This adversary complaint, filed by two children of the Debtor, stems from certain terms regarding life insurance proceeds contained in a separation agreement between the Debtor and her now deceased ex husband. The children sought a declaration that a state court default judgment they obtained against the Debtor was nondischargeable. The Court first held that the Bankruptcy Court was not precluded by the doctrine of collateral estoppel from considering the underlying conduct giving rise to the debt for dischargeability purposes given the state court’s failure to do so. The Court then found that the plaintiffs sufficiently established that the debt was nondischargeable under 11 U.S.C. § 523(a)(5) as a domestic support obligation or, alternatively, under 11 U.S.C. § 523(a)(15) as a debt to a child of the debtor incurred in connection with a separation agreement or divorce decree.

An unsecured creditor moved to conduct Rule 2004 examinations of the chapter 7 debtor and his non-filing wife to determine whether granting a discharge would be presumptively abusive under section 707(b)(1). The threshold question was whether certain tax liabilities that the IRS had designated as currently not collectible should be counted in calculating the debtor's total debt. The Court held that they should, reasoning that an administrative determination of non-collectibility does not extinguish or reduce the underlying tax obligation. Because the underlying tax liabilities remained valid legal obligations, they were properly counted as non-consumer debts, the debtor's non-consumer debts exceeded his consumer debts, and section 707(b) was therefore inapplicable. The Court denied the motion for a Rule 2004 examination as moot.

The question before the Court was whether to grant the trustee’s motion to modify the debtors’ confirmed chapter 13 plan over the objection of the debtors. The trustee moved to modify the confirmed plan because one of the debtors received an inheritance during the latter months of the plan term. The debtors opposed the motion to modify arguing they had not experienced a substantial and unanticipated change in financial condition. The Court granted the motion in part and denied the motion in part.

An involuntary Chapter VII bankruptcy petition was filed against Yellow Poplar Lumber Company, Inc. under the Bankruptcy Act of 1898. The case was closed and then later reopened when the bankruptcy estate received proceeds from gas wells on property Yellow Poplar had an interest in at the time of its bankruptcy. The Trustee was left with $422,857.12 in unclaimed funds, which were transmitted to the Clerk of this Court. The issue before the Court is which version of Section 66 of the Bankruptcy Act applied: the 1956 version or the version in effect when the bankruptcy case was pending. The statute, as amended in 1956, provided that unclaimed funds were not subject to escheat under the laws of any state. The State of South Carolina asserted that under the pre-1956 version the funds are subject to escheat back to individual States where deceased shareholders who left no heirs were located. While Yellow Poplar went bankrupt in 1928, the natural gas royalties that give rise to the unclaimed funds did not manifest themselves until many decades after the case was closed. Since the funds did not exist prior to 1956, and therefore could not have escheated to any state prior to the date of amendment, the Court held that the 1956 amendment to Section 66 applies. As the unclaimed funds are not subject to escheat, the Court denied the State of South Carolina’s motion to pay the unclaimed funds into the registry of the court and then transfer the case and the funds back to the District of South Carolina.