from being available for tax returns covering a period of less than 12 months.
The Court dismissed the debtors' motion for declaratory judgment, holding that 11 U.S.C. § 362(c)(3) terminates the automatic stay with regard to the debtors but does not terminate the automatic stay with regard to property of the bankruptcy estate. In so holding, the Court noted that no creditor was alleged to be taking or threatening any collection enforcement action against the debtors and no party in interest had appeared or otherwise asserted a position opposing such motion, and therefore, the Court found that there is no actual controversy as required by 28 U.S.C. § 2201(a) in order to issue a declaratory judgment.