Proof of Claim faxed to Trustee's Counsel does not constitute timely delivery In re Outboard Marine Corporation (7th Cir. 2004) A Creditor that faxed its Proof of Claim to the Trustee's Counsel on the bar date rather than delivering it by mail to the post office box for the Claims Agent was not entitled to have the Claim treated as timely. The Bankruptcy Court erred, however, in disallowing the Claim. Instead, said the Appellate Court, the procedure should have been to allow the Claim but subordinate it to other, timely filed Claims. Edtor's Note: Either way, that Attorney is going to have a malpractice headache to deal with. This one may have come from our own Judge Squires, who I believe is handling the Outboard Marine case. If anyone knows please e-mail and let us know. ___________________ ... But how will it play in Peoria? Debtor's plea of guilty to Bankruptcy fraud justifies denial of Discharge (surprise!) In re Peterson, (C.D.Ill. 2004) The U.S. Trustee moved for summary judgment on its adversary complaint objecting to the discharge of Debtor/Defendant Kelly R. Petersen on the basis that his plea of guilty to the crime of Bankruptcy fraud established conclusive grounds for denial of discharge. In granting the summary judgment request the Court held that since the elements of the Bankruptcy crime and the grounds for denial of discharge were identical, and since the Debtor had enjoyed an opportunity to litigate the criminal proceeding but elected not to do so, collateral estoppel applied. ___________________ Beware the heavy hand of the Bankruptcy Court: Divorce Attorney's Fees slashed In re Powell (N.D.Tex. 2004) A Debtor in Chapter 13 need not obtain Court approval to retain an Attorney to represent him or her in divorce proceedings, but said Attorney must apply to the Court for approval of fees. In this case the firm representing the Debtor in divorce proceedings applied for approval of fees and the Court reduced the amount requested based on "vague" service descriptions in the billing statement, excessive staff conferencing time, and because the Fee Application did not break out billable time into distinct subject areas. The Debtor's estranged husband objected, arguing in part that 11 U.S.C. � 330 only allows compensation from the estate for services directly related to the Bankruptcy. The Court rejected that argument and held that services provided to the Debtor personally need not be solely for Bankruptcy services in order to be compensated from the Estate. Editor's Note: For more on when an Attorney can be paid from a Bankruptcy Estate, see the article in the DCBA Brief, written by your humble narrator and found online at http://www.dcba.org/brief/febissue/2004/art20204.htm ___________________ License forfeiture not a violation of the Stay In re McMullen (1st Cir. 2004) The Bankruptcy Court did not err in finding that the post-Petition commencement of license forfeiture proceedings before the State Board of Realtors was not a violation of the Automatic Stay in the realtor's Bankruptcy case. ___________________ Chapter 7 case dismissed under �707(b) due to excessive mortgage payment In re Cox (8th Cir. BAP 2004) (Southern District of Iowa) A mortgage on a house in which the Debtor resides, and wishes to continue to reside, is a consumer debt regardless of the fact that the Debtor intends to ultimately sell the house and use the funds for retirement. A Bankruptcy Appellate Panel held that since the Debtors' primary purpose in incurring the mortgage debt secured by his residence was to furnish and complete construction of that home for family and personal use, the Bankruptcy Court had not "clearly erred" in finding that the Debtor held primarily "consumer debts" as defined under �101(8). By the same token, the Bankruptcy Court did not err in dismissing the Debtor's Chapter 7 case under �707(b) where the Debtor's mortage payment was "excessive" and reducing the payment would have contributed to funding a Chapter 13 Plan. Here the Debtors' monthly payment was $2,930 on the first mortgage and $482 on the second. The UST produced the testimony of a Bankruptcy analyst in support of its motion, who testified that the maximum reasonable housing expense in that market was $1,175 per month based on the 2001 Consumer Expenditure Survey produced by the United States Bureau of Labor and Statistics. The expert also noted that the Debtor would have had enough to fund a Chapter 13 Plan if he reduced his housing expense to $1,175 per month and included the $1,083 that he had ceased remitting to the IRS in his calculation. ___________________ Chapter 13 Debtor may return collateral and amend Plan In re Mason (Bankr. N.D. Cal. 2004) A Debtor operating under a confirmed Chapter 13 Plan is entitled to return collateral to a Secured Creditor and modify his Plan to treat the Creditor's Claim as unsecured.