To our Colleagues and Friends: Don’t forget to mark your calendars for our Annual Seminar this Thursday at 2:00 P.M. (starting after the Law Day Luncheon). Thank you for spreading the word and, by all means, please try to make it this Thursday. The Last Seminar Before Summer! Don't miss this opportunity to catch up on the latest Chapter 13 Information. Glenn Sterns, Chapter 13 Trustee, will discuss "Pet Peeves and Upcoming Trends - The New Model Chapter 13 Plan." Mazyar Hedayat, will present “Preferential Transfers” as well as a rundown on next year's plan for the Committee. Westlaw is going to provide free food and drink and discuss its New Bankruptcy Software! Judge Squires will make every effort to join us (if his trial ends in time...) Come for the food - Stay for the Seminar. To register click on: mailto:gnorton@dcba.org Mazyar M. Hedayat, Vice Chair Bankruptcy Law Subcommittee

Chicago Daily Law Bulletin on the Web: "Bankruptcy law � non-dischargeable debts Debts procured by written misrepresentations are not dischargeable under Bankruptcy Code, but code does not allow for debts procured by oral misrepresentations of debtor's financial condition to be found non-dischargeable. The 7th U.S. Circuit Court of Appeals has affirmed a ruling by U.S. District Judge Blanche M. Manning. Plaintiff Blake Berkson alleged that he was working on behalf of a real estate developer soliciting equity contributions for a La Jolla, Calif., project. In March 1995, debtor Shmuel Gulevsky contracted to invest $1.2 million in the project, but he did not make his payment by the required date. Instead, Gulevsky allegedly made repeated assurances that he would assemble the funds he owed from various accounts. At the end of the month, the developer told the plaintiff that he needed $100,000 from Gulevsky immediately for the project to go forward. The plaintiff relayed this information to Gulevsky, who said he had the funds to fully pay for his equity contribution but that he needed time to assemble the money because it was not liquid. Gulevsky asked the plaintiff to make the payment on his behalf, and the plaintiff agreed to do so. Gulevsky, however, never made any further contributions to the project. After the developer notified Gulevsky that he was in breach of their contract, Gulevsky formally withdrew from the project. He never repaid the plaintiff, who was not able to recover the $100,000 from the developer. The plaintiff alleged that Gulevsky knew he had no realistic prospect to repay the $100,000 at the time he asked for the loan. The plaintiff obtained a judgment in 1997 against Gulevsky for $124,000 and filed an adversary complaint to have the debt declared non-dischargeable under under the Bankruptcy Code. Written misrepresentations of the debtor's financial condition are not dischargeable under the code, and the issue in this case was whether debts procured by oral misrepresentations are also not dischargeable. The bankruptcy judge found that such debts were dischargeable and dismissed the plaintiff's complaint. The district judge affirmed that finding, and the appeals court agreed. The bankruptcy court found that the plaintiff did not state a claim under the code because allowing a creditor to proceed against a debtor on the basis of oral misrepresentations would render the writing requirement of the code superfluous. The appeals court agreed, saying that exceptions to discharge are to be construed narrowly. The appeals court said that other courts that have dealt with the dischargeability of false oral statements of financial condition are unanimous that the code cannot be used to circumvent the writing requirement. ''We agree that creditors should not be able to use [the code] in that way, in no small part because of the Pandora's box that would be opened in the absence of [the] writing requirement,'' the appeals court said. The appeals court also rejected Gulevsky's request for sanctions against the plaintiff on the basis that while the plaintiff's brief was ''relatively insubstantial,'' his argument was not ''so foreclosed'' by precedent that it warrants sanctions. Blake Berkson v. Shmuel E. Gulevsky, No. 03-3299. Judge Ilana Diamond Rovner wrote the court's opinion with Judges Richard A. Posner and Richard D. Cudahy concurring. Released March 31, 2004.

OMISSIONS ON SCHEDULES RESULT IN DENIAL OF DISCHARGE UST v. Wilson (Bankr. C.D. Il. 2004) The bankruptcy court concluded that the Debtor demonstrated a "continued pattern . . . of making omissions and false statements in his bankruptcy schedules" and exhibited reckless indifference for the truth, notwithstanding any memory loss. The bankruptcy court based its decision on the following omissions from Debtor's schedules and amendments: the Debtor's position as president of Freedom Properties; his debt-reduction agreement with Valore; his $50,000 personal injury action, listed only in the third amended schedules as a pending claim; and the Debtor's $62,304 judgment lien against Financial America. The Debtor had knowledge of his involvement with Freedom Properties but asserted that he did not consider it an asset of the bankruptcy estate because he had no ownership interest in the company. He also knew that Financial America owed him money but explained that he thought the claim was worthless and did not know a judgment had been rendered. We agree that the "recalcitrant debtor may not escape a section 727(a)(4)(A) denial of discharge by asserting that the admittedly omitted or falsely stated information concerned a worthless business relationship or holding; such a defense is specious." Chalik v. Moorefield (In re Chalik), 748 F.2d 616, 618 (11 Cir. 1984). Moreover, Debtor's detailed account at trial of his accident refutes his assertion that he could not remember the personal injury claim until his third amended schedule. __________________________ ORAL MISREPRESENTATION DOES NOT RESULT IN NONDISCHARGEABILITY IN RE GULEVSKY (7th Circ. 2004) Debts procured by oral misrepresentations of the debtor's financial condition are not made nondischargeable by Bankruptcy Code section 523(a)(6). That section cannot be used to circumvent the writing requirement of section 523(a)(2)(B). ___________________________ BANKRUPTCY SYSTEM "HAS SERVED THE PUBLIC WELL" IN RE PORRAZZO, (Bkrtcy.Conn. 2004) "The public policy traditionally served by bankruptcy law is to provide honest debtors with an economic fresh start. In chapter 7 cases, a debtor surrenders nonexempt property to a trustee who distributes it to the holders of allowed claims in exchange for a discharge of dischargeable debts. "That equation has served the public interest well by recognizing the social benefits of giving honest but economically distressed individuals a chance to start over and at the same time making a distribution to holders of allowed claims in accordance with the priority scheme established by the bankruptcy code. "As noted, the discharge does not include all debts. Here, the debtor seeks a determination that the outstanding balance of his student loans is discharged pursuant to 11 U.S.C. § 523(a)(8). Judgment shall enter in his favor." ____________________________ TAX CLAIM SECURED BY LIEN IS STILL A PRIORITY CLAIM IN RE BARRANCO, (W.D.Va. 2004) The debtor focuses on the "kind of claim" that the IRS holds as of the date of the filing of the petition and seizes upon the language in 11 U.S.C. § 507(a)(8) that allows only unsecured claims of governmental units to have priority of payment of claims. However, this court finds that the language of 11 U.S.C. § 523(a)(1) which excepts from "any debt — (1) for . . . (A) of the kinds and for the period specified in § 507(a)(8) of this Title . . ." points to the "kind of tax " and not the "kind of claim" as determinative of the issue. The 11th Circuit Court of Appeals reached the same conclusion in In re Gust, 197 F.3d 1112 (11th Cir. 1999). This court finds the reasoning of the Gust court persuasive in the case at bar and holds that 11 U.S.C. § 523(a)(1) does not confine its exception to to allowed unsecured claims of governmental units. _________________________ COURT MUST LOOK TO PROSPECTIVE EARNING CAPACITY IN RULING ON HARDSHIP DISCHARGE OF LOAN In re Nys (9th Cir. BAP 2004) The "additional circumstances" prong of the three-part Bruner test for an undue hardship discharge of a student loan requires that the court make a predictive judgment as to the likelihood that the debtor's financial hardship will continue for a significant portion of the repayment period. Additional circumstances are not defined solely by their nature or by a convenient label, but instead by their effect on the debtor's continuing inability to repay over an extended period of time. ________________________ U.S. TRUSTEE RETURNS CLAIM TO WRONG ENTITY In re Wheatfield Business Park LLC (9th Cir. BAP 2004) When a creditor mistakenly submitted its proof of claim to the UST, that agency was required by Rule 5005(c) to note its date of receipt and forward it to the Bankruptcy Clerk. The UST's decision to return the claim to the creditor was in derogation of that Rule, ad the claim was entitled to be treated as an informal proof of claim. ___________________________ TRUSTEE MAY PURSUE DEBTOR'S LAWSUIT PARKER v. WENDY'S INT'L, INC. (11th Cir. 2004) Bankruptcy trustee is not judicially estopped from pursuing plaintiff's employment discrimination claim on behalf of her creditors in bankruptcy; plaintiff's failure to disclose the suit to the bankruptcy court was inadvertent and the equities balance in favor of allowing the trustee to proceed.

Troubling? You bet ... BANKRUPTCY ATTORNEY MURDERED Wednesday, April 14, 2004 AUBURN, Washington — A bankruptcy attorney, William Messer, 57, was found beaten to death late Monday in his law office, police said. No one had been identified as a suspect yesterday. A law-enforcement source familiar with the investigation said there are several leads to follow but declined to be specific. Messer received an admonishment — the most mild discipline meted out — from the Washington State Bar Association in December for failing to show up for a bankruptcy hearing. As a result, a car was repossessed from two of his clients, according to disciplinary documents. There was no indication yesterday that the case had anything to do with his death. By J. Patrick Coolican Seattle Times staff reporter __________________________ TAX TROUBLE FOR BANKRUPT WORLDCOM WorldCom, which filed bankruptcy listing some $41 billion in debt, the largest in history, may owes the state of Mississippi a billion in delinquent taxes, according to a spokesman for the Mississippi attorney general. Mississippi's claim, which was submitted a couple of weeks ago, came to light on Friday, when the U.S. bankruptcy court judge heard arguments on the states' KPMG motion. WorldCom was based in Clinton, Miss., when it filed for bankruptcy and is now headquartered in Virginia. "We have put in a claim for $1 billion," said a special assistant with the Mississippi attorney general. Asked if that amount included interest and penalties, he replied: "It's back taxes." Mississippi claims that WorldCom concealed approximately $24 billion in revenue to avoid paying state taxes. SOURCE: Reuters __________________________ MORE ELDERS RELY ON CREDIT CARDS TO SURVIVE More and more elderly Americans are relying on plastic to pay for their golden years. The average credit card debt among people 65 and older has risen substantially, and more senior citizens are declaring bankruptcy. "It's hugely embarrassing to most of the elderly people we talk to," said Susan Hunt, regional counseling manager for Consumer Credit Counseling Service of Greater Atlanta. "They've prided themselves their whole lifetimes on working hard and taking care of themselves," Hunt said. "Now they are not able to do that anymore." But they need not feel alone. The average credit card debt of persons over 65 was $4,041 in 2001, according to a study from Demos, a public policy group. In 1992, the average was $2,143. The numbers are adjusted for inflation. Among those with incomes under $50,000, one in five families was in "debt hardship." That means they spent more than 40 percent of their income on debt payments, including mortgages. SOURCE: THE ATLANTA JOURNAL-CONSTITUTION

Blog subscribers: Below please find the transcript of an e-mail exchange that I recently had with Attorney Gary Moore on the subject of clearing up a State tax lien. Unfortunately we could not identify the original source of the question, so if any of you know please pass along this information. Thank you for your attention. Mazyar M. Hedayat, Vice Chair DCBA Bankruptcy Law Subcommittee =========================== Re: IDOR Tax Liens My client has a Chapter 7 Discharge and a letter from the IDOR that states that his Illinois tax debts are discharged. But the IDOR will not release its tax lien. Now, years later, the client wants to purchase a home, but his lender says the lien must be released. Any suggestions? - posted by John @ 7:17 AM 1. Try having client purchase house using a land trust. 2. Give copy of discharge and letter from IDOR to title company for recording. 3 Talk to the lender. If the debt is really discharged the lien could not affect property the debtor did not own when the lien was filed. ----------------------------------- Dear Gary: All the suggestions you record below are pretty good ones. At the end of the day the real problem is not necessarily the IDOR or even anything related to the Bankruptcy. The real sticking point is the lender, and if they have knowledgeable Counsel then he/she should recognize this situation for what it is. You may also wish to demand that the credit reporting bureaus (Equifax, Trans Union, etc.) erase the Lien information from the Client's record as inaccurate. THis should take about 40 days -- if the credit reporting agencies comply, which can be a haphazard outcome. It also seems more than likely that the IDOR would be willing to issue a Release of Lien (if in fact they previously agreed to forgo this obligation). Let me know if you need any more perspective on the subject. Mazyar M. Hedayat, Esq.

RETAIL VALUE MUST BE USED FOR REDEMPTION PURPOSES In re Smith (Bankr. ND IL 2004); See Also Associates Comm. Corporation v. Rash, 117 S. Ct. 1879 (1997) The Debtor, Ms. Joann Smith (“Smith”), in this Chapter 7 proceeding proposes to redeem her automobile pursuant to 11 U.S.C. § 722 based on its wholesale value. The main issue presented is whether a wholesale value standard or a retail value standard should be used to determine the amount of a secured claim for redemption purposes. For reasons discussed below, the automobile must be valued under 11 U.S.C. § 506(a) according to its retail value discounted to eliminate inapplicable elements of that value, not wholesale value. Moreover, the showing as to purported wholesale value is not proper and must be rejected, though a proper showing could be made under Evidence Rule 803(17). For both reasons, the motion is by separate order denied. ____________________________ ADVERSARY PROCEEDING REQUIRED TO FIX VALUE OF LIEN In re Anderson (8th Cir. BAP 2004) Held, in a Chapter 12 proceeding the court erred in finding Jaks was not a secured creditor, in using the confirmation process to avoid a valid lien absent an objection to said claim, and in using the confirmation process, instead of an adversary proceeding, to determine the extent and validity of the lien. ____________________________ DEBTOR'S AUTISM JUSTIFIES HARDSHIP DISCHARGE In re Porrazzo (Bankr. CT 2004) The presence of a disability is an important factor in assessing whether undue hardship exists warranting discharge of a student loan. A debtor who suffered from autism, and was unable to work due to that disability, was entitled to an undue hardship discharge.

I hate to sound like Johnny-One-Note but ... does credit counseling ever work? Senate Report Raises Concerns about Credit Counseling Companies According to a report issued late March by the Senate Governmental Affairs Committee's Permanent Subcommittee on Investigations staff, the business model for the traditional nonprofit credit counseling company has changed significantly with many newer entities generating profits from for-profit subsidiaries. The report resulted from an investigation to determine the state of the credit counseling industry and to explore viable solutions to remedy problems. In the report, entitled Profiteering in a Non-Profit Industry: Abusive Practices in Credit Counseling, many of those new organizations are "using a for-profit model designed so that 'their nonprofit credit counseling agencies generate massive revenues for a for-profit affiliate for advertising, marketing, executive salaries, and any number of other activities other than actual credit counseling. The new model looks to the consumer to provide those revenues." Staff concluded this model resulted in "increased consumer complaints; such as excessive fees, nonexistent education, poor service and generally being left in worse debt than when they initiated their debt management program." According to the report, there is little uniformity in industry regulation with their currently being various professional, state, and federal standards; some being mandatory, others are voluntary. The subcommittee staff offered the following findings and recommendations: * some credit counseling agencies are engaged in abusive practices hurting debtors, including charging excessive fees, putting marketing before counseling, and providing debtors with inadequate educational, counseling, and debt management services; * some nonprofit credit counseling agencies are funneling millions of dollars each year from debtors to insiders and affiliated for-profit businesses, possibly violating tax laws prohibiting tax-exempt charities from benefiting private interests; * as part of ongoing efforts to halt abusive practices in the credit counseling industry, major creditors should review and strengthen their standards for credit counseling agencies with whom they do business; * the FTC and IRS should accelerate their enforcement efforts to review suspect credit counseling agencies and take appropriate action against agencies and other who are violating restrictions on tax exempt entities or engaging in deceptive or unfair trade practices-and should consider coordinating with state enforcement agencies to make efficient use of government resources; * the Senate should consider modifying credit counseling provisions in the pending bankruptcy legislation to strengthen protections against abusive practices, including determining whether a single authority, the U.S. bankruptcy trustee, should issue a central list of qualifying credit counseling agencies to provide counseling to bankruptcy petitioners and whether credit counseling fee limits would be appropriate; and * the Senate should consider a bill, either modeled on the Debt Repair Organizations Act of 1996 or expanding that law's application to reach nonprofit entities, to strengthen protections against abusive practices in the credit counseling industry., The staff report noted: When profit motive is injected into a non-profit industry, it should come as no surprise that harm to consumers will follow. Indeed, the primary effect of the 'for-profit model has been to corrupt the original purpose of the credit counseling industry-to provide advice, counseling, and education to indebted consumers free of charge or at minimal charge, and place consumers on debt management programs only if they are otherwise unable to pay their debts. Some of the new entrants now practice the reverse-provide no bona fide education or counseling and place every consumer onto a debt management program at unreasonable or exorbitant charge.

This one comes to us from the "enough already" file ... Bankruptcy Judge's Open Letter to Debtors and Their Counsel N.D. CAL, Santa Rosa Division, 10/03/97 I have noticed a disturbing trend among debtors and their counsel to treat the schedules and statement of affairs as "working papers" which can be freely amended as circumstances warrant and need not contain the exact, whole truth. Notwithstanding execution under penalty of perjury, debtors and their counsel seem to think that they are free to argue facts and values not contained in the schedules or even directly contrary to the schedules. Some debtors have felt justified signing a statement that they have only a few, or even a single creditor, in order to file an emergency petition, knowing full well that the statement is false. Whatever your attitude is toward the schedules, you should know that as far as I am concerned they are the sacred text of any bankruptcy filing. There is no excuse for them not being 100% accurate and complete. Disclosure must be made to a fault. The filing of false schedules is a federal felony, and I do not hesitate to recommend prosecution of anyone who knowingly files a false schedule. I have no idea where anyone got the idea that amendments can cure false schedules. The debtor has an obligation to correct schedules he or she knows are false, but amendment in no way cures a false filing. Any court may properly disregard subsequent sworn statements at odds with previous sworn statements. I give no weight at all to amendments filed after an issue has been raised. As a practical matter, where false statements or omissions have come to light due to investigation by a creditor or trustee, it is virtually impossible for the debtor to demonstrate good faith in a Chapter 13 case or entitlement to a discharge in a Chapter 7 case. I strongly recommend that any of you harboring a cavalier attitude toward the schedules replace it with a good healthy dose of paranoia. Dated: September 10, 1997 Alan Jaroslovsky U.S. Bankruptcy Judge

IRS Commissioner Calls for Legislative Crackdown on Accountants and Lawyers IRS Commissioner Mark Everson recently commented that Congress could aid the administration's crackdown on improper tax avoidance schemes by raising the penalties levied on accountants and lawyers who promote them, CQToday reported. Everson said such penalties should be raised for accountants and lawyers who fail to register their products and disclose the identities of companies and individuals to whom they sell them. The avoidance schemes typically represent attempts by tax professionals to use existing provisions in the tax code to reduce the amount of tax paid. Corporate tax bills moving through the House and Senate (H.R. 2896, S. 1637) attempt to curb tax avoidance. The largest of those provisions, currently in the Senate bill, would effectively ban complex leasing transactions in which financial institutions avoid billions in taxes by taking depreciation deduction for public infrastructures, such as city subway systems. Everson said another important area in which Congress could aid IRS in tax compliance would be to simplify the tax code.

Bankruptcy Filings Set New Calendar Year Record in 2003 Bankruptcy filings in the federal courts broke a record during calendar year 2003, according to data released today by the Administrative Office of the U.S. Courts. Total bankruptcies filed in the 12-month period ending December 31, 2003, totaled 1,660,245, up 5.2 percent from the previous record of 1,577,651 bankruptcies filed in the 12-month period ending December 31, 2002. The calendar year total for 2003, however, did not break the historic high for a 12-month period, which was reported for the 12-month period ending September 30, 2003, at 1,661,996. The overwhelming percentage of bankruptcy filings are non-business (personal) filings, totaling 1,625,208 in calendar year 2003, up 5.6 percent from the 1,539,111 personal bankruptcies filed in calendar year 2002. The number of business filings continued to decline, totaling 35,037 in 2003, down 9.1 percent from the 38,540 business bankruptcies filed in the 12-month period ending December 31, 2002. Large public company cases filed under chapter 11 fell to 142 in 2003, down from 191 in 2002. Substantial Caseloads Continue to Fill Courts In fiscal year 2003, the federal courts continued to experience high, and in many cases, record caseloads, according to statistics released today by the Administrative Office of the U.S. Courts. The number of bankruptcy cases rose 7 percent, appeals filed grew 6 percent and the number of criminal cases rose 5 percent. Total bankruptcy filings for fiscal year 2003 reached a historic high at 1,661,996. The overall growth was due to an 8 percent rise in filings of nonbusiness petitions, which offset a 7 percent decline in business petitions. Nonbusiness petitions constituted 98 percent of filings in 2003. Increases in filings occurred under all chapters of the Bankruptcy Code except chapter 11. Chapter 7 filings, which were 71 percent of all petitions filed, rose 9 percent in 2003. The largest rise in chapter 7 filings occurred in the Northern District of Ohio, the Eastern District of Michigan and the District of Colorado. Chapter 13 filings rose 5 percent, with the largest increases occurring in the Eastern District of Michigan and the Northern District of Texas. Chapter 11 filings dropped 13 percent. The District of Maryland reported the largest increase in chapter 11 filings, from 150 in fiscal year 2002 to 441 in 2003, a 194 percent increase. Chapter 12 filings increased 117 percent, up 376 petitions, a growth that may be linked to retroactive extension of provisions for filing under this chapter. The federal judiciary's fiscal year is the 12-month period ending September 30. Complete statistics for fiscal year 2003, compiled in the publication Judicial Business of the U.S. Courts, can be found at www.uscourts.gov, under Library/Statistical Reports.

Bankruptcy Filings Set New Calendar Year Record in 2003 Bankruptcy filings in the federal courts broke a record during calendar year 2003, according to data released today by the Administrative Office of the U.S. Courts. Total bankruptcies filed in the 12-month period ending December 31, 2003, totaled 1,660,245, up 5.2 percent from the previous record of 1,577,651 bankruptcies filed in the 12-month period ending December 31, 2002. The calendar year total for 2003, however, did not break the historic high for a 12-month period, which was reported for the 12-month period ending September 30, 2003, at 1,661,996. The overwhelming percentage of bankruptcy filings are non-business (personal) filings, totaling 1,625,208 in calendar year 2003, up 5.6 percent from the 1,539,111 personal bankruptcies filed in calendar year 2002. The number of business filings continued to decline, totaling 35,037 in 2003, down 9.1 percent from the 38,540 business bankruptcies filed in the 12-month period ending December 31, 2002. Large public company cases filed under chapter 11 fell to 142 in 2003, down from 191 in 2002. Substantial Caseloads Contingue to Fill Courts In fiscal year 2003, the federal courts continued to experience high, and in many cases, record caseloads, according to statistics released today by the Administrative Office of the U.S. Courts. The number of bankruptcy cases rose 7 percent, appeals filed grew 6 percent and the number of criminal cases rose 5 percent. Total bankruptcy filings for fiscal year 2003 reached a historic high at 1,661,996. The overall growth was due to an 8 percent rise in filings of nonbusiness petitions, which offset a 7 percent decline in business petitions. Nonbusiness petitions constituted 98 percent of filings in 2003. Increases in filings occurred under all chapters of the Bankruptcy Code except chapter 11. Chapter 7 filings, which were 71 percent of all petitions filed, rose 9 percent in 2003. The largest rise in chapter 7 filings occurred in the Northern District of Ohio, the Eastern District of Michigan and the District of Colorado. Chapter 13 filings rose 5 percent, with the largest increases occurring in the Eastern District of Michigan and the Northern District of Texas. Chapter 11 filings dropped 13 percent. The District of Maryland reported the largest increase in chapter 11 filings, from 150 in fiscal year 2002 to 441 in 2003, a 194 percent increase. Chapter 12 filings increased 117 percent, up 376 petitions, a growth that may be linked to retroactive extension of provisions for filing under this chapter. The federal judiciary's fiscal year is the 12-month period ending September 30. Complete statistics for fiscal year 2003, compiled in the publication Judicial Business of the U.S. Courts, can be found at www.uscourts.gov, under Library/Statistical Reports.

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Re: IDOR Tax Liens My client has a Chapter 7 Discharge and a letter from the IDOR that states that his Illinois tax debts are discharged. But the IDOR will not release its tax lien. Now, years later, the client wants to purchase a home, but his lender says the lien must be released. Any suggestions?

Here are some cases from around the country -- note the 7th Circuit and ND IL decisions among them: DEBTOR'S DISSIPATION OF FUNDS NOT GROUNDS FOR DENIAL OF DISCHARGE Although the debtor received and quickly dissipated a substantial insurance settlement within one year of her bankruptcy filing, there was no evidence of fraudulent intent to hinder, delay or defraud creditors sufficient to deny the debtor a discharge. In re Sims (Bankr. C.D. Ill 2004) ___________________________ COURT MUST DETERMINE WHETHER DEBTOR OWNS PROPERTY Bankruptcy court may not allow sale of property as "property of the estate" without first determining whether debtor in fact owned the property. In re Rodeo Canon Development Corp. (9th Cir. 2004) ______________________ CH 13 DEBTOR PAID PRINCIPAL OF TAX IN PLAN BUT HELD LIABLE FOR INTEREST AFTER DISMISSAL Debtor Leonard Moore (the "Debtor") filed an Objection to the Internal Revenue Services' Amended Proof of Claim for the payment of penalties and interest on the Debtor's 1995 tax obligation, arguing that the tax debt was satisfied during the pendency of a prior Chapter 13 filing. The Internal Revenue Service (the "IRS") responds that Debtor's previous filing was dismissed, and as no discharge was granted to Debtor, 11 U.S.C. § 349(b)(3) permits the IRS to seek interest and penalties that accrued during the period that Debtor was under the protection of Chapter 13 of the Bankruptcy Code even if the principal amount of the tax was repaid during the prior bankruptcy case. For the Page 2 reasons set forth below, the Court holds that Debtor is required to pay interest and penalties on a satisfied tax obligation when debtor did not receive a discharge in his previous Chapter 13 filing. IN RE MOORE, (S.D.N.Y. 2004) ____________________ TRUSTEE MAY PURSUE UNSCHEDULED LITIGATION CLAIM Where a debtor's failure to list a litigation claim on her schedules was inadvertent, and the equities balance in favor of her estate, judicial estoppel does not bar pursuit of the claim by her trustee. Parker v. Wendy's International, Inc. (11th Cir. 2004) ____________________ DIFFERENCE BETWEEN TRUE LEASE AND FINANCING AGREEMENT In four cases combined in one ruling, court held a “lease” under § 365 must be a “true” lease, as opposed to a financing instrument. Because three of the four subject "leases" were not true leases, the debtor is entitled to summary judgment. The four adversary proceedings that produced the present motions all involve a similar situation: tax-exempt bonds were issued to finance the construction of airport improvements for the benefit of United, and the debt service on the bonds was to be paid with funds received from United. In re UAL Corp. (Bankr. IL 2004) _____________________ ORAL MISREPRESENTATIONS DO NOT SUPPORT FRAUD EXCEPTION §523(a)(6) does not allow for debts procured by oral misrepresentations of the debtor's financial condition to be found non-dischargeable because this interpretation would be incompatible with the more specific provisions of §523(a)(2)(B) In re Gulevsky (7th Cir. 2004) ___________________ IRS MAY LEVY ON TRUSTEE'S FUNDS AFTER DISMISSAL OF CHAPTER 13 Because the dismissal of a bankruptcy case prior to confirmation removes the protections afforded by the Bankruptcy Code, the funds held by a Chapter 13 trustee after administration of the estate are not afforded protection from levy. Although § 1326(a)(2) mandates that the Chapter 13 trustee return such funds to the debtor after deducting allowed administrative expenses, a taxing authority is entitled to levy such funds after dismissal and prior to disbursement by the trustee. In re Steenstra (1st Cir. BAP 2004) _______________________ TRUSTEE MUST ABANDON CAUSE OF ACTION A Chapter 7 bankruptcy trustee's acquiescence to the continuation of an appeal of an estate cause of action by the debtor's attorney is insufficient to confer standing on the debtor or his attorney. For such permission to be effective, the cause of action must be formally abandoned by the trustee. Turner v. Cook (9th Cir. 2004)

I've asked before and I'll ask again: what is a "reputable" credit counselling service? UTAH CREDIT COUNSELING SERVICE SHUT DOWN Consumers who relied on Consumer Credit Counseling Service of Utah to handle their debt payments are being urged to contact creditors directly after the Utah Division of Consumer Protection temporarily shut down the agency Tuesday. Participants in CCCS debt-management programs each month paid the nonprofit organization what they owed for all their bills. CCCS then forwarded payments to creditors from a trust account. The state is investigating why the trust account did not have enough money to pay all its clients' bills. SOURCE: Knight-Ridder / Tribune Business News

UNEMPLOYED GIVING UP ON FINDING A JOB The share of the U.S. population working or actively seeking a job has fallen to 65.9 percent, the lowest level in 16 years. Economists say the weak job market is causing people to give up their searches and drop out of the labor pool at an unusual pace. The effect is to hold down the unemployment rate, at 5.6 percent in February. March figures were being released today by the Labor Department. The economy, while growing, is failing to produce much new work to entice seekers. Just 126,000 net jobs were added in the past three months. The recovery is the weakest for job creation since World War II. SOURCE; BKinformation.com; The Seattle Times

Okay, this one you have to see to believe. I mean, whoa. BK ATTORNEY PLEADS GUILTY TO BANKRUPTCY FRAUD Disbarred attorney Bridgette M. Harris of Bowie pleaded guilty today to four counts of bankruptcy fraud and fraudulent transfer of property in bankruptcy. In a statement of facts given to the court as part of her plea, Harris admitted that she had practiced bankruptcy law in Maryland, Virginia and the District of Columbia. Harris also admitted to another scheme in which she filed personal bankruptcy in Brooklyn, N.Y., and lied about her debts, Social Security number and income. She also made telephone calls to the bankruptcy trustee falsely identifying herself as an NAACP representative, a judge, and a judicial law clerk. After that case was transferred to Maryland, she said she fraudulently transferred two pieces of real estate to relatives. Harris also admitted that she solicited bankruptcy clients in 2002 under the business name "Foreclosure Prevention Network" and filed the clients under another attorney's name without the attorney's permission. Harris will be sentenced in U.S. District Court in Greenbelt before Judge Peter J. Messitte on June 13. She faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release.