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 reconverted the case to one under Chapter 7 upon a creditor's motion to dismiss when the court determined that proposed Chapter 13 plan was not feasible, because the court found that conversion, rather than dismissal, better served the interest of all creditors.
The court held that the Debtor's potential recovery from a loss of consortium claim pending in Kentucky state court was properly claimed exempt as a cause of action for personal injury.
The Court declared a wholly unsecured second priority lien on the Chapter 13 Debtor's real property an unsecured claim for the pendency of the case, but declined to declare the lien void until the Debtor received a discharge.
The Debtor filed a Complaint against the U.S. Department of Housing and Urban Development ("HUD") to turnover his 2003 federal income tax refund which HUD set off against the debtor's pre-petition debt owed to HUD for a foreclosed home pursuant to 26 U.S.C. § 6402 (Federal Intercept Statute). The setoff occurred one day after the debtor filed his bankruptcy petition. In addition, the debtor sought a determination that HUD violated the automatic stay of 11 U.S.C. § 362. HUD moved for retroactive, or nunc pro tunc, relief from stay by annulment of the stay. The Bankruptcy Code preserves the right to setoff that exists under nonbankruptcy law, and Section 6402 allows the I.R.S. to offset a tax refund against any debt which the taxpayer may owe to a federal agency. See 26 U.S.C. § 6402(d). Nevertheless, regardless of any established rights to conduct a setoff, postpetition acts to conduct a setoff are prohibited by the automatic stay under Section 362. Further, prepetition creditors generally may not execute a postpetition setoff on property which the debtor has exempted. The Court found that annulment of the automatic stay would be contrary to the intent of Congress and the Commonwealth of Virginia. Accordingly, the Court concluded that the government's post-petition setoff of the debtor's tax refund to prepetition debt was a violation of the automatic stay, and therefore ordered that HUD turn the debtor's tax refunds over to the trustee to administer because it is property of the estate. Nevertheless, the Court found that HUD's actions were not willful, and therefore did not issue sanctions against HUD for violating the automatic stay.
The male debtor inherited the real property within 180 days of filing the bankruptcy petition. 11 U.S.C. § 541(a)(5)(A) provides that property acquired by inheritance, bequest, or devise within 180 days of the filing of the petition becomes property of the estate. The Chapter 7 Trustee filed a motion to sell real estate free and clear of liens and co-owner's interest pursuant to 11 U.S.C. § 363(h). The debtors argue that the provisions of Section 363(h) do not apply to the proposed sale because the male debtor made a partial disclaimer of his inheritance, and under Virginia law, the right to disclaim his inheritance permits exclusion of the disclaimed interest as property of the estate even when the disclaimer occurs after the filing of the bankruptcy petition. The Court disagrees, holding that federal law, not state law, governs property of the estate and legal rights and interests of the debtors.
The court dismissed the Debtor's case because he failed to obtain credit counseling in the 180 days prior to filing.
The court allowed hold-over rent at the pre-negotiated rate and the amount of damage resulting from the Debtor's removal of an alarm system upon vacating the property as an administrative expenses to the purchaser of real property formerly occupied by the Debtor. The Claimant failed to satisfy its burden of proof with regard to a counter the Debtor removed from the property.
The Court declared a second priority lien on the Chapter 13 Debtor's real property an unsecured claim for the pendency of the case, but declined to declare the lien void until the Debtor received a discharge.
The court granted the U.S. Trustee's motion to dismiss pursuant to 11 U.S.C. section 707(b) because the Debtor's case constituted substantial abuse. The court considered that the Debtor could pay more than 28% of his scheduled unsecured debt over a thirty-six month plan, the filing was not due to some unforeseen tragedy, the Debtor and his wife incurred consumer obligations far beyond their ability to pay and their household expenditures were excessive, and that the Debtor materially understated his wife's income, albeit unintentionally.
Court conditionally granted the United States Trustee's motion to dismiss the debtor's case for substantial abuse under section 707(b). USTE alleged that debtors incurred excessive consumer debt at a time when they were not paying their existing consumer debt obligations and that they understated their petition date income in their schedules. After analyzing the In re Green factors and In re Harrelson, Court held that the ability to repay is the primary factor to be considered in a substantial abuse case. Court found that debtors did not have meaningful ability to pay their unsecured debt if they did what their statement of intention indicated (pay mortgage debt, vehicle debt and furniture debt). However, the debtors had not reaffirmed such debt. Filing was found to be abusive as to several obligations incurred prior to filing bankruptcy. Court denied the USTE's motion upon the condition that the debtors execute and file reaffirmation agreements for certain obligations. If the debtors failed to reaffirm such debt or convert their case to chapter 13 within the required time, then the case will be dismissed. Case controlled by law in effect prior to adoption of BAPCPA.