Judge Makes Debtor give up part of Tax Return

August 31, 2012

Judge Makes Debtor give up part of Tax Return

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION –– FLINT

IN RE: DANNY R. BOWLES, Case No. 11-35340 Chapter 7 Proceeding Hon. Daniel S. Opperman Debtors. _____________________________________/

OPINION REGARDING CHAPTER 7 TRUSTEE’’S MOTION FOR ENTRY OF ORDER REQUIRING TURNOVER ON NON-EXEMPT PROPERTY OF THE ESTATE

Collene K. Corcoran, the appointed Chapter 7 Trustee in this case, has filed a Motion to compel turnover of Debtor Danny R. Bowles’’ non-exempt portion of his 2011 federal tax refund. The amount at issue is $3,909.58, calculated by taking one-half of the total 2011 federal tax refund of $9,819.17, which is $4,909.58, and reducing such by the $1,000.00 exemption claimed by Debtor.

Debtor asserts that the Trustee’’s calculation is incorrect because a 50/50 split as to his entitlement to the tax refund is not appropriate under the unique facts of this case. A hearing was held on the instant Motion on May 30, 2012, and the parties agreed that the facts are undisputed without further need for evidentiary hearing.

Facts

Debtor filed his petition seeking Chapter 7 relief with this Court on November 22, 2011. Debtor’’s spouse did not file for bankruptcy. On Schedule B, Debtor listed a “”2011 YTD Tax Refund”” in the amount of $1,000.00, representing “”Debtor husband portion of the refund.”” On Schedule C, Debtor again listed the value of his portion of the refund at $1,000.00, and exempted $165.00 pursuant to 11 U.S.C. §§ 522(d)(5), which was the remaining amount available to Debtor under this subsection.

It does not appear that the Trustee disputes the $165 exemption, because the Trustee did not file an objection to the amount of exemption taken. In the Motion for Turnover, the Trustee references a $1,000.00 exemption, and references this amount as the exemption taken in the tax refund. However, the Debtor’’s Schedule C clearly limits the exemption taken to the $165 claimed, as that is all Debtor had remaining to utilize under Section 522(d)(5). Accordingly, Debtor is only entitled to $165.00 exemption for the subject tax refund.

The Trustee objects to the Debtor’’s allocation of the tax refund, asserting that the Debtor should be entitled to half of the $9,819.17 federal tax refund, or $4,909.58, when reduced to Debtor’’s one-half portion. This amount is then further reduced by the $165.00 Debtor has claimed as exempt. The total amount at issue is therefore $4,744.58.

Debtor responds that because his non-filing spouse is the main income earner, his portionof the tax refund is actually $288.00, including his deduction for one of the children. Per the Court’’s calculation, deducting the $165.00 claimed exemption, if the Court were to adopt the Debtor’’s argument, would result in a total of $123.00, which Debtor would be required to turnover to the

Trustee.

Jurisdiction

This Court has subject matter jurisdiction over this proceeding under 28 U.S.C. §§§§ 1334(b), 157(a), and 157(b)(1) and E. D. Mich. LR 83.50(a). This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A) (matters concerning the administration of the estate).

Analysis

The Court begins its analysis with the case of Araj v. Kohut (In re Araj), 371 B.R. 240 (E.D. Mich. 2007), in which District Court Judge Battani held that tax refunds were property of the estate and should be prorated on a per diem basis.

1 The Court calculates the amount as follows: federal tax refund $9,819.17 ÷÷ 365 = $26.90 x 326 (total pre-petition days in 2011) = $8,769.40. 3

It is clear to this Court that this tax refund is property of the estate and that Judge Battani’’s formula of determining the amount of the property of the estate should be followed because it is logical and straightforward. The Araj analysis indicates that of the $9,819.17 federal tax refund, $8,769.40 is in issue.1

Courts across the United States have reached different conclusions as to how tax refunds that are property of the estate should be divided between a husband and wife. One approach holds that the tax refund from a joint tax return should be allocated proportionally between the husband and wife in accordance with their respective tax withholdings during the relevant year. See In re Gartman, 372 B.R. 790 (Bankr. D. S.C. 2007). A second approach is to allocate the joint tax refund proportionally in accordance with income produced. See In Levine, 50 B.R. 587 (Bankr. S.D. Fla.1985); In re Verill, 17 B.R. 652 (Bankr. D. Md. 1982); In re Kestner, 9 B.R. 334 (Bankr. E.D. Va. 1981); In re Colbert, 5 B.R. 646 (Bankr. S.D. Ohio 1980). A third approach courts have adhered to is that a joint tax refund should be allocated equally between the husband and wife without regard to tax withholdings or income produced. See In re Innis, 331 B.R. 784 (Bankr. C.D. Ill 2005); In re Barrow, 306 B.R. 28 (Bankr. W.D. N.Y. 2004); In re Aldrich, 250 B.R. 907 (Bankr. W.D. Tenn 2000); Bass v. Hall, 79 B.R. 653, (W.D. Va. 1987). All of these cases, however, are consistent in that state law governs the determination of the property right. Butner v. United States, 440 U.S. 48, 99 S. Ct. 914 (1979).

Here, it is undisputed that Debtors are owed a refund of $9,819.17, and that the refund is joint. Since Michigan law governs, the Court notes that M.C.L. §§ 557.151 states:

All bonds, certificates of stock, mortgages, promissory notes, debentures, or other evidences of indebtedness hereafter made payable to persons who are husband andwife, or made payable to them as endorsees or assignees, or otherwise, shall be held by such husband and wife in joint tenancy unless otherwise therein expressly provided, in the same manner and subject to the same restrictions, consequences and conditions as are incident to the ownership of real estate held jointly by husband and wife under the laws of this state, with full right of ownership by survivorship in case of the death of either.

Accordingly, Michigan law holds that the refunds in this case are jointly held as an “”other evidence[s] of indebtedness””. Moreover, tax refunds and liabilities are often divided equally in the event of divorce or separation.

In this case, the total combined federal and state refund was $9,819.17, of which $8,769.40 is the prorated amount. Each Debtor is apportioned $4,384.70. Debtor claimed $165.00 as exempt. Accordingly the Trustee is entitled to turnover of the remaining $4,219.70. The Trustee is directed to prepare an Order consistent with this Opinion. . Signed on August 28, 2012 /s/ Daniel S. Opperman Daniel S. Opperman United States Bankruptcy Judge

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BANKRUPTCY IN FLINT MICHIGAN 235-1970

May 7, 2012

THE BANKRUPTCY PROCESS

I represent good people in economic hardship.We are called a debt relief agency under the law. In reality I am a local Flint attorney that practices bankruptcy. We try to educate you as to the process and your full set of rights in bankruptcy.

BANKRUPTCY FLINT MICHIGAN

Talk to Flint Bankruptcy Attorney Terry Bankert at 810-235-1970. Questions for Bankruptcy Lawyer Terry Bankert can be found at http://www.attorneybankert.com

Within a month of your filing bankruptcy a mandatory attendance at a meeting with a Bankruptcy Trustee is required. This is called a creditors meeting or a 341 Hearing after the Code Section.

The Trustee is an attorney that is not a judge and does not work for one. The trustee works for the U.S.Attorney a Federal Prosecutor.

In Flint the 341 hearing is held in the basement of the Federal Building. The bankruptcy trustee chairs the meeting. The trustee’s job may begin with finding you not eligible for a chapter 7 bankruptcy if your income is too great. The core purpose of the trustee is to have you swear an oath that the information you provided to the Bankruptcy Court is true. You can be federally prosecuted if it is not.

The trustee will question you about the information you provided to the court. You will be asked if all property was listed. How did you determine the value for the property you listed. Inquiry will be made of the net equity you have in personal and real property. Too much value in some property and you will not be able to exempt it from the bankruptcy.

Following is a list of topics the bankruptcy trustee may ask you about:

-inconsistencies that point to your being less than honest.
-your failure to file necessary documents.
-a decision that you must file for Chapter 13 instead of Chapter 7
-what methods did you use to arrive at the value of big ticket items that you are claiming as exempt like a car or house.
– what have done with your most recent tax refund

If the trustee sees items non dischargeable in bankruptcy you will be asked about them. Most people discharge all their debt like credit cards, medical and legal debts. The most common types of debt not dischargeable in bankruptcy are:
-non dischargeable taxes and the debts incurred to pay them.
-court-imposed fines and rstitution
-back child support and alimony
-debts owed to an ex spouse in a divorce or separation
-loans owed to a retirement system such as a 401(k)
-student loans
-federal and state loans that were due less than three years before you filed.
-fines for driving under the influence of alcohol
-personal injury claims resulting from your drunk driving

Some debts not listed above will survive bankruptcy if the creditor seeks an order excluding the debt. These debts most often are: fraudulent transactions, recent credit card charges for luxuries and willful and malicious acts causing personal injury or property damage.

Your creditors seldom show up. If they do they can ask you questions. The purpose of the meeting is for the trustee to ask you questions. Your attorney will say very little at these meetings.


DEBTOR IN BANKRUPTCY MUST HAVE RECENT CREDIT COUNSELING. QUESTIONS? CALL 235-1970

January 25, 2012

When you are involved in the bankruptcy process you are required to have recently completed credit counseling. We you do not follow the rules your case can be dismissed .
On January 20, 2012, Debtor filed a voluntary petition for relief under Chapter 13, and a
“Certificate of Counseling” (Docket # 5), which states that on June 3, 2011, Debtor received “an
individual [or group] briefing that complied with the provisions of 11 U.S.C. §§ 109(h) and
111.”

Debtor is not eligible to be a debtor in this case under 11 U.S.C. § 109(h)(1). That
section provides in relevant part, that
an individual may not be a debtor under this title unless such
individual has, during the 180-day period ending on the date of
filing the petition by such individual, received from an approved
nonprofit budget and credit counseling agency described in section
111(a) an individual or group briefing (including a briefing
conducted by telephone or on the Internet) that outlined the
opportunities for available credit counseling and assisted such
individual in performing a related budget analysis.
Debtor did not receive the required credit counseling briefing during the 180-day period
preceding the date of the filing of her petition. Debtor received the credit counseling briefing 231
days before her petition was filed. Accordingly,
IT IS ORDERED that this case is dismissed.
.
Signed on January 23, 2012,UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: Case No. 12-41245
SABRINA WADE, pro se, Chapter 13 , Judge Thomas J. Tucker


YOUR PERSONAL WALL STREET TYPE BAILOUT A CHAPTER SEVEN BANKRUPTCY -810-235-1970

November 15, 2011

WE HAVE WATCHED WALL STREET, BIG BANK AND BIG BUSINESS GET BAILED OUT. WHAT ABOUT YOU? The Bankruptcy code was written for you and can be your own personal bail out. Flint BankruptcyAttorney Terry Bankert  presents on Flint D ivorce and Flint Bankruptcy 810-235-1970.

Basic Bankruptcy options available.

Types of Bankruptcies. The four main types of bankruptcies are as follows:
Chapter 7—Liquidation: In a Chapter 7 the debtor turns over all non-exempt property to the Chapter 7 Trustee: this Trustee sells or liquidates the property and distributes the proceeds to creditors according to the priority scheme set forth in the bankruptcy code, and usually in a small one-time payment. The debtor will be released (discharged) from the unpaid portion of many types of debt unless a creditor objects to the debtor’s discharge, or unless a creditor objects to the dischargeability of its particular claim. The Chapter 7 Trustee is always appointed by the United States Trustee and is usually a member of a panel of Trustees.
Chapter 11—Reorganization: The purpose of Chapter 11 is to allow the debtor a breathing spell from creditors, thereby enabling the debtor to reorganize its financial affairs. This is the most expensive and complicated type of bankruptcy and can last for years. If successful, a plan of reorganization would be proposed which is subject to the vote of creditors.
Chapter 12—Family Farmer Bankruptcy: Chapter 12 can only be filed by a family farmer with regular annual income. This proceeding is similar to a Chapter 13, described below.
Chapter 13—Adjustment of Debts: Chapter 13 can only be filed by individuals with regular income (filing with or without a spouse) and with unsecured debts of less than $336,900 and secured debts of less than $1,010,650—See ll U.S.C. § 109(e). (These dollar limits are adjusted at 3-year intervals: the most recent adjustment was effective April 1, 2007.) The purpose of a Chapter 13 is for the debtor to pledge part of his or her income over a period of time (usually 3 to 5 years) to pay all or a portion of the debt. Once this portion of the debt is paid, the debtor is released (i.e. discharged) from the unpaid portion of the debts. Soon after the case is commenced, the debtor must propose a plan which fits within the strict requirements of the Bankruptcy Code. Priority debts must be paid in full. (See 11 U.S.C. §1322(a)(2).) Pursuant to §507(a)(1), a debt for a domestic support obligation (defined below) is a first priority unsecured claim

.
PERSONAL BAILOUT OR Discharge: The main reason why any individual files bankruptcy is to try to get a discharge from debts which are owing to creditors. 11 U.S.C. § 727 says that all individual debtors are eligible to receive a discharge unless he or she committed one of the “bad acts” described in 11 U.S.C. § 727.

III. WHAT IN BANKRUPTCY IS A DOMESTIC SUPPORT OBLIGATION.

The Bankruptcy Reform Act gives us a new term—“domestic support obligation”—which is defined in 11 U.S.C. § 101(14A), as follows:
(14A) The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.
Nondischargeability of Domestic Support Obligations: 11 U.S.C. § 523(a)(5) provides that a DSO cannot be discharged in Bankruptcy.
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(5) for a domestic support obligation;
Special Impact of Domestic Support Obligations in Chapter 13 Cases:

IV. Nondischargeability of Property Settlement
Before the Bankruptcy Reform Act, 11 U.S.C. § 523(a)(15) provided that property settlement debts were nondischargeable unless the debtor lacked the ability to pay it according to the criteria described in the statute, or unless discharging the property settlement would result in a benefit to the debtor that outweighed the detriment to the non-debtor spouse, former spouse or child. The old law also required that the non-debtor spouse commence an adversary proceeding in bankruptcy court to determine the nondischargeability of the property settlement and, pursuant to 11 U.S.C. § 523(c) the complaint in that adversary proceeding was required to be filed within 60 days after the first date set for the meeting of creditors pursuant to 11 U.S.C. § 341. If a nondischargeability complaint was not timely filed, the property settlement was automatically discharged under 11 U.S.C. § 727. 11 U.S.C. § 523(c) often resulted in non-debtor spouses having to spend limited funds in order to “protect” their property settlements.
11 U.S.C. § 523(a)(15) was oddly written. Courts, attorneys, and litigants consistently struggled with it. The Bankruptcy Reform Act resolves the difficulty by revising § 523(a)(15) so that it reads as follows:
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record or, a determination made in accordance with State or territorial law by a governmental unit;…
Thus, under the Bankruptcy Reform Act, even if a debtor’s obligation in a divorce decree does not come within the definition of “domestic support obligation” so as to be nondischargeable under § 523(a)(5), it is still nondischargeable under § 523(a)(15) if it is a property settlement debt to a spouse, former spouse or child.
In applying the Bankruptcy Reform Act, bankruptcy judges are now more likely to view any obligation in a divorce decree as being nondischargeable by a party to that divorce who later winds up in bankruptcy.
Also, the Reform Act amends 11 U.S.C. § 523(c) so that the non-debtor spouse is not required to file an adversary proceeding in order to preserve the nondischargeability of the debtor’s obligations that fall within the scope of 11 U.S.C. § 523(a)(15). This is an important change in the law, designed to protect non-debtor spouses and children by eliminating the need for them to spend precious resources trying to “protect” the property settlement by commencing an adversary proceeding in the bankruptcy court.
Taken together, the Reform Act’s changes to 11 U.S.C. § 523(a)(5) and (15) operate to exempt from discharge all alimony, maintenance, support, property settlements, hold-harmless obligations, etc. to a spouse, former spouse or child so long as they are incurred in the course of a divorce or separation, or in connection with the divorce decree, separation agreement or other order.

V. Are There Any Remaining Differences Between Nondischargeable Domestic Support Obligation Under 11 U.S.C. § 523(A)(5) and Nondischargeable Property Settlement Under the Reform Act’s 11 U.S.C. § 523(A)(15)? The Answer Remains “Yes”—Even Under the Bankruptcy Reform Act
A debt which is nondischargeable under 11 U.S.C. § 523(a)(15) (e.g., a property settlement that is not in the nature of alimony, maintenance or support) is dischargeable in a Chapter 13 under the Reform Act if the debtor makes all payments under the Chapter 13 plan. However, a domestic support obligation which is nondischargeable under 11 U.S.C. § 523(a)(5) is nondischargeable even under Chapter 13, even if the debtor makes all of its payments due under the plan and receives a super-discharge. See 11 U.S.C. § 1328(a).
In Chapter 13 cases, domestic support obligations get better treatment than do property settlements. For example, the failure of a Chapter 13 debtor’s failure to pay a domestic support obligation post-petition is grounds for denial of confirmation of the Chapter 13 plan (11 U.S.C. § 1325(a)(8)), and if the failure occurs post-confirmation, it is a ground for dismissal or conversion of the Chapter 13 case (see 11 U.S.C. § 1307(c)(11)). Debts for property settlement are not given similar protection. Furthermore, the debtor’s plan is required to cure all domestic support obligation arrearages during the life of the Chapter 13 plan, unless the recipient agrees to a different treatment.
First Priority for Domestic Support Obligations: Another difference between domestic support obligations and property settlement debts is that 11 U.S.C. § 507 makes unsecured claims for domestic support obligations first priority, subject only to the fees and expenses incurred by a trustee in collecting them. Property settlement does not enjoy this high priority. The pertinent section of the Bankruptcy Reform Act reads as follows:
VI. Exceptions to the Automatic Stay

Bankruptcy’s automatic stay is a comprehensive injunction that stays actions against the debtor, property of the debtor and/or property of the bankruptcy estate.[1] The automatic stay is embodied in 11 U.S.C. §362(a), but there are 28 statutory exceptions to the automatic stay: those exceptions are set forth in 11 U.S.C. §362(b)(1)–(28).
The Bankruptcy Reform Act amended the exceptions to the automatic stay which pertain to family law matters. These changes in the Bankruptcy Code clarify that a broader range of family-law proceedings can continue even when one spouse files bankruptcy. Consequently, the following activities do not constitute a violation of bankruptcy’s automatic stay:
§ 362. Automatic Stay…
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—
(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)—
(A) of the commencement or continuation of a civil action or proceeding—
(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466 (a) (16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act.
The highlights of this new exemption from automatic stay are:
In addition to criminal proceedings, a wide variety of civil actions can proceed against a person who files bankruptcy including civil actions regarding paternity, civil actions to establish or modify domestic support obligations, civil actions regarding custody or visitation, civil actions regarding domestic violence, and civil actions to dissolve a marriage (but actions concerning property of the debtor’s estate are stayed).
Income/wage withholding orders can still proceed, even if they target the debtor’s property or property of the estate.
Suspension of driver’s license or professional license to the extent that state law provides for such a suspension, reporting of overdue support, can proceed.

VII. Can Property Settlements in Divorce Judgments Be Challenged as Fraudulent Transfers?
In and out of bankruptcy, there are various laws that generally enable creditors to avoid (i.e. undo) transfers made or obligations incurred that have the effect of improperly putting a debtor’s assets beyond the reach of his or her creditors. Generally, transfers made (or obligations incurred) are considered to be a “fraud on creditors” when they are “actually fraudulent” (e.g. with actual intent to hinder, delay or defraud a creditor: See MCL 566.34(a)) or “constructively fraudulent” (e.g. transfers made (or obligations incurred) in exchange for less than reasonably equivalent value and by one who is either: (i) insolvent or rendered insolvent by the transfer made or obligation incurred (See MCL 566.35(1)), or (ii) engaged (or about to engage) in a business or transaction with unreasonably small assets (See MCL 566.34(b)(i)) or (iii) who intends or reasonably should have known that he or she is about to incur debt that is beyond his or her ability to pay when the debt becomes due. (See MCL 566.34(b)(ii)). Outside of bankruptcy, creditors can use MCL 566.31, et seq., which is Michigan’s version of the Uniform Fraudulent Transfer Act (“UFTA”) to avoid and recover fraudulent transfers. In bankruptcy, the debtor or trustee can use 11 USC §§ 544 and 548 to recover fraudulent transfers (11 U.S.C. § 544 “incorporates” applicable non-bankruptcy law, including UFTA).

Basic Bankruptcy options available.
Types of Bankruptcies. The four main types of bankruptcies are as follows:
Chapter 7—Liquidation: In a Chapter 7 the debtor turns over all non-exempt property to the Chapter 7 Trustee: this Trustee sells or liquidates the property and distributes the proceeds to creditors according to the priority scheme set forth in the bankruptcy code, and usually in a small one-time payment. The debtor will be released (discharged) from the unpaid portion of many types of debt unless a creditor objects to the debtor’s discharge, or unless a creditor objects to the dischargeability of its particular claim. The Chapter 7 Trustee is always appointed by the United States Trustee and is usually a member of a panel of Trustees.
Chapter 11—Reorganization: The purpose of Chapter 11 is to allow the debtor a breathing spell from creditors, thereby enabling the debtor to reorganize its financial affairs. This is the most expensive and complicated type of bankruptcy and can last for years. If successful, a plan of reorganization would be proposed which is subject to the vote of creditors.
Chapter 12—Family Farmer Bankruptcy: Chapter 12 can only be filed by a family farmer with regular annual income. This proceeding is similar to a Chapter 13, described below.
Chapter 13—Adjustment of Debts: Chapter 13 can only be filed by individuals with regular income (filing with or without a spouse) and with unsecured debts of less than $336,900 and secured debts of less than $1,010,650—See ll U.S.C. § 109(e). (These dollar limits are adjusted at 3-year intervals: the most recent adjustment was effective April 1, 2007.) The purpose of a Chapter 13 is for the debtor to pledge part of his or her income over a period of time (usually 3 to 5 years) to pay all or a portion of the debt. Once this portion of the debt is paid, the debtor is released (i.e. discharged) from the unpaid portion of the debts. Soon after the case is commenced, the debtor must propose a plan which fits within the strict requirements of the Bankruptcy Code. Priority debts must be paid in full. (See 11 U.S.C. §1322(a)(2).) Pursuant to §507(a)(1), a debt for a domestic support obligation (defined below) is a first priority unsecured claim

.
PERSONAL BAILOUT OR Discharge: The main reason why any individual files bankruptcy is to try to get a discharge from debts which are owing to creditors. 11 U.S.C. § 727 says that all individual debtors are eligible to receive a discharge unless he or she committed one of the “bad acts” described in 11 U.S.C. § 727.

III. WHAT IN BANKRUPTCY IS A DOMESTIC SUPPORT OBLIGATION.

The Bankruptcy Reform Act gives us a new term—“domestic support obligation”—which is defined in 11 U.S.C. § 101(14A), as follows:
(14A) The term “domestic support obligation” means a debt that accrues before, on, or after the date of the order for relief in a case under this title, including interest that accrues on that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child’s parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned voluntarily by the spouse, former spouse, child of the debtor, or such child’s parent, legal guardian, or responsible relative for the purpose of collecting the debt.
Nondischargeability of Domestic Support Obligations: 11 U.S.C. § 523(a)(5) provides that a DSO cannot be discharged in Bankruptcy.
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(5) for a domestic support obligation;
Special Impact of Domestic Support Obligations in Chapter 13 Cases:

IV. Nondischargeability of Property Settlement
Before the Bankruptcy Reform Act, 11 U.S.C. § 523(a)(15) provided that property settlement debts were nondischargeable unless the debtor lacked the ability to pay it according to the criteria described in the statute, or unless discharging the property settlement would result in a benefit to the debtor that outweighed the detriment to the non-debtor spouse, former spouse or child. The old law also required that the non-debtor spouse commence an adversary proceeding in bankruptcy court to determine the nondischargeability of the property settlement and, pursuant to 11 U.S.C. § 523(c) the complaint in that adversary proceeding was required to be filed within 60 days after the first date set for the meeting of creditors pursuant to 11 U.S.C. § 341. If a nondischargeability complaint was not timely filed, the property settlement was automatically discharged under 11 U.S.C. § 727. 11 U.S.C. § 523(c) often resulted in non-debtor spouses having to spend limited funds in order to “protect” their property settlements.
11 U.S.C. § 523(a)(15) was oddly written. Courts, attorneys, and litigants consistently struggled with it. The Bankruptcy Reform Act resolves the difficulty by revising § 523(a)(15) so that it reads as follows:
§ 523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—…
(15) to a spouse, former spouse, or child of the debtor and not of the kind described in paragraph (5) that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record or, a determination made in accordance with State or territorial law by a governmental unit;…
Thus, under the Bankruptcy Reform Act, even if a debtor’s obligation in a divorce decree does not come within the definition of “domestic support obligation” so as to be nondischargeable under § 523(a)(5), it is still nondischargeable under § 523(a)(15) if it is a property settlement debt to a spouse, former spouse or child.
In applying the Bankruptcy Reform Act, bankruptcy judges are now more likely to view any obligation in a divorce decree as being nondischargeable by a party to that divorce who later winds up in bankruptcy.
Also, the Reform Act amends 11 U.S.C. § 523(c) so that the non-debtor spouse is not required to file an adversary proceeding in order to preserve the nondischargeability of the debtor’s obligations that fall within the scope of 11 U.S.C. § 523(a)(15). This is an important change in the law, designed to protect non-debtor spouses and children by eliminating the need for them to spend precious resources trying to “protect” the property settlement by commencing an adversary proceeding in the bankruptcy court.
Taken together, the Reform Act’s changes to 11 U.S.C. § 523(a)(5) and (15) operate to exempt from discharge all alimony, maintenance, support, property settlements, hold-harmless obligations, etc. to a spouse, former spouse or child so long as they are incurred in the course of a divorce or separation, or in connection with the divorce decree, separation agreement or other order.

V. Are There Any Remaining Differences Between Nondischargeable Domestic Support Obligation Under 11 U.S.C. § 523(A)(5) and Nondischargeable Property Settlement Under the Reform Act’s 11 U.S.C. § 523(A)(15)? The Answer Remains “Yes”—Even Under the Bankruptcy Reform Act
A debt which is nondischargeable under 11 U.S.C. § 523(a)(15) (e.g., a property settlement that is not in the nature of alimony, maintenance or support) is dischargeable in a Chapter 13 under the Reform Act if the debtor makes all payments under the Chapter 13 plan. However, a domestic support obligation which is nondischargeable under 11 U.S.C. § 523(a)(5) is nondischargeable even under Chapter 13, even if the debtor makes all of its payments due under the plan and receives a super-discharge. See 11 U.S.C. § 1328(a).
In Chapter 13 cases, domestic support obligations get better treatment than do property settlements. For example, the failure of a Chapter 13 debtor’s failure to pay a domestic support obligation post-petition is grounds for denial of confirmation of the Chapter 13 plan (11 U.S.C. § 1325(a)(8)), and if the failure occurs post-confirmation, it is a ground for dismissal or conversion of the Chapter 13 case (see 11 U.S.C. § 1307(c)(11)). Debts for property settlement are not given similar protection. Furthermore, the debtor’s plan is required to cure all domestic support obligation arrearages during the life of the Chapter 13 plan, unless the recipient agrees to a different treatment.
First Priority for Domestic Support Obligations: Another difference between domestic support obligations and property settlement debts is that 11 U.S.C. § 507 makes unsecured claims for domestic support obligations first priority, subject only to the fees and expenses incurred by a trustee in collecting them. Property settlement does not enjoy this high priority. The pertinent section of the Bankruptcy Reform Act reads as follows:
VI. Exceptions to the Automatic Stay

Bankruptcy’s automatic stay is a comprehensive injunction that stays actions against the debtor, property of the debtor and/or property of the bankruptcy estate.[1] The automatic stay is embodied in 11 U.S.C. §362(a), but there are 28 statutory exceptions to the automatic stay: those exceptions are set forth in 11 U.S.C. §362(b)(1)–(28).
The Bankruptcy Reform Act amended the exceptions to the automatic stay which pertain to family law matters. These changes in the Bankruptcy Code clarify that a broader range of family-law proceedings can continue even when one spouse files bankruptcy. Consequently, the following activities do not constitute a violation of bankruptcy’s automatic stay:
§ 362. Automatic Stay…
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—
(1) under subsection (a) of this section, of the commencement or continuation of a criminal action or proceeding against the debtor;
(2) under subsection (a)—
(A) of the commencement or continuation of a civil action or proceeding—
(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not property of the estate;
(C) with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 466 (a) (16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act.
The highlights of this new exemption from automatic stay are:
In addition to criminal proceedings, a wide variety of civil actions can proceed against a person who files bankruptcy including civil actions regarding paternity, civil actions to establish or modify domestic support obligations, civil actions regarding custody or visitation, civil actions regarding domestic violence, and civil actions to dissolve a marriage (but actions concerning property of the debtor’s estate are stayed).
Income/wage withholding orders can still proceed, even if they target the debtor’s property or property of the estate.
Suspension of driver’s license or professional license to the extent that state law provides for such a suspension, reporting of overdue support, can proceed.

VII. Can Property Settlements in Divorce Judgments Be Challenged as Fraudulent Transfers?
In and out of bankruptcy, there are various laws that generally enable creditors to avoid (i.e. undo) transfers made or obligations incurred that have the effect of improperly putting a debtor’s assets beyond the reach of his or her creditors. Generally, transfers made (or obligations incurred) are considered to be a “fraud on creditors” when they are “actually fraudulent” (e.g. with actual intent to hinder, delay or defraud a creditor: See MCL 566.34(a)) or “constructively fraudulent” (e.g. transfers made (or obligations incurred) in exchange for less than reasonably equivalent value and by one who is either: (i) insolvent or rendered insolvent by the transfer made or obligation incurred (See MCL 566.35(1)), or (ii) engaged (or about to engage) in a business or transaction with unreasonably small assets (See MCL 566.34(b)(i)) or (iii) who intends or reasonably should have known that he or she is about to incur debt that is beyond his or her ability to pay when the debt becomes due. (See MCL 566.34(b)(ii)). Outside of bankruptcy, creditors can use MCL 566.31, et seq., which is Michigan’s version of the Uniform Fraudulent Transfer Act (“UFTA”) to avoid and recover fraudulent transfers. In bankruptcy, the debtor or trustee can use 11 USC §§ 544 and 548 to recover fraudulent transfers (11 U.S.C. § 544 “incorporates” applicable non-bankruptcy law, including UFTA).


BANKRUPTCY, BANKRUPTCY CHAPTER 7, 235-1970

October 16, 2011

DO YOU NEED BANKRUPTCY? BANKRUPTCY CHAPTER SEVEN CALL 235-1970

In all Chapter 7 cases, the U.S. trustee appoints a trustee to administer the estate created by the filing of the debtor’s bankruptcy. 11 USC 701. The trustee is typically a member of a private panel of individuals appointed by the Office of the U.S. Trustee, although certain circumstances, such as a conflict of interest affecting all of the private panel trustees, may necessitate the appointment of an individual who is not a member of the standing panel. See 11 USC 702 (allowing for election of trustee).

In his or her capacity as trustee, the trustee is required to investigate, collect, and liquidate the debtor’s nonexempt property and distribute the proceeds to creditors according to the priorities established in the Bankruptcy Code. 11 USC 704(a). The trustee is charged with performing other duties as well, including, where appropriate, opposing an individual debtor’s right to receive a discharge. 11 USC 705. In a large number of Chapter 7 cases, trustees retain counsel to assist them in administering the estate. If you are requested to represent a trustee in a Chapter 7 case, you should first make certain that the bankruptcy court administering the case enters an order appointing you as counsel. 11 USC 327(a). Typically, court approval of the trustee’s employment of professionals is obtained on an ex parte basis; however, the process requires the concurrence of the U.S. trustee.

In the Eastern District of Michigan, LBR 2014-1 (ED Mich) governs the procedure for applications for the retention of professionals, including the attorney for a Chapter 7 trustee. In general, the application must be accompanied by a statement from the attorney that he or she is a disinterested person and holds no interest adverse to the estate. Bankruptcy Rule 2014; LBR 2014-1(a) (ED Mich); see also 11 USC 327(a). This statement must also disclose all connections of the attorney with the “debtor, creditors or any other party in interest, and their respective attorneys and accountants” as required by Bankruptcy Rule 2014. LBR 2014-1 (ED Mich); see also LBR 2014 (WD Mich). This application must be filed with the bankruptcy court, and a copy of the application, along with a proposed order of retention, must be served on the U.S. trustee. LBR 2014-1(b) (ED Mich). If the U.S. trustee concurs in the application, he or she will sign the proposed order. If the U.S. trustee fails to sign the order within seven days, the applicant must serve on the U.S. trustee a notice of a hearing for the entry of the retention order. Once the retention order is entered, it is deemed effective as of the date the application was filed, “unless the Court orders otherwise.” Id.


BANKRUPTCY, FLINT BANKRUPTCY, FLINT BANKRUPTCY ATTORNEY, LAWYER EXPLAINS SECURED DEBTS IN BANKRUPTCY.

April 7, 2011

BANKRUPTCY, FLINT BANKRUPTCY, FLINT BANKRUPTCY ATTORNEY, LAWYER EXPLAINS SECURED DEBTS IN BANKRUPTCY.

A Flint Bankruptcy debt is a secured debt if you will lose identified property real or personal when creditor payments are not made. How is a bankruptcy secured debt made. These debts are created when you the debtor sign a loan giving the bankruptcy creditor what is called a “ security interest” in your property. Most often these are home or car loans. Bankruptcy security interests are also created when a creditor files a lien which stops future sales.

Bankruptcy Lawyer Terry R. Bankert talks about these and other Bankruptcy issues on his popular  site http://www.nojokebeingbroke.com

 and http://www.attorneybankert.com writings on bankruptcy.

FLINT OR BAY CITY BANKRUPTCY SECURED DEBTS .

a. Tax liens in BANKRUPTCY- The taxing authority must record the liens against your property. Often these authorities are the IRS or state and local government. When in Bankruptcy Check to see if they have.
basmati Law created liens in BANKRUPTCY- Often these are called mechanics, materialmans or contractor liens. The creditor can assert or file a lien. When in bankruptcy check to see if they have.
c. Judicial liens in Bankruptcy- when the creditor loses a lawsuit they get a judgment. The creditor must record this judgment to create a lien. In Bankruptcy check to se if this was done.
d. In BANKRUPTCY personal loans from banks and credit unions or finance companies. You will have pledged valuable personal property such as a vehicle, or other property as collateral This  property can be repossessed if you don’t make the payments.
e. In BANKRUPTCY store charges with security agreements. The norm is that credit card buys on a credit card are unsecured. Some stores like J.C.Penny’s and Sears claim to retain a security interest in all hard or durable goods. Often these stores make their customers sign a security agreement when charges are made.
f. In BANKRUPTCY loans for RV’s, motorcycles, tractors, boats, and cars.
g. SECOND MORTGAGES IN BANKRUPTCY- If you do not pay this obligation to a bank or a finance company they will take your house under foreclosure.
h. MORTGAGES IN BANKRUTPCY- As you know these are loans on your home purchase or refinance. If you fail to pay the lender can take or foreclose on your home.

A Flint or Bay City bankruptcy attorney lawyer will help you deal with these debits and eliminate some. If you have question contact Bankruptcy lawyer Terry R. Bankert Terry@attorneybankert.com
810-235-1970 or http://www.attroneybankert.com
My law firm is called a debt relief agency that helps you file for bankruptcy. (feds made me say that) Get your free consultation today. 810-235-1970


BANKRUPTCY attorney violates the automatic stay

April 6, 2011

BANKRUPTCY COURT OPINION REGARDING BANKRUPTCY DEBTOR’S CONTEMPT MOTION

BANKRUPTCY AND ATTORNEY FEES

A. Introduction

This case came before the Court for hearing on January 19, 2011 and on March 30, 2011 on a motion filed by Debtor entitled “Motion for Order for Contempt, Damages and Attorney Fees for Willful Violation of the Automatic Stay and Creditor Misconduct” (Docket # 18, the
“Motion”).

BANKRUPTCY COURT CONDUCTED TWO HEARINGS

At both the January 19 and March 30 hearings, the Court made certain findings, conclusions, and rulings regarding the Motion, all of which the Court now incorporates by reference into this opinion. At the conclusion of the March 30 hearing, the Court took the Motion under advisement.

IS YOUR CASE IN THE EASTERN DISTRICT OF MICHIGAN BANKRUPTCY COURT? BANKRUPTCY FLINT / BAY CITY ,ATTORNEY POSTING BY Flint / Bay City Bankruptcy Attorney Terry R. Bankert 810-235-1970. http://www.attorneybankert.com

 Written in SEO format and modified

One of the issues to be decided concerns the Bankruptcy Code’s definition of “domestic support obligation.” That definition requires, among other things, that in order for a debt to be a “domestic support obligation,” the debt must be “owed to or recoverable by — (I) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible
relative; or (ii) a governmental unit.” 11 U.S.C. § 101(14A)(A).

____________________________________/
UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION, In re: Case No. 10-74187, THOMAS F. MURPHY, Chapter 7 Debtor. Judge Thomas J. Tucker, Signed on April 5, 2011 Partial source
__________________________________/

In this case, the Debtor,Thomas Murphy, argues that the debt in question does not meet this requirement, and therefore is not a domestic support obligation. The creditor, Dayna Milbrand, argues the opposite.

MACOMB COUNTY DIVORCE ORDERED ATTORNEY FEES
B. Facts

The facts relevant to this issue are undisputed. The debt in question arises from the Consent Judgment of Divorce that was entered by the Macomb County Circuit Court on April 9,2009 (the “Judgment”).1 The Judgment divorced the Debtor from Stacey Murphy. It contained
numerous provisions, including a provision requiring Debtor to pay attorney fees to Dayna Milbrand in the amount of $2,500.00. Ms. Milbrand was Stacey Murphy’s attorney in the divorce case.

The provision in question states:

ATTORNEY FEES

IT IS FURTHER ORDERED AND ADJUDGED that [Thomas
Murphy] shall pay attorney fees to Dayna Milbrand in the amount
of $2,500.00, by cashing in one of his 401(K) related assets to
make said payment, within sixty (60) days from the entry of this
Judgment of Divorce. Upon failure to pay said sum then such
amount can be collected through all collection remedies available
at law, as if these funds were a Judgment.

IT IS FURTHER ORDERED AND ADJUDGED that each party
shall pay their own attorney fees and costs associated with this
divorce action.2
The Judgment also contains a section labeled “Non-Dischargeability,” which states:

NON-DISCHARGEABILITY

IT IS FURTHER ORDERED AND ADJUDGED that [Stacey
Murphy and Thomas Murphy] acknowledge that by assuming their
individual share of the marital debts that they have under this
property settlement, they have assumed all domestic obligations
which are not dischargeable under the Bankruptcy Code 11 USC
1328(B)(5). In the event either party discharges or attempts to
discharge in bankruptcy any debt for which any creditor then seeks
to sue or compel payment or receives judgment against for the
discharged debt from the non-bankrupt party, then the bankrupt
party shall indemnify the other party in full for any liability
incurred.3

ATTORNEY GAVE CLIENT FOR FEES OPPOSITE PARTY ORDERED TO PAY

When the Judgment was entered, Dayna Milbrand gave her client, Stacey Murphy, a credit on her attorney fee bill for the $2,500.00 that Debtor was required to pay to Ms. Milbrand.

DEBTOR DID NOT PAY THE ATTORNEY FEES
Debtor did not pay the $2,500.00 attorney fee debt to Dayna Milbrand. Nor did he reimburse Stacey Murphy in any amount for these attorney fees.

ATTORNEYS CLIENT FILED FOR BANKRUPTCY. ANY OBLIGATION TO HER ATTORNEY WAS DISCHARGED

Stacey Murphy filed her own Chapter 7 bankruptcy case in this Court, on June 2, 2010 (Case No. 10-58179). The parties agree that the discharge that Stacey Murphy received in that case, on September 14, 2010,4 discharged any debt that Stacey Murphy may have had for attorney fees to Dayna Milbrand.

DEBTOR THEN FILED HIS BANKRUPTCY
Debtor filed a voluntary Chapter 7 bankruptcy petition on November 9, 2010, commencing this case.
ATTORNEY IGNORED THE AUTOMATIC STAY AND FILED IN STATE COURT TO GET ATTORNEY FEES
Dayna Milbrand then filed a motion in the Macomb County Circuit
Court, on December 6, 2010, seeking to enforce Debtor’s obligation to pay her the $2,500.00 attorney fees.5 Ms. Milbrand filed her motion in state court without seeking or obtaining relief from the automatic stay in this Court. Debtor’s present Motion followed.

BANKRUTPCY QUESTION ARE ATTORNEY FEES DOMESTIC SUPORT AND EXEMPT FROM BANKRUPTCY. COURT SAYS NO

C. Discussion After considering the arguments of the parties and surveying the case law on the issue, the Court concludes that the Debtor’s obligation under the Judgment to pay $2,500.00 in attorney fees to Dayna Milbrand cannot be deemed a “domestic support obligation,” because it is not a
debt “owed to or recoverable by — (I) a spouse, former spouse, or child of the debtor or such child’s parent, legal guardian, or responsible relative; or (ii) a governmental unit.” 11 U.S.C. §
101(14A)(A).
THE ATTORNEY ALLOWED IT TO BE A DEBT TO THE ATTORNEY
The debt in question is owed to Dayna Milbrand, and she is not one the entities listed in this statute. The debt is not “owed to or recoverable by” Debtor’s “former spouse,” Stacey Murphy, because Stacey Murphy is not liable to Dayna Milbrand for the $2,500.00 in attorney fees in question, and cannot possibly ever become liable for such fees, in the event the
Debtor Thomas Murphy fails to pay them.
ATTORNEY ACKNOWLEDGES CLIENTS BANKRUPTCY ABSOLVED OBLIGATION
As Ms. Milbrand correctly acknowledges, the discharge that Stacey Murphy received in her bankruptcy case on September 14, 2010 discharged
any debt that Stacey Murphy may have had for attorney fees to Dayna Milbrand. Thus, from well before the date on which the Debtor Thomas Murphy filed this bankruptcy case, the “former spouse,” Stacey Murphy, could not held liable or otherwise be adversely affected if the Debtor
failed to pay Ms. Milbrand the $2,500.00 in fees. And the indemnification clause in the Judgment, quoted above, could not apply to give Stacey Murphy a right to any relief against the Debtor Thomas Murphy, because Stacey Murphy cannot possibly “incur” any “liability” for Ms.
Milbrand’s fees, due to Ms. Murphy’s bankruptcy discharge.
IT IS NOT A DOMESTIC SUPPORT OBLIGATION
In this situation, the debt in question cannot be deemed to be “owed to or recoverable by” the former spouse Stacey Murphy, within the meaning of the § 101(14A)(A) definition of “domestic support obligation,” because Stacey Murphy is not liable, and can never be liable, for
the attorney fees in question. This Court agrees with what the court in Kassicieh v. Battisti (In Kassicieh), 425 B.R. 467, 477-81 (Bankr. S.D. Ohio 2010) called the “third line of authority” on this question. Under that view of § 101(14A)(A), and its predecessor, the pre-2005 version of 11
U.S.C. § 523(a)(5),

The debt must be in the nature of support, but also must be a debt
to the former spouse or child. This ‘‘debt to’’ element can be
satisfied when the obligation is payable directly to a third party,
typically a professional who provided services to benefit the wife
or child, but only if the former spouse is also obligated for the fees.
425 B.R. at 478 (emphasis added by the Kassicieh court)(quoting Simon, Schindler & Sandberg,
LLP v. Gentilini (In re Gentilini), 365 B.R. 251, 256 (Bankr. S.D. Fla. 2007). See also In re
Johnson, 397 B.R. 289, 296 (Bankr. M.D.N.C. 2008).

DEBTOR FILED BANKRUTPCY AND DEBT OWED TO ATTORNEY WAS NOT DOMESTIC SUPPORT
It follows that the Debtor’s debt under the Judgment — his obligation to pay $2,500.00 in attorney fees to Dayna Milbrand — is not a “domestic support obligation.” As a result, the Court must reject Ms. Milbrand’s argument that 11 U.S.C. § 362(b)(2)(B) applies to her action in filing
her state court motion against Debtor.

The Court also must reject Ms. Milbrand’s argument that her state court motion is covered by 11 U.S.C. § 362(b)(3). Ms. Milbrand’s filing of her state court motion was not an “act to perfect, or to maintain or continue the perfection of, an interest in property . . .” within the
meaning of § 362(b)(3). Ms. Milbrand had no “interest in [any] property” of the Debtor, Thomas Murphy before Mr. Murphy filed bankruptcy or when Ms. Milbrand filed her state court motion.

D. Conclusion
ATTORNEY INTENTIONALLY VIOLATED THE AUTOMATIC STAY
Based on the foregoing, and based on the other findings, conclusions, and rulings that the Court made during the January 19 and March 30 hearings on the Motion, the Court finds and concludes that Dayna Milbrand willfully violated the automatic stay when she filed her state court motion on December 6, 2010 and pursued that motion. Ms. Milbrand was aware of Debtor
Thomas Murphy’s bankruptcy case when she filed her state court motion, and the filing and prosecution of that motion  violated the automatic stay under 11 U.S.C. § 362(a)(1), (a)(2), and (a)(6). Debtor is entitled to appropriate relief under 11 U.S.C. § 362(k)(1).
The Court will enter an order for further, appropriate proceedings on Debtor’s Motion.
Signed on April 5, 2011 /s/ Thomas J. Tucker
–END–
If you have questions contact Terry Bankert a Bankruptcy attorney who helps you file for bankruptcy. 810-235-1970