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.