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DISCHARGE

 

Cohen V. de la Cruz, 1998 WL 126909 (1998)

(Justice O'Connor) (9:0)

certiorari to the U.S. Court of Appeals for the 3rd Circuit

http://supct.law.cornell.edu/supct/html/96-1923.ZS.html

On March 24, 1998, the United States Supreme Court held that 11 U.S.C. 523(a)(2)(A) prevents the chapter 7 discharge of all liability arising from fraud, including compensatory damages, punitive damages, and attorney's fees. The case highlights the distinction between the more limited discharge of chapter 7 and the broader discharge available under chapter 13.

Perez v. Campbell, 402 U.S. 146 (1971)(Justice White)

http://laws.findlaw.com/US/402/637.html

On June 1, 1971, the United States Supreme Court ruled that a section of the Arizona Motor Vehicle Safety Responsibility Act directly conflicted with 17 of the Bankruptcy Act, which states that a discharge in bankruptcy fully discharges all but certain specified judgments. Therefore, the Supreme Court held that the Arizona statute was invalid pursuant to the Supremacy Clause.

Internal Revenue Service v. Hairopoulos, 118 F.3d 1240 (8th Cir. 1997)

http://www.wulaw.wustl.edu/8th.cir/Opinions/970707/962573.P8

Debtor filed a chapter 7 bankruptcy and listed the IRS as a creditor. IRS received a no asset notice to creditors, which also instructed creditors not to file claims. Subsequently, debtor converted to chapter 13; proposed a plan that did not address the tax liability; the claims date expired without the IRS filing a claim; the plan was confirmed; and the debtor received a discharge. IRS attempted to collect from the chapter 13 debtor post-discharge. Debtor moved to reopen the chapter 13 case and pursued the IRS for violating the discharge injunction. IRS argued it had insufficient notice since it did not receive notice of conversion of chapter 7 case to chapter 13; the first meeting of creditors, plan confirmation, or the claims bar date. However, the IRS had actual notice of chapter 13 plan post-confirmation and after claims bar date, but during the pendency of the chapter 13 case. Bankruptcy court held IRS had received sufficient notice to put IRS on inquiry notice and that IRS debt was discharged. The decision was appealed by the IRS, and the Circuit Court held the notice IRS did receive was insufficient, and since chapter 13 plan did not provide for IRS debt, debt was not discharged.

In Re Baker, 736 F.2d 481 (8th Cir. 1984)

A previous discharge within six (6) years of filing for chapter 13 relief does not, by itself, automatically bar relief under chapter 13. The court may consider, whether the chapter 13 relief is actually disguised liquidation, which may be prohibited.

Carter v. Van Buskirk, 3 F.3d 1174 (8th Cir.1982) (Chapter 7)

The Court held that losses lender sustained to foreclose on original note and executed renewal note constituted sufficient grounds for refusing to discharge fraudulently renewed credit. Debtor fraudulently obtained renewal of loan from his mother-in-law by intentionally failed to disclose his deteriorating relationship with wife. Debtor's intent to divorce lender's daughter constituted "material fact," nondisclosure of which would render debtor's obligation on renewal note nondischargeable in bankruptcy.

 

 

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