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Appellate Court Rules that Inheritance Received After Filing of Chapter 13 Bankruptcy Petition is Part of Bankruptcy Estate
When a debtor files a bankruptcy petition, a bankruptcy estate is created that exists as a distinct legal entity. The court-appointed trustee has the authority to manage this estate, and the debtor’s non-exempt property becomes the estate’s property. Property obtained...
Los Angeles Court Affirms Penalties for Willful Violation of Automatic Stay in Chapter 13 Bankruptcy Case
A U.S. district court in Los Angeles affirmed a bankruptcy court’s order finding that a judgment creditor willfully violated the automatic stay in a Chapter 13 case. In re Bayley, No. 2:14-cv-07799, order (C.D. Cal., Jan. 14, 2015). The automatic stay takes effect the...
Supreme Court Rules that Chapter 7 Debtor Cannot Strip Underwater Second Lien from Home
“Lien stripping” is the process of eliminating some junior liens, such as a second mortgage, from real property during a bankruptcy case. Junior liens are, by definition, subordinate to senior liens securing a piece of real estate. The lien-stripping process...
City of San Bernardino, California’s Bankruptcy Case Results in Multitude of Legal Disputes
The City of San Bernardino joined a number of cities around the country by filing for bankruptcy in 2012. See In re City of San Bernardino, 499 B.R. 776 ((Bankr. C.D. Cal 2013). While a municipal bankruptcy differs from a personal or business bankruptcy in numerous...
Court Rules that Fines Under California’s Private Attorney General Act Are Not Dischargeable in Chapter 7 Bankruptcy
A California federal district court ruled that fines assessed under a California law that allows employees to enforce state labor law as “private attorneys general” are not dischargeable in a Chapter 7 bankruptcy proceeding. Medina v. Poel, No. 1:14-cv-01302, order...
Chapter 7 Bankruptcy Case Reopened for Creditors Left Out of Debtor’s Schedules
A bankruptcy court reopened a Chapter 7 case after granting a discharge on the debtor’s motion, although not for the reason stated by the debtor. In re Sullivan, No. 11-38246-A-7, memorandum (Bankr. E.D. Cal., Feb. 23, 2015). The debtor asked the court to reopen the...
Chapter 13 Case Dismissed Due to Failure to Disclose Prior Bankruptcy Filings, Other Acts Deemed in Bad Faith
A bankruptcy court granted a Chapter 13 trustee’s motion to dismiss a debtor’s case and barred the debtor from further bankruptcy filings, in any district in the country, for a two-year period. In re Weik, No. 14-61298, mem. dec. (Bankr. D. Mont., Feb. 24, 2015). The...
Tax Penalties Accrued More than Three Years Before Bankruptcy Filing Date Are Dischargeable, Court Rules
Federal bankruptcy law allows debtors to discharge tax penalties if they meet certain criteria. The Internal Revenue Service (IRS) may penalize individual taxpayers for failing to file a tax return by the April 15 due date, 26 U.S.C. § 6651(a)(1). These penalties are...
Bankruptcy Court Rules that State Tax Debt Is Dischargeable in Chapter 7 Bankruptcy Case
A California bankruptcy court ruled that sales tax obligations owed by a debtor in connection with a convenience store she owned were subject to discharge in the debtor’s Chapter 7 bankruptcy case. In re Athar, No. 1:11-bk-23947, Adv. No. 1:12-ap-01038, memorandum...
California Bankruptcy Court Considers Whether a Debtor Has the Burden of Proof in Claiming an Exemption Under State Law
A bankruptcy judge in California considered a Chapter 7 trustee’s objection to a debtor’s exemption claim. The debtor claimed that a large retirement account was exempt from Chapter 7 liquidation under California law. The court identified two factual questions, but...
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