RECENT DEVELOPMENTS IN BANKRUPTCY LAW
RECENT DEVELOPMENTS IN BANKRUPTCY LAW
AAugust 12, 2016 Today the Bankruptcy Appellate Panel ruled that a “pay to stay” jail fee is dischargeable in bankruptcy.  In this case, an individual filed for chapter 7 bankruptcy, and owed fees to Dakota County for room and board fees for time spent in jail.  After the bankruptcy was filed, Dakota County claimed that these fees should not be discharged in the bankruptcy because they were a fine or penalty owed to a government unit.  However, the Court concluded that this type of fee does not meet the standard to be nondischargeable as a fine or penalty, and the debt owed to Dakota County was discharged as part of the chapter 7 bankruptcy.  Dakota County v. Milan.ugust 12, 2016 Today the Bankruptcy Appellate Panel ruled that a “pay to stay” jail fee is dischargeable in bankruptcy.  In this case, an individual filed for chapter 7 bankruptcy, and owed fees to Dakota County for room and board fees for time spent in jail.  After the bankruptcy was filed, Dakota County claimed that these fees should not be discharged in the bankruptcy because they were a fine or penalty owed to a government unit.  However, the Court concluded that this type of fee does not meet the standard to be nondischargeable as a fine or penalty, and the debt owed to Dakota County was discharged as part of the chapter 7 bankruptcy.  Dakota County v. Milan.
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RECENT DEVELOPMENTS IN BANKRUPTCY LAW
June 26, 2017 This involves a chapter 13 case.  The chapter 13 plan provided that a leased vehicle with Ford Motor Credit would be directly, outside of the chapter 13 bankruptcy.  After the chapter 13 plan was confirmed by the Court, Ford filed a motion seeking $3,600 in administrative expenses.  The Court denied Ford’s request because the chapter 13 plan is binding on all creditors.  In re Reiser. June 12, 2017 Generally speaking, repayments of loans to “insiders” within 1 year of filing for bankruptcy are considered preferences, and a bankruptcy trustee may seek to have that repayment avoided.  Insiders are typically relatives.  Today’s case involved the repayment of a debt to his ex-wife within that 1 year period.  The trustee sought to avoid the repayment, but the Court ruled that an ex-wife is not an insider, and the trustee’s motion was denied. In re White.
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August 12, 2016 Today the Bankruptcy Appellate Panel ruled that a “pay to stay” jail fee is dischargeable in bankruptcy.  In this case, an individual filed for chapter 7 bankruptcy, and owed fees to Dakota County for room and board fees for time spent in jail.  After the bankruptcy was filed, Dakota County claimed that these fees should not be discharged in the bankruptcy because they were a fine or penalty owed to a government unit.  However, the Court concluded that this type of fee does not meet the standard to be nondischargeable as a fine or penalty, and the debt owed to Dakota County was discharged as part of the chapter 7 bankruptcy.  Dakota County v. Milan. March 15, 2016 An individual filed for chapter 7 bankruptcy, and at the time she filed she lived at her parents’ home.  Within 180 after she filed for bankruptcy, both of her parents passed away, and as a result she inherited an ownership interest in her parents’ home.  The Bankruptcy Code states that if someone becomes entitled to inherit property within 180 days after filing for bankruptcy, that property becomes an asset of the bankruptcy estate, so she was subject to losing her interest in her parents’ house.  So she amended her bankruptcy schedules to list the new ownership interest, and exempted it under Minnesota’s homestead exemption, even though didn’t own the house when she filed for bankruptcy.  The trustee in her case objected to this, but the Minnesota Bankruptcy Court ruled in her favor.  The Court recognized that when someone files for bankruptcy, Minnesota law allows them to keep up to $390,000 in homestead equity, assuming they are living at the house at the time.  Because the individual in this case was living in her parents’ house when she filed for bankruptcy, the Court ruled in her favor and allowed her to exempt her inherited interest in the house as her homestead, even though she did not own the house when she filed for bankruptcy.   In re Walz. September 11, 2015 An individual filed for chapter 13 bankruptcy.  As part of the chapter 13, she tried to have the second mortgage lien removed and that debt wiped out (called “lien stripping”).  This may be permissible in chapter 13 when the value of the house is worth less than what is owed on the first mortgage, making the second mortgage completely unsecured.  However, her ex-husband was also obligated for the second mortgage.  Because of this, the Minnesota Bankruptcy Court concluded that she could not obtain a release of the second mortgage.  In re Brown. April 17, 2015 A husband and wife filed separate bankruptcy petitions because they wanted to claim different exemption laws that were available to them.  The Court said this was not permissible, and consolidated their 2 cases into one, and told them to pick 1 exemption law that would be applied to both of them.  Boellner v. Dowden January 26, 2015 A married couple filed for chapter 7 bankruptcy.  Included in their list of assets was a 529 college savings plan that the husband inherited.  The beneficiaries were their 2 children.  529 plans are generally not property of the bankruptcy estate, which means they are not subject to being turned over.  The trustee argued that because the person filing for bankruptcy was not listed as the owner if the account (his deceased mother was still listed as owner), the funds should be forfeited.  However, the Minnesota Bankruptcy Court did not agree, and ruled because the person filing for bankruptcy had a legal ownership in the account via inheritance, it was his, and was not subject to being turned over.  In re Hennessy.
Schreiber Law Office, LLC Richard M. Schreiber, Attorney
June 26, 2017 This involves a chapter 13 case.  The chapter 13 plan provided that a leased vehicle with Ford Motor Credit would be directly, outside of the chapter 13 bankruptcy.  After the chapter 13 plan was confirmed by the Court, Ford filed a motion seeking $3,600 in administrative expenses.  The Court denied Ford’s request because the chapter 13 plan is binding on all creditors.  In re Reiser. June 12, 2017 Generally speaking, repayments of loans to “insiders” within 1 year of filing for bankruptcy are considered preferences, and a bankruptcy trustee may seek to have that repayment avoided.  Insiders are typically relatives.  Today’s case involved the repayment of a debt to his ex-wife within that 1 year period.  The trustee sought to avoid the repayment, but the Court ruled that an ex-wife is not an insider, and the trustee’s motion was denied. In re White. August 12, 2016 Today the Bankruptcy Appellate Panel ruled that a “pay to stay” jail fee is dischargeable in bankruptcy.  In this case, an individual filed for chapter 7 bankruptcy, and owed fees to Dakota County for room and board fees for time spent in jail.  After the bankruptcy was filed, Dakota County claimed that these fees should not be discharged in the bankruptcy because they were a fine or penalty owed to a government unit.  However, the Court concluded that this type of fee does not meet the standard to be nondischargeable as a fine or penalty, and the debt owed to Dakota County was discharged as part of the chapter 7 bankruptcy.  Dakota County v. Milan. March 15, 2016 An individual filed for chapter 7 bankruptcy, and at the time she filed she lived at her parents’ home.  Within 180 after she filed for bankruptcy, both of her parents passed away, and as a result she inherited an ownership interest in her parents’ home.  The Bankruptcy Code states that if someone becomes entitled to inherit property within 180 days after filing for bankruptcy, that property becomes an asset of the bankruptcy estate, so she was subject to losing her interest in her parents’ house.  So she amended her bankruptcy schedules to list the new ownership interest, and exempted it under Minnesota’s homestead exemption, even though didn’t own the house when she filed for bankruptcy.  The trustee in her case objected to this, but the Minnesota Bankruptcy Court ruled in her favor.  The Court recognized that when someone files for bankruptcy, Minnesota law allows them to keep up to $390,000 in homestead equity, assuming they are living at the house at the time.  Because the individual in this case was living in her parents’ house when she filed for bankruptcy, the Court ruled in her favor and allowed her to exempt her inherited interest in the house as her homestead, even though she did not own the house when she filed for bankruptcy.   In re Walz. September 11, 2015 An individual filed for chapter 13 bankruptcy.  As part of the chapter 13, she tried to have the second mortgage lien removed and that debt wiped out (called “lien stripping”).  This may be permissible in chapter 13 when the value of the house is worth less than what is owed on the first mortgage, making the second mortgage completely unsecured.  However, her ex-husband was also obligated for the second mortgage.  Because of this, the Minnesota Bankruptcy Court concluded that she could not obtain a release of the second mortgage.  In re Brown. April 17, 2015 A husband and wife filed separate bankruptcy petitions because they wanted to claim different exemption laws that were available to them.  The Court said this was not permissible, and consolidated their 2 cases into one, and told them to pick 1 exemption law that would be applied to both of them. Boellner v. Dowden. January 26, 2015 A married couple filed for chapter 7 bankruptcy.  Included in their list of assets was a 529 college savings plan that the husband inherited.  The beneficiaries were their 2 children.  529 plans are generally not property of the bankruptcy estate, which means they are not subject to being turned over.  The trustee argued that because the person filing for bankruptcy was not listed as the owner if the account (his deceased mother was still listed as owner), the funds should be forfeited.  However, the Minnesota Bankruptcy Court did not agree, and ruled because the person filing for bankruptcy had a legal ownership in the account via inheritance, it was his, and was not subject to being turned over.  In re Hennessy.
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RECENT DEVELOPMENTS IN BANKRUPTCY LAW
June 12, 2017 Generally speaking, repayments of loans to “insiders” within 1 year of filing for bankruptcy are considered preferences, and a bankruptcy trustee may seek to have that repayment avoided.  Insiders are typically relatives.  Today’s case involved the repayment of a debt to his ex-wife within that 1 year period.  The trustee sought to avoid the repayment, but the Court ruled that an ex-wife is not an insider, and the trustee’s motion was denied.  In re White. August 12, 2016 Today the Bankruptcy Appellate Panel ruled that a “pay to stay” jail fee is dischargeable in bankruptcy.  In this case, an individual filed for chapter 7 bankruptcy, and owed fees to Dakota County for room and board fees for time spent in jail.  After the bankruptcy was filed, Dakota County claimed that these fees should not be discharged in the bankruptcy because they were a fine or penalty owed to a government unit.  However, the Court concluded that this type of fee does not meet the standard to be nondischargeable as a fine or penalty, and the debt owed to Dakota County was discharged as part of the chapter 7 bankruptcy.  Dakota County v. Milan. March 15, 2016 An individual filed for chapter 7 bankruptcy, and at the time she filed she lived at her parents’ home.  Within 180 after she filed for bankruptcy, both of her parents passed away, and as a result she inherited an ownership interest in her parents’ home.  The Bankruptcy Code states that if someone becomes entitled to inherit property within 180 days after filing for bankruptcy, that property becomes an asset of the bankruptcy estate, so she was subject to losing her interest in her parents’ house.  So she amended her bankruptcy schedules to list the new ownership interest, and exempted it under Minnesota’s homestead exemption, even though didn’t own the house when she filed for bankruptcy.  The trustee in her case objected to this, but the Minnesota Bankruptcy Court ruled in her favor.  The Court recognized that when someone files for bankruptcy, Minnesota law allows them to keep up to $390,000 in homestead equity, assuming they are living at the house at the time.  Because the individual in this case was living in her parents’ house when she filed for bankruptcy, the Court ruled in her favor and allowed her to exempt her inherited interest in the house as her homestead, even though she did not own the house when she filed for bankruptcy.   In re Walz. September 11, 2015 An individual filed for chapter 13 bankruptcy.  As part of the chapter 13, she tried to have the second mortgage lien removed and that debt wiped out (called “lien stripping”).  This may be permissible in chapter 13 when the value of the house is worth less than what is owed on the first mortgage, making the second mortgage completely unsecured.  However, her ex-husband was also obligated for the second mortgage.  Because of this, the Minnesota Bankruptcy Court concluded that she could not obtain a release of the second mortgage.  In re Brown. April 17, 2015 A husband and wife filed separate bankruptcy petitions because they wanted to claim different exemption laws that were available to them.  The Court said this was not permissible, and consolidated their 2 cases into one, and told them to pick 1 exemption law that would be applied to both of them. Boellner v. Dowden. January 26, 2015 A married couple filed for chapter 7 bankruptcy.  Included in their list of assets was a 529 college savings plan that the husband inherited.  The beneficiaries were their 2 children.  529 plans are generally not property of the bankruptcy estate, which means they are not subject to being turned over.  The trustee argued that because the person filing for bankruptcy was not listed as the owner if the account (his deceased mother was still listed as owner), the funds should be forfeited.  However, the Minnesota Bankruptcy Court did not agree, and ruled because the person filing for bankruptcy had a legal ownership in the account via inheritance, it was his, and was not subject to being turned over.  In re Hennessy.
June 26, 2017 This involves a chapter 13 case.  The chapter 13 plan provided that a leased vehicle with Ford Motor Credit would be directly, outside of the chapter 13 bankruptcy.  After the chapter 13 plan was confirmed by the Court, Ford filed a motion seeking $3,600 in administrative expenses.  The Court denied Ford’s request because the chapter 13 plan is binding on all creditors.  In re Reiser.
RECENT DEVELOPMENTS IN BANKRUPTCY LAW
Schreiber Law Office, LLC Richard M. Schreiber, Attorney
Minnesota Bankruptcy Law Firm
(651) 554-0121
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