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2008 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

Appellate Court Decisions Related
To Bankruptcy Cases

By William Norton, III

order, the court held that an indigent's right to counsel exists only in favor of those whose physical liberty is at stake, which was not an issue in the bankruptcy case.)

42. 522(d) Exemptions -- Homestead

In re Brannon, 476 F.3d 170 (3rd Cir. Feb. 7, 2007) (Where married debtors held exempt property as tenants by the entirety pursuant to Pennsylvania law, wife could claim exemption up to full value not claimed as exempt by husband; she was not limited to claiming only 50% of the value of the property.)

43. 522(f) Exemptions -- Avoidance of Judicial Liens

United States v. Hyde, 497 F.3d 103 (1st Cir. Aug. 7, 2007) (Avoidance of pre-petition lien on debtor's residence under S 522(f) did not prevent enforcement of post-petition restitution order against proceeds from the debtor's sale of the residence. Debtor defrauded his deceased mother's pension fund so that he received her pension checks for 18 years following her death. The debt to the pension fund was non-dischargeable, but the pension fund's pre-petition lien on debtor's residence was avoided under S 522(f) so as not to impair debtor's state law homestead exemption. Postpetition, debtor was convicted of mail fraud and ordered to pay restitution under the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. S 3613. When the debtor later sold the residence, the United States sought to garnishment the sale proceeds. Pursuant to the MVRA, the order of restitution was a lien in favor of the United States on all property of the debtor as if the debt was a tax debt. Accordingly, the United States in effect possessed a tax lien, which, pursuant to S 522(c)(2)(B), is an exception to the homestead exemption, so that the United States was allowed to execute on the sale proceeds.)

In re Wilding, 475 F.3d 428 (1st Cir. Jan. 30, 2007) (Bankruptcy court has power to avoid a judicial lien that impairs an exemption of the debtor even though the lien has already been satisfied and the bankruptcy case closed.)

44. 522(g) Exemptions -- Objections

In re Kuhnel, 495 F.3d. 1177 (10th Cir. July 25, 2007) (After secured creditor consensually released its late perfected security interest in debtor's truck, trustee objected to the debtor's claim of an exemption in the truck, but failed to do so within the 30-day window prescribed by Rule 4003(b). The bankruptcy court allowed the objection under S 522(g), and the appellate court affirmed, noting that Rule 4003(b) is "uncompromising and inflexible"

 

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