in dicta, that the sixty day extension of the redemption period provided for by 11 U.S.C. § 108(b)
may be modified and treated as a secured claim under 11 U.S.C. § 1322(b)(2), which states that a
bankruptcy plan may:

modify the rights of holders of secured claims, other than a claim secured only by
a security interest in real property that is the debtor principal residence, or of
holders of unsecured claims, or leave unaffected the rights of holders of any class
of claims.

Bates, 270 B.R. at 466, Dabal asserts that he can modify because the tax purchaser in this case
has only a secured interest in the property, since the bankruptcy suit was filed prior to the
expiration of the redemption period and all bankruptcy claims must be assessed as of the date of
the filing. See id. at 467. Essentially, Appellee attempts to convince this court that the property
interests of the parties do not change in nature throughout the pendancy of the bankruptcy
proceeding and should only be determined as of the filing date. We respectfully disagree with
this reasoning because it presents a drastic departure from established precedent in this circuit
conceming the interaction of § 108(b) and § 1322(b)(2).

The courts in this jurisdiction have repeatedly recognized that the nature of the parties
state property interests changes, even while bankruptcy proceedings are pending, because the
automatic stay provision of a bankruptcy suit does not toll the running of the redemption period.
In re Davenport, 268 B.R. 159, 165 (Bankr. N.D. Ill. 2001). The property owner retains his legal
and equitable ownership rights only until the expiration of the redemption period, at which time
he loses “all interest in the property” and “can do nothing to prevent the issuance of a deed to the
tax purchaser.” Jn re Bequette, 184 B.R. 327, 336 (Bankr. S.D. Ill. 1995); see In re Jackson, 176

B.R. 156, 159 (Bankr. N.D. Ill. 1994); In re McKeever, 132 B.R. 996, 1010 (Bankr. N.D. Ill.



Appellant’s motion to lift the stay, thereby accepting the Chapter 13 plan and its extension of

the redemption period; and 2) vacating the motion to dismiss.

DISCUSSION

L Standard of Review

This court has jurisdiction over the instant appeal under 28 U.S.C. § 158 (a)(1), which
vests the district court with jurisdiction over appeals from “final judgments, orders and decrees”
of the bankruptcy court. Acting as an appellate court, the district court is bound to accept the
bankruptcy court’s findings of fact, unless they are clearly erroneous, and may only consider
evidence presented before the bankruptcy court and made part of the record. In re Home Comp.
Care, Inc., 221 B.R. 202, 205 (N.D. Ill. 1998) (citing Jn re Lefkas Gen. Partners, 112 F.3d 896,
900 (7th Cir. 1997)); In the Matter of Neis, 723 F.2d 584, 588-89 (7th Cir. 1983) (citing Fed. R.
Bankr. P. 8013). However, when there are pure questions of law, the court reviews them de

novo. Matter of UNR Indus., Inc., 986 F.2d 207, 208 (7th Cir. 1993).

I. Analysis

The issue on appeal is whether the Bankruptcy Judge erred when he approved the
inclusion of an extended stay to prevent S.I. Securities’s acquisition of a tax deed as part of the
Chapter 13 plan. Relying on Jn re Bates, 270 B.R. 455 (Bankr. N.D. Ill. 2001), Dabal argues that

a debtor who files a bankruptcy petition prior to the expiration of the redemption period may

redeem a tax purchase through a repayment plan organized under Chapter 13. Bates suggested,



1991). Ifthe property owner does not redeem the taxes within the statutory period (including
the extension), his interest in the property is extinguished. The tax purchaser may then obtain a
tax deed on the property. 35 ILCS 200/22-40. Thus, an automatic stay does not prevent the tax
purchaser from acquiring equitable or legal title to the property once the redemption period runs,
even if bankruptcy proceedings are still in progress.

In addition, while the Seventh Circuit has not ruled on a set of circumstances exactly like
those before this Court, it has previously determined that, under § 108(), a sixty-day extension
is the specific remedy for a debtor who finds himself in bankruptcy during the course of a tax
purchase redemption period. Jn re Tynans, 773 F.2d 177, 179 (7th Cir. 1985). Allowing the

debtor to suspend this redemption period indefinitely by conditioning it on the settlement of a
bankruptcy proceeding, or the establishment of a Chapter 13 plan, would undermine the holding
in Tynans by enabling the debtor to set his own redemption schedule. In re Murray, 276 B.R.
869, 877 (Bankr. N.D. Ill. 2002). In effect, a debtor could successfully bypass state redemption
law by filing for bankruptcy. No provision of Chapter 13 should render any terms of the
Bankruptcy Code superfluous or insignificant. See Woodfork v. Marine Cooks & Stewards
Union, 642 F.2d 966, 970-971 (5th Cir. 1981). When two statutes address the same subject
matter and seem conflicting, they are to be read in pari materia and harmonized when possible,
Murray, 276 B.R. at 876; In re Johnson, 787 F.2d 1179, 1181 (7th Cir. 1986); In re Robinson,
665 F.2d 166, 171 (7th Cir. 1981). Unless a federal interest requires a different result, this Court
believes that bankruptcy proceedings should not interfere with the application of state property

interests. See Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914 (1979).



Minte Order Form (06/97)

oe

=

United States District Court, Northern District of Illinois

Name of Assigned Judge Wayne R. Andersen Sitting Judge if Other
or Magistrate Judge ” than Assigned Judge
CASE NUMBER 3274 DATE 7/30/2003
CASE S.L Securities vs. Joseph Dabal
TITLE
[In the following box (a) indicate the party filing the motion, e.g. plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOTION: of the motion being presented.]

DOCKET ENTRY:

(1) QO Filed motion of [ use listing in “Motion” box above.]

(2) o Brief in support of motion due

(3) 0 Answer brief to motion due . Reply to answer briefdue___

(4) oO Ruling/Hearing on set for at

(5) Oo Status hearing[held/continued to} [set for/re-set for] on set for at

(6) a Pretrial conference{held/continued to] [set for/re-set for} on set for at .

(7) oO Trial[set for/re-set for] on at

(8) go [Bench/Jury trial} [Hearing] held/continued to at

(9) ob This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRcP4(m) CO Local Rule 41.1 CFRCP41(a)(1) OO FRCP41(a)(2).

(0) [Other docket entry] Enter MEMORANDUM, OPINION AND ORDER: This Court reverses
the decision and remands this matter to the Bankruptcy Court for proceedings consistent with this
opinion. This ruling renders all other counts of this appeal moot.

“y
4
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No notices required, advised in open court.
No notices required. number of notices
Notices mailed by judge's staff, at
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In the instant case, Appellee failed to redeem the tax purchase within the sixty-day
extension. His redemption rights therefore expired and the estate retained no interest in the

property. As a result, Appellant acquired equitable title to the property and has a legitimate right

to a tax deed on the tax purchase certificate. Accordingly, Appellant’s motion to lift the stay was

wrongly denied.

CONCLUSION
For the foregoing reasons, this Court reverses the decision and remands this matter to the
Bankruptcy Court for proceedings consistent with this opinion. This ruling renders all other

counts of this appeal moot.

Je (CR

Wayne R. Andersen
United States District Judge

Dated: Opuly 30, 2003


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
S$. SECURITIES, ) Bae
) Be
Defendant-Appellant, ) AUG a
) ‘dis
v. ) No. 03 C 274
)
JOSEPH DABAL, ) Wayne R. Andersen
) District Judge Lary
Debtor-Appellee, ) AUG “| 2063

MEMORANDUM, OPINION AND ORDER

This case is before the court on Defendant-Appellant S.I. Securities’ appeal from a
decision rendered by the United States Bankruptcy Court for the Northern District of Illinois.
For the following reasons, the decision of the bankruptcy court is reversed and remanded for

proceedings consistent with this opinion.

BACKGROUND
On December 16, 1997, Debtor-Appellee Joseph Dabal purchased a parcel of real estate
located at 7443 West Washington, Forest Park, Illinois. In 1999, Defendant-Appellant S.I.
Securities bought Dabal’s unpaid real estate taxes for 1997 from Cook County. No redemption
of the tax purchase, however, was ever made. On March 6, 2002, the last day of the redemption
period, Dabal filed a petition for relief under Chapter 13. Under the appropriate bankruptcy
provisions, he received a sixty-day extension of the redemption period, 11 U.S.C. § 108(b), as

well as an automatic stay on the prosecution of the tax deed, 11 U.S.C. § 362. Appellee failed to

redeem his property during the period of extension.



On June 14, 2002, Dabal filed an adversary complaint against Appellant seeking damages
for alleged violations of the automatic stay provisions. On July 31, 2002, Appellant countered
by filing: 1) a motion to lift the automatic stay on the prosecution of the tax deed; 2) a motion to
dismiss the bankruptcy case; 3) a motion to dismiss the adversary complaint; and 4) an objection
to Appellee’s Chapter 13 plan, filed on April 19, 2002. On August 19, 2002, the bankruptcy
court dismissed Dabal’s bankruptcy case, finding him ineligible for Chapter 13 protection
because he was unemployed at the time of the filing. As a result of this ruling, the other three
issues were also dismissed.

In response, Dabal filed a motion to reconsider and vacate the order, alleging that his
unemployment status at the date of the filing should not be dispositive as to whether he was an
“individual with regular income.” On September 9, 2002, the Court held a hearing and requested
additional briefs regarding Appellee’s argument that a Chapter 7 claim could have originally
been filed and then converted to a Chapter 13 case when he became employed.

On October 7, 2002, the bankruptcy court vacated its dismissal, reinstating the adversary
complaint and the automatic stay. On October 28, 2002, the Appellee once again amended his
bankruptcy plan, and in doing so extended the redemption of the real estate taxes over the life of
the plan. As before, Appellant opposed the extension, but on December 16, 2002, the court
overruled the objection, confirmed the plan, and denied the motion to lift the stay. On the same

day, this appeal was filed by Appellant arguing that the bankruptcy court erred in: 1) denying