In a chapter 13 proceeding, student loan creditor objected to debtors' proposed plan, alleging that student loans were not dischargeable under chapter 13. The court disagreed, finding that Congress had specifically rejected non-dischargeability of such loans in chapter 13, in order to incentivize long-term efforts by debtors to repay their debts. The court also rejected creditor's argument that student loan debt is "long-term debt" under 11 U.S.C. § 1322(a)(5), concluding that treatment of debt as "long-term" is a benefit afforded to debtors rather than creditors. However, under the circumstances of the case, including a high percentage of total debt comprised by student loans and the relatively small payment proposed, the court concluded that debtors' proposed plan failed to meet the "good faith" standard under 11 U.S.C. § 1325(a)(3). The court rejected the reasoning of cases from other jurisdictions that questioned whether determinations of good faith should be predicated on debtors' treatment of debts that would be dischargeable under chapter 7, concluding that the existence of such debts is a relevant factor to consider.
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The District of Utah offers a database of opinions for the years 1979 to Current, listed by year and judge. For a more detailed search, enter the keyword or case number in the search box above.
Title: In re Smith, 8 B.R. 543 (Bankr.D.Utah) | Date: Jan-26-1981 | Status: PUBLISHED (Judge Mabey) | Case(s): 79-1293
Title: Pillow v. Avco Fin. Servs. (In re Pillow), 8 B.R. 404 (Bankr.D.Utah)Geigle v. Avco Fin. Servs. (In re Geigle)Horton v. Avco Fin. Servs. (In re Horton)Revello v. Avco Fin. Servs. (In re Revello) | Date: Jan-8-1981 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-0059, -0061, -0060, -0058
Debtors in four cases filed complaints against Avco seeking to avoid its liens on their personal property, and Avco moved to dismiss. The court considered whether the 11 U.S.C. § 522(f)(2) lien avoidance provisions applied to security interests created prior to enactment of the Bankruptcy Code, and if so, whether the provisions were constitutional. The court explained that § 522(f)(2) was intended to avoid nonpossessory, non-purchase money liens to the extent they impair exemptions for certain living necessities, tools of trade, and health aids, then concluded that both the statute's language and legislative analysis indicated that § 522(f) was intended by Congress to be retroactive. In considering whether retroactive application of the statute was constitutional, the court concluded that no substantive due process rights outweighed the congressional power to regulate bankruptcies. At most, the court held that the Constitution required a rational connection between § 522(f) and the purpose of its enactment, which was to eliminate certain "evils" in the credit industry. The court held that, under the presumption of constitutionality that was afforded the statute, it would be inappropriate to conclude that § 522(f) does not rationally relate to that purpose and, therefore, the statute was constitutional. Avco's motions to dismiss were denied.
Title: In re Kennard | Date: Oct-24-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 78-0922
In a case subject to the Bankruptcy Act, attorneys who represented debtor prepetition filed a secured claim for fees incurred in a successful litigation. Trustee objected to treatment of the claim as secured. Section 67b of the Act made certain state law statutory liens superior to the trustee's claim, and Utah provided such a statutory lien for attorney's fees. The court determined that the Utah lien was perfected upon the filing of a complaint. All of trustee's arguments of invalidity of the statutory charging lien were rejected by the court, and trustee's objection to the claim was denied.
Title: Styler v. Local Loan Fin. Servs. (In re Lanctot), 6 B.R. 576 (Bankr.D.Utah) | Date: Oct-10-1980 | Status: PUBLISHED (Judge Mabey) | Case(s): 80P-0078
Debtors purchased two motorcycles from lender pursuant to a purchase money security agreement, which was never perfected. In debtors' chapter 7 proceeding, trustee filed an adversary complaint against lender seeking to set aside its interest under 11 U.S.C. § 544, and to preserve the lien for the estate under 11 U.S.C. § 551. Lender stipulated to the relief sought by trustee. The court ruled that trustee's hypothetical judicial lien was automatically preserved for the estate by § 551, but that debtors were still subject to lender's contractual claim. Debtors claimed an exemption in the motorcycles under 11 U.S.C. § 522(d)(5), which the court determined would not be available to them unless they established an "aggregate interest" in the property, which would require them to either avoid lender's lien, which still bound them under state law and exceeded the property's value, or obtain the benefit of trustee's avoidance of that lien. Such powers would only be provided by the exemption statute, and the court considered subsections (c), (f), (g), and (h) of § 522, concluding that none of those provisions would allow debtors' to claim an exemption.
Title: Davies v. Platt (In re Yellow House Rest.) | Date: Oct-4-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0744, -0745, -0763
Debtors, former spouses, filed separate bankruptcy petitions, and both claimed a state law homestead exemption. The parties occupied different parts of the same house, jointly ran a restaurant, and had one minor child together. The Utah statute makes a homestead exemption available only to a "head of family," which requires a relative, who is under debtor's care, to reside with them. Since the minor child was the only qualifying relative, the court ruled that only one exemption could be claimed. The debtors' child primarily lived with his mother in her part of the house, mother had more responsibility for his care, and the child's support was provided, indirectly, by the restaurant. Therefore, the court ruled that only wife could claim the head of family exemption.
Title: Peale v. Bates (In re Bates) | Date: Oct-3-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 80P-0046
Debtors sold a home in Washington state to plaintiffs, who incurred expenses getting the home up to code. In a state court action, plaintiffs obtained a judgment against debtors, in which that court found that debtors had "materially misrepresented the condition of" the home, which proximately caused plaintiffs' damages. Debtors filed a bankruptcy petition, and plaintiffs filed a complaint in the bankruptcy court under 11 U.S.C. § 523(a)(2), alleging their judgment was non-dischargeable. The court noted that, based on principles of res judicata, a valid final judgment could not be re-litigated. However, when the issue between the parties is dischargeability, res judicata is inapplicable, but collateral estoppel might bar the re-litigation of issues that were litigated to the same standards that apply in bankruptcy. Comparing Washington state law misrepresentation standards with the standards of § 523(a)(2), the court concluded the standards were essentially the same. Therefore, plaintiff's motion for summary judgment was granted.
Title: In re Lovett, 6 B.R. 270 (Bankr.D.Utah) | Date: Sep-26-1980 | Status: PUBLISHED (Judge Mabey) | Case(s): 80-0108
Debtor's ex-wife initiated a prepetition action in state court against debtor for delinquent child support. After debtor's petition was filed, the state court entered a judgment in favor of ex-wife. Debtor moved to stay the judgment and its enforcement in the bankruptcy case. The court held that the state judgment was valid and binding, pursuant to 11 U.S.C. § 362(b)(2), as to the existence of the debt, which is determined under state law. However, the dischargeability of the debt is determined under federal law. Thus, the court must examine the nature of the judgment, and must determine what property of debtor's does not belong to the estate. Debtor's motion was denied, and the court indicated that ex-wife could file a dischargeability complaint under 11 U.S.C. § 523(a)(5), which may receive an accelerated hearing.
Title: Novinski-Durando v. Heaps (In re Heaps) | Date: Sep-26-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 78-0743, -0744
Trustee sought to set aside debtors' transfer of their residence to their son, as a fraudulent transfer. The court concluded that, at the time of the transfer, debtors did not intend or believe that they would incur debts beyond their ability to pay and, therefore, trustee's 11 U.S.C. § 107d(2)(c) claim failed. The issues with respect to trustee's claim under § 107d(2)(a) were whether debtors were rendered insolvent by the transfer and whether fair consideration was paid by their son. The court found that debtors were rendered insolvent by the transfer of the property, and that son's assumption of a $25,000 first mortgage on a $62,000 property was not fair consideration, and refused to include the value of a life estate in the property as part of son's consideration, as no written agreement had been produced that created such a property right in debtors.
Title: Ingersoll-Rand Fin. Corp. v. Hyland (In re Atlas Dirty Devil Mining Co.) | Date: Sep-16-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0327
Plaintiff leased mining equipment to debtor, which was in debtor's possession when it filed its petition and when personal property taxes were assessed against it by the County. In a dispute between plaintiff and County, the court ruled that plaintiff, as the owner of the property, was liable for the taxes on that property, and that assessment of taxes does not violate the stay even if a debtor is assessed. Likewise, County's seizure of the property, which took place after plaintiff obtained relief from stay to foreclose on the property, also did not violate the stay. Finally, County obtained a lien on the property under state law when it took possession of it. However, plaintiff may have a claim against debtor for the taxes that it paid, as the parties' lease required debtor to pay the taxes.
Title: Cutler v. Tebbs (In re Tebbs) | Date: Aug-19-1980 | Status: UNPUBLISHED (Judge Mabey) | Case(s): 79-0965
Plaintiffs obtained a judgment against debtor in state court on the basis that debtor's conduct was "willful, intentional and malicious." Finding that the tort and bankruptcy standards for what is willful and malicious were substantially the same, the court granted summary judgment to plaintiffs on their non-dischargeability claim, based on collateral estoppel.