The court overruled the chapter 7 trustee's objection to the debtor's homestead exemption where the court found that the debtor qualified as"head of a family" under Arkansas law based on the debtor's relationship with each of her brothers.
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Judge Ben T. Barry
Settlement funds received by the debtor that related to a lawsuit between the debtor and the builder were "miscellaneous proceeds" subject to an assignment clause in the debtor’s mortgage with the bank. Under Arkansas statute, the debtor was a trustee with regard to the funds and, as such, should have turned the funds over to the bank. The court found that the debtor committed defalcation while acting in a fiduciary capacity.
The court overruled the debtors’ objection to the claim of the IRS finding that a properly perfected tax lien on the debtors’ personal property remains attached to the personal property even if the debtors relocated with the personal property to another county within the state.
Debtors' attorney suspended from practice in the United States Bankruptcy Court for the Eastern and Western Districts of Arkansas for violations of Federal Rule of Bankruptcy Procedure 9011 and pursuant to Local Rule 2090-2.
The Court denied the trustee's motion for turnover and overruled his objection to the debtor's exemption. The Court could not determine whether the property interest at issue--the right to payments pursuant to a judgment for past due child support--was an interest of the debtor in accordance with applicable state law based on insufficient record before it. The judgment was not in evidence and state laws differ as to whether child support arrearages are property of the custodial parent or property of the child.
In this case, the debtors claimed a homestead exemption under Arkansas law on 0.3 acres in a subdivision that prohibited further division of the property. The creditors objected to the claimed exemption and argued that because the property is indivisible and exceeds one-quarter of an acre, the exemption should be denied or limited in value to $2500.00 under the Arkansas Constitution. In the alternative, the creditors argued that the property should be sold for the estate to realize the non-exempt portion of the claimed exemption. The Court recognized that the highest return to the estate would result from a sale of the property, but further recognized that the trustee’s share of the proceeds could also be determined prior to a sale, resulting in a benefit to the estate without the additional costs of a sale.
The court dismissed the plaintiff’s complaint for lack of subject matter jurisdiction. Piercing the corporate veils of companies held by the debtor is not a core proceeding and, even if successful, in this instance would have no conceivable effect on the debtor’s chapter 13 bankruptcy case.
The Court found that the chapter 7 trustee did not meet his burden to show that the debtor's exemption claimed under section 522(d)(11)(D) was improper.
In this case, the debtor attempted to avoid the nonpossessory nonpurchase-money liens of a secured creditor because they impaired the debtor’s tools of the trade and wild card exemptions. The creditor responded by requesting relief from the automatic stay. The court found that the debtor’s truck, boat, and trailer were tools of the debtor’s fishing guide trade, but the debtor’s ATV and tractor were not. In ruling, the court avoided the creditor’s liens on the tools of the trade to the extent the liens impaired the exemptions, and granted relief from the stay on the ATV and tractor for lack of equity. It also granted relief from the stay for cause for the remaining value of the creditor’s liens on the tools of the trade.
The debtor's dilatory performance of a contract to customize the creditor's vehicle was not sufficient to find the debt non-dischargeable under section 523(a)(2).