Source: https://www.georgiabankruptcyblog.com/page/2
Timestamp: 2019-04-21 07:07:29+00:00

Document:
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), as the name implies, included several amendments to the Bankruptcy Code that were intended to curb alleged “abuses” of the Code and Bankruptcy system. One of the amendments was limiting or eliminating the protections of the automatic stay of §362(a) for repeat filings within a one year period. Judge Sacca in the Northern District of Georgia recently addressed the applicability and limitations of §362(c)(3), which limits the stay for the second case filed within a one year period. In re Keeler, Ch. 13 Case No. 16-59261, 2016 WL 6892464 (Bankr. N.D. Ga. Nov. 22, 2016).
In In re Feagan, 549 B.R. 811, Ch. 13 Case No. 15-40823 (Bankr. N.D. Ga. April 8, 2016) (click here for .pdf of opinion), the issue before Judge Bonapfel was “whether an ‘above-median’ Chapter 13 debtor with car payments on account of a nonpurchase-money debt may deduct the Ownership Costs allowance for purposes of calculating his projected disposable income (“PDI”) under 11 U.S.C. § 1325(b).” In his Chapter 13 Plan, the Debtor deducted a vehicle ownership expense of $517 per month for his payments on a title pawn transaction. The Chapter 13 Trustee objected to the proposed Plan arguing that the allowed deduction is only applicable to purchase money debt or a vehicle lease, and not to non-purchase money debt such as title pawns.
No, you have not accidentally stumbled upon the Georgia Criminal Law Blog, and I am not going to change my practice area just yet (though on the slow days I often think about it). I happen to come across this case today and thought it may be of interest, especially with the news we see every day now. With the BAPCPA now approaching 11 years in age and Bankruptcy slow, I may make a habit of occasionally straying from the topic.
One hard and fast rule in Bankruptcy is that debts and claims are “set in stone” as of the petition date, or perhaps post-petition if added to the Chapter 13 plan. Bankruptcy Courts and Trustees do not normally police potential debts that may come up later. There are some exceptions to the general rule, and a Texas Bankruptcy Court addressed one of them recently.
In In re Sinclair, Ch. 13 Case No. 11-34564 (Bankr. S.D. Tex. September 7, 2016)(click here for opinion), the Debtors filed their Chapter 13 case in May 2011, proposed a confirmed plan, made all payments and completed their financial management course. Thus, they were eligible for a discharge. “But, there is a rub,” said Judge Jeff Bohm. There existed a criminal case against Mr. Sinclair arising from an alleged sexual relationship with a minor. The alleged relationship started after the Chapter 13 petition was filed, and is discussed in a little more detail in the Court’s Order. It resulted in a felony indictment against the Debtor in July 2014, which was still pending as of September 2016.
I find that the Palladinos paid SHU because they believed that a financially self-sufficient daughter offered them an economic benefit and that a college degree would directly contribute to financial self-sufficiency. I find that motivation to be concrete and quantifiable enough. The operative standard used in both the Bankruptcy Code and the UFTA is “reasonably equivalent value.” The emphasis should be on “reasonably.” Often a parent will not know at the time she pays a bill, whether for herself or for her child, if the medical procedure, the music lesson, or the college fee will turn out to have been “worth it.” But future outcome cannot be the standard for determining whether one receives reasonably equivalent value at the time of a payment. A parent can reasonably assume that paying for a child to obtain an undergraduate degree will enhance the financial well-being of the child which in turn will confer an economic benefit on the parent. This, it seems to me, constitutes a quid pro quo that is reasonable and reasonable equivalence is all that is required.
Thanks to Mark Duedall at Bryan Cave for the initial tip on this case. His article on the case can be found at the Bankruptcy Cave Blog. I would expect the decision to be appealed. While not all parents are convicted of running a Ponzi Scheme, Bankruptcy Courts are probably full of parents who have paid their child’s educational expenses (or for housing, vehicles, and living expenses). As Mark points out, this new twist on the defense could create a safe haven for many otherwise fraudulent transfers to children. It could also lead to some novel pre-Bankruptcy planning.
The case is Degiacomo v. Sacred Heart, Case No. 15-01126 (Bankr. E.D. Mass. August 10, 2016). Click here for the .pdf of the opinion.
Thanks to Mark Duedall at Bryan Cave for the initial tip on this case. His article on the case can be found at the Bankruptcy Cave Blog.
Funds in joint bank accounts can generally be accessed by all account-holders — each of them can withdraw all of the money in the account regardless of who actually deposited the funds in the account. This is often the reason for having a joint account. This can create a huge problem for the account holders when one of them is subject to a garnishment or files a Bankruptcy case. If the account is garnished because one of the account holders has a judgment against them, neither the bank nor the creditor have to determine the source of the funds prior to attaching them. If one of the parties files a Bankruptcy case, the Trustee may lay claim to all or a portion of the funds as property of the Bankruptcy estate.
In a recent Bankruptcy case in the Northern District of Georgia, the Court addressed the “intent” clause in the statute. The Chapter 7 Trustee claimed that the funds in a Debtor’s joint account were property of the estate. However, the other account holder objected and claimed that the funds were his, rather than the Debtor’s, as he had deposited the money in the account. Prior to the filing of the Bankruptcy case, the non-debtor testified under oath in a garnishment case that both he and the Debtor would deposit money into the account, but the Debtor was the only one who ever withdrew money from the account. He also stated that the Debtor would use the money in the account for her personal expenses, and the account’s purpose “was to have a convenient place to deposit a reasonable sum of money for safekeeping and that…she could use it, or I could use it as we may need to.” Before the state court ruled on the matter, the Chapter 7 case was filed. The Trustee alleged that the testimony above evidenced an intent of the non-debtor to transfer ownership of the funds to the Debtor.
Judge Drake ruled that the state court testimony was not sufficient to overcome, by clear and convincing evidence, the presumption that the fund belonged to the non-debtor account holder.
The Trustee maintained that Sylvester’s testimony that only the Debtor ever withdrew funds from the account, and that the Debtor used the funds in the account for her personal expenses, showed that Sylvester must have intended his deposits into the account as gifts.
[The non-debtor account holder] proffered at the hearing before this Court that he and the Debtor had an understanding that each spouse was to deposit funds into the account to cover that spouse’s withdrawals from the account. The Trustee did not call the Debtor as a witness or present any other evidence suggesting that there was no such arrangement between Sylvester and the Debtor.
After a hearing on the approval of a disclosure statement, Judge Edward J. Coleman of the Middle District of Georgia ruled that the absolute priority rule and new value exception apply in individual Chapter 11 cases. In re Rogers, Ch. 11 Case No. 14-40219, 2016 WL 3583299 (Bankr. M.D. Ga June 24, 2016) (click here for .pdf of opinion).
In a published opinion entered on April 8, 2016, the Eleventh Circuit Court of Appeals held that District Courts are obliged to use and apply the Federal Rules of Bankruptcy Procedure rather than the Federal Rules of Civil Procedure when trying a case that “arises under” Title 11 (28 U.S.C. §1334). In Rosenberg v. DVI Receivables, LLC, et al., No. 14-14620, 2016 WL 1392642 (11th Cir. April 8, 2016) (click here for .pdf of opinion), the issue before the Court was the timeliness of the Defendants’ Motion for Judgment as a Matter of Law after a jury trial. Pursuant to Civil Procedure Rule 50(b), the deadline to file the Motion was 28 days after the entry of judgment. However, under Federal Rule of Bankruptcy Procedure 9015(c) the deadline is reduced to only 14 days after the entry of the judgment. The Defendants’ Motion was filed 28 days after the judgment against them was entered, making it timely under the Civil Rules, but not the Bankruptcy Rules. The District Court granted the Motion on the merits, and the Plaintiff appealed.
The question of what constitutes a tax “return” for purposes of 11 U.S.C. §523(a)(1) has been the subject of conflicting Circuit Court cases the last several years. The Eleventh Circuit Court of Appeals addressed the issue in In re Justice, No. 15-10273, 2016 WL 1237766 (11th Cir. March 30, 2016) (click for .pdf of opinion). The Debtor sought to discharge taxes for tax years 2000-2003, but had filed the returns for those years several years late and only after the IRS had issued notices of deficiency and assessments. The Bankruptcy Court held that the taxes were non-dischargeable and the District Court affirmed.
(1) for a tax or a customs duty – (B) with respect to which a return, or equivalent report or notice, if required— (i) was not filed or given; or (ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition….

References: §362
 §362
 § 1325
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 §1334
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 §523