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RADANDT (9/3/93) (160 B.R. 323)

• Wisconsin DNR's motion for allowance of priority administrative expense claim pursuant to 11 U.S.C. § 503(b)(1)(a) is denied. No clean-up costs for environmental damage have yet been incurred -- allowing administrative expense status for undetermined future costs would constitute an advisory opinion; case is not ripe for judicial review. In addition, clean-up costs would not constitute funds necessary to "preserve" the estate pursuant to § 503(b)(1)(a); trustee had already declared intent to abandon pursuant to 11 U.S.C. § 554(a). Presence of unencumbered assets in the estate does not change this result.
• DNR was not entitled to priority lien on environmentally contaminated property to pay for future clean-up costs. Absent clear statutory authority to do so, Court refuses to fashion a remedy to redress environmental damage in light of fact that no evidence established that property presented imminent danger to public.

RAMEKER V. FARMERS STATE BANK (7/27/04) (Unpublished)

Trustee filed complaint against Defendant alleging that its financing statement was defective in that it didn't describe the collateral sufficiently. The General Business Security Agreement used to secure the business note contained a description of the collateral, but when the Defendant sought to perfect its security interest in the personal property by filing a UCC-1 financing statement, the collateral was described as the collateral covered as "general business security agreement now owned or hereinafter acquired." No documents were attached to the financing statement. Under Wisconsin law the description of personal property is sufficient if it reasonably identifies what is described. What is reasonable is putting third parties on inquiry notice to allow them to identify what property has a lien against it. It was determined that the description in this case failed to put third parties on notice as to which property of the Debtor was subject to the Defendant's security interest and that judgment may be ordered for the Trustee.

RAMEKER V. HOLDEN (12/4/07) (383 BR 727)

Rameker v. Holden (In re Williams), adv. case #07-74, main case #06-12442. filed 12/4/2007, Trustee's application to sell debtor’s interest in real property. The non-debtor defendant argued that the debtor’s interest in a partnership was terminated by a prior written agreement. The consideration for the agreement was not a payment to the debtor made prior to the agreement, rather, it was a present release of an obligation to reimburse the partnership for said payment, and thus the agreement was enforceable. The debtor had no interest in the partnership property and the trustee’s complaint was dismissed.

REDDICK (11/13/91) (Unpublished)

• Creditor (Snap-On Tools) did not lose its purchase money status in its security interest in tools sold to debtor so as to make its lien in the tools avoidable by the debtor. Case did not involve a cross-collateralization, after-acquired property clause or a consolidation of security interests. The only consolidation which occurred involved the outstanding balances from various purchases made by the debtor.
• Where security interest does not specify how payments are to be applied, court can apply the payments pursuant to Wisconsin's "first-in, first-out" payment provision -- Wis. Stat. Ann. § 422.418(3) (West 1988).

REESE (5/15/87) (Unpublished)

• Motion by third party indebted to debtor in this case for rehearing and to vacate court order entered December 31, 1986, is denied. Court order: 1) denied third party's motion to prohibit trustee from initiating further collection activity on basis of state court judgment against him; and 2) granted trustee's motion for turnover. Third party had failed to appear at hearing on December 17, 1986, and later failed to timely file memorandum in support of motion for rehearing/reconsideration as ordered by Court.
• Motion by third party to enjoin trustee from disbursing funds collected from third party is also denied. Injunctive relief requires filing of adversary proceeding. Citing bankruptcy rule 7001.

RESOP v. F & M BANK (in re McClearn) (5/15/07) (372 B.R. 471)

Noncompliance with Wisconsin's homestead joinder requirement was not grounds for avoidance by a chapter 7 trustee, even though the mortgage was "invalid." The protections for bona fide purchasers of real estate in Wisconsin provide no protection against the spouse of a prior transferor of real estate for five years after the prior transfer. Section 544(a)(3) of the Bankruptcy Code only grants the trustee the rights of a bona fide purchaser of real estate. Section 544, Wis. Stats. 706.02(1)(f), 706.09(1)(e).

RONDEAU (11/4/87) (Unpublished)

Creditor's motion to convert case from chapter 11 to chapter 7 for failure to file plan and disclosure statement is denied. Decision whether to dismiss or convert is within discretion of court. Continuation of case would not result in any substantial benefit to creditors or to the estate; case will therefore be dismissed. Moving creditor can pursue its remedies in state court.

REIGLE (7/31/01) (Unpublished)

Debtors challenged claim of First American Credit Union (“FACU”). At issue is whether a car pledged as security for a direct loan also secured a credit card debt by virtue of a dragnet clause in the loan contract. Both parties moved for summary judgment based on stipulated facts. Debtors made three arguments: that FACU never explained the meaning of the dragnet clause in the contract; that they did not read the dragnet clauses and had no intention of pledging the car as security for the credit card debt, and that the dragnet clauses in the Rules and car loan contract "were in boilerplate fine print." FACU countered that the dragnet clauses were customary and ordinary provisions and that debtors’ intent to pledge the car as security interest for the credit card debt is evident from the fact that debtors received the Rules and signed the car loan contract, both of which included dragnet clauses. FACU further argued that it had no obligation to explain the meaning or effect of the dragnet clauses to debtors. It was determined that the intent of debtors to grant FACU a security interest in the car for other debts is evident from the clear language of the dragnet clauses in the Rules and the car loan contract.

ROYAL PLASTICS, INC. (11/30/94) (Unpublished)

Creditors of chapter 11 debtor contended that they were entitled to the revenues generated by the debtor's use of certain plastic molds. These revenues were generated by the debtor prior to the petition date, but were in the debtor's possession when the case was filed. The creditors contended that they were entitled to the funds because the debtor did not own the molds. Given the absence of any trust relationship between the parties, however, and the extraordinarily broad definition of "property of the estate" under 11 U.S.C. § 541, the court concluded that the debtor held legal and equitable title to the funds when the bankruptcy was filed. Accordingly, the creditor's adversary proceeding was dismissed.

RYE (10/7/91) (Unpublished)

Debtor's motion to avoid the lien of Sears in her washer and dryer pursuant to § 522(f)(2)(a) is denied. Issue of whether Sears was required to file a financing statement to perfect its interest pursuant to Wis. Stat. § 409.302(1)(d) is irrelevant for the court's analysis. Even an unperfected security interest remains valid and enforceable as between the parties to it. Fact that a purchase money security interest is unperfected does not destroy its purchase money status. Chapter 7 trustee took no position as to Sears' lien because the debtor claimed the property as exempt. Trustee thus did not take priority over the lien of Sears.

RYNEARSON (4/6/92) (Unpublished)

Debtor's motion for valuation of the lien of the USA-FmHA at $21,000 is denied. Supreme Court's decision in Dewsnup v. Timm, 116 L. Ed. 2d 903 (1992), prevents chapter 7 debtors from "stripping down" the lien of a creditor to the judicially determined value of the collateral. Debtors' attempts to distinguish Dewsnup on its facts are without merit.

SALINAS (9/15/99) (240 B.R. 305)

Debtor filed adversary proceeding contending student loan debt constituted an "undue hardship" under 11 U.S.C. § 523(a)(8). The Court concluded that the debtor could not maintain a minimal standard of living, especially given the presence of other student loans the debtor conceded were nondischargeable. The debtor had done everything he could to maximize income and minimize expenses. His expenses still exceeded his income by a considerable amount. Accordingly, the debt was an "undue hardship" under § 523(a)(8) and dischargeable.  [Reversed on appeal, 262 B.R. 457 (W.D. Wis. 1999)]

SALINAS (2/14/01) (258 B.R. 913)

On remand of district court’s order reversing prior order granting discharge of student loan debts, the bankruptcy court again considered the debtor’s financial condition. Debtor did not have significant income, and had in fact been employed for a period of time. The Court concluded that the debtor had demonstrated an "undue hardship" within the meaning of U.S.C. § 523(a)(8). The Court also rejected the suggestion that the court could further defer or reduce the debtor’s loan obligations. [Reversed on appeal, Case No. 01-C-234-S (W.D. Wis. 2001)]

SASOPA (3/2/00) (Unpublished)

The plaintiff filed a motion for summary judgment claiming that as a matter of law, she is entitled to a judgment finding the debtor's debt to her nondischargeable under 11 U.S.C. § 523(a)(6).  The debtor attacked the plaintiff, bit off the plaintiff's second finger at the joint area and was charged in state court with aggravated battery with intent to cause substantial bodily harm.  The debtor pled guilty to this crime.  The plaintiff argued that because the debtor pled guilty to aggravated assault, she was precluded, under the doctrine of issue preclusion, from re-litigating the issue of whether her actions were willful and malicious for purposes of § 523(a)(6).  The court (Judge Martin) denied plaintiff's motion on two grounds:  (1) there were issues of material fact regarding the debtor's actions; and (2) this court could not apply the doctrine of issue preclusion because the issue of the debtor's willfulness and maliciousness had not been actually litigated.  The court outlined the requirements for issue preclusion and found that the plaintiff did not meet the fourth requirement -- that "the issues in the prior action . . . must have been actually litigated and necessarily determined."  See In the Matter of Wagner, 79 B.R. 1016 (Bankr. W.D. Wis. 1987).  Looking to Wisconsin law, the court determined that in the absence of a clear statement from the Wisconsin Supreme Court, this court was precluded from finding that a plea of guilty satisfies the requirement that a controversy be "actually litigated" for issue preclusion to apply.

SASOPA (8/6/01) (Unpublished)

In 1996 debtor physically attacked plaintiff.  Debtor was charged with aggravated battery with intent to cause substantial bodily harm and pled guilty.  In 1998 plaintiff commenced an intentional tort action against debtor.  Prior to judgment being rendered debtor filed her chapter 7 petition staying the tort action.  Plaintiff filed this adversary proceeding seeking summary judgment arguing that as a result of the guilty plea in the criminal action, debtor was collaterally estopped from contesting the willful and malicious nature of the injury that gave rise to the debt.  The court denied the summary judgment motion.  The parties agreed to lifting the stay to permit the state tort action to proceed to judgment, which was subsequently entered.  Plaintiff then moved for summary judgment for a second time contending that the tort judgment supports collateral estoppel and bars debtor from contesting the willful and malicious nature of her debt for purposes of § 523(a)(6).  This court determined that she was correct and granted her motion for summary judgment.

 SCHRANK (7/9/92) (Unpublished)

Abstention is appropriate in what is essentially an action grounded on various state law fraud claims. Factors supporting abstention in this matter are: 1) the effect or lack thereof on the efficient administration of the estate; 2) the extent to which state law issues predominate over bankruptcy issues; 3) the difficulty or unsettled nature of the applicable law; 4) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; 5) the substance rather than the form of an asserted "core" proceeding; 6) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court; 7) the existence of a right to a jury trial; 8) the presence in the proceeding of a nondebtor party. Citing Republic Reader's Service, Inc. v. Magazine Service Bureau, Inc. (In re Republic Reader's Service, Inc.), 81 B.R. 422, 429 (Bankr. S.D. Tex. 1987).

SEAWAY INTERNATIONAL TRANSPORT, INC. (3/8/06) (S.D. Florida) (341 B.R. 333)

Trustee sought to avoid certain alleged fraudulent transfers under 11 U.S.C. §§ 544 and 548. The corporate debtor made payments on the home mortgage of its sole principal and officer totaling some $14,000 over the four years prior to bankruptcy. The trustee contended that the debtor did not receive “reasonably equivalent value” for the transfers. The debtor’s principal argued that the payments were a portion of his compensation. In general, payments on behalf of a third party can be avoided in bankruptcy unless there was a clear benefit (or “value”) to the debtor. The principal took no salary or compensation from the debtor companies; the court concluded that the payments constituted a pattern of compensation and that the debtor received an “indirect benefit” from the payments.

SHAFER (6/9/08) (393 BR 655)

Chapter 13 plan confirmation. The debtors’ case was dismissed for lack of good faith under the totality-of-the-circumstances test. The debtors’ income, expenses, assets, occupation, a prior voluntary dismissal and refiling to avoid preference payments, and the likelihood that the debtors were abusing chapter 13 to parlay into an early retirement demonstrated an effort not to pay creditors.

SHAKER (1/15/92) (137 B.R. 930)

• The "applicable nonbankruptcy law" language of § 541(c)(2) includes ERISA's anti-alienation provisions. Debtors' pension plan account is therefore excluded from the bankruptcy estate.
• Alternatively, § 815.18(31) of the Wisconsin statutes "relates to" ERISA plans for purposes of 29 U.S.C. § 1144(a) but is saved from preemption pursuant to § 414(d) of ERISA [29 U.S.C. § 1144(d)]. Preempting Wis. Stat. § 815.18(31) would modify or impair § 522(b) of the bankruptcy code in contravention of 29 U.S.C. § 1144(d). Debtors' pension plan account is therefore exempted from the bankruptcy estate pursuant to Wis. Stat. § 815.18(31).
• Alternatively, ERISA's anti-alienation provision constitutes "other federal law" pursuant to 11 U.S.C. § 522(b)(2)(a). The debtors' pension plan account is therefore exempted from the claim of the bankruptcy trustee pursuant to § 522(b)(2)(a).

SHEPLER (8/20/87) (78 B.R. 217)

Debtor's motion to avoid the lien of Bank of Holmen on certain office equipment pursuant to 11 U.S.C. § 522(f) is denied. Bank legally took possession of collateral upon default of debtor prior to bankruptcy filing. In so doing, bank's security interest became "possessory." Bank's security interest, therefore, is no longer voidable, due to "nonpossessory, nonpurchase-money security interest" requirement of § 522(f).

SIMON BROTHERS/WALTER BOWE (11/25/91) (Unpublished)

• 11 U.S.C. § 553 does not create an independent right of setoff; it limits the use of setoff rights already available under state law.
• Before determining whether setoff was appropriate pursuant to § 553, state law right of setoff must first be established. That issue is a proper one for determination by a state court.
• Whether the language in defendant Agri-Supply's bylaws is sufficient to grant it a lien under Wisconsin law is a proper matter for state court determination.

SMITHEY (9/7/00) (Unpublished)

Creditor mailed claim prior to claims bar date but it was not received until after the bar date expired. The trustee objected and sought to classify the claim as a "tardily filed claim" under 11 U.S.C. § 726(a)(3). The Court rejected use of the "mailbox rule" and held that there was no issue as to receipt of the claim. Since filing constitutes delivery and receipt by the proper party, the proof of claim was filed after the bar date. The trustee’s objection to the claim was sustained.

SPORE (6/30/89) (105 B.R. 476)

Parties sought Court determination regarding validity and extent of judgment lien on nonexempt real estate of debtors who had received chapter 7 discharge. Court holds that bankruptcy court discharge voided judgment against debtors. Further, state court's subsequent order of satisfaction -- granted pursuant to Wisconsin Stat. § 806.19(4) providing for satisfaction of judgments upon showing of bankruptcy discharge -- voided judgment lien on nonexempt real estate. Judgment lien is voided pursuant to Wisconsin Stat. § 806.21, which provides for voiding of lien upon satisfaction of judgment.

STANIFORTH (4/24/90) (116 B.R. 127)

• Trustee's failure to timely object to debtor's claimed exemption cannot create an exemption which would otherwise have no legal basis. [NOTE: But see Taylor v. Freeland & Kronz, 118 L. Ed. 2d 280 (1992) -- trustee's failure to timely object to debtor's claimed exemption prevented him from challenging the validity of the exemption regardless of whether the debtor had a colorable statutory basis for claiming the exemption.]
• Self-employed dentist's independent retirement accounts were exempt from creditors' claims pursuant to Wis. Stat. § 815.18(31) -- the exemption provision for "interest of any person in any employees' benefit plan."

STELZER (6/10/93) (Unpublished)

• Plaintiff insurance company's claim that $638.26 it paid for damages done to house of its insured by debtor driving while intoxicated should be nondischargeable is dismissed. Debtor's actions did not constitute "willful and malicious" injury pursuant to 11 U.S.C. § 523(a)(6) because he did not intentionally or knowingly damage the insured's house. Drunk driving is not per se "willful and malicious." There may be fact situations involving drunk driving so egregious as to constitute "willful and malicious" injury, but this is not such a case. Agreeing with Cooper v. Noller (In re Noller), 56 B.R. 36 (Bankr. E.D. Wis. 1985).
• Plaintiff's claim for nondischargeability pursuant to 11 U.S.C. § 523(a)(7) is likewise dismissed. First-time offense under Wis. Stat. § 346.63 (driving while intoxicated) is technically not a criminal act. State court judgment cannot therefore be found to be "payable to or for the benefit of a government unit" as required by § 523(a)(7).
• 11 U.S.C. § 523(a)(9) is inapplicable because this case involved damage to property rather than to a person.

STEVENS POINT ASSOCIATED (12/24/91) (Unpublished)

• Absent a reasonably clear manifestation to create a trust, no trust relationship existed between the movant Manheim Auto Auctions and the debtor, a Wisconsin car dealership.
• Absent a reasonably clear manifestation by both parties of an intent to enter into a security agreement, no security interest was given in cars transferred to debtor car dealership for sale to third parties. Mere retention of possession of a vehicle's certificate of title does not automatically result in a security interest attaching to the vehicle.
• Movant Auto Auctions failed to show that either of two potentially applicable means of perfecting their alleged security interest in vehicles transferred to debtor had been implemented by them. Perfected security interest of floor-plan-financing bank therefore took priority over any interest Auto Auctions might have retained in the vehicles.

STOLP (5/23/90) (116 B.R. 131)

Plaintiff Joan Stolp's motion for declaratory judgment excluding her interest in debtor's (plaintiff's former husband) military pension from the bankruptcy estate is granted. Any existing interest which the debtor had in that portion of his pension was dissolved by the state court divorce decree which granted portion of pension to debtor's wife. Decree entitled debtor's former wife to receive her portion of pension benefits directly from the government. Former wife's share was thus not property of the bankruptcy estate.

STONE (12/6/99) (243 B.R. 40)

The debtors brought an adversary proceeding to determine whether the post-petition maintenance fees that accrued on the debtors' campsite were dischargeable in their bankruptcy, and seeking sanctions against the defendant for violating the automatic stay in attempting to collect a debt.  The court (Judge Martin) held that the 11 U.S.C. § 523(a)(16) requirements for an exception to discharge had not been met because (1) the unit is not a dwelling unit; (2) the debtor never physically occupied the unit; and (3) the debtors never rented or received rent from the unit.  The court then, following the holding of the Seventh Circuit in In the Matter of Rosteck, 899 F.2d 694 (7th Cir. 1990), held that the post-petition maintenance fees were dischargeable in the debtors' bankruptcy because the debt was for future assessments based on a pre-petition contract to pay, and the debt arose pre-petition.  The court refused to impose sanctions on the defendants because if the defendants attempted to collect a debt from the debtors they did so under a good faith belief, supported by case law, that the debt was nondischargeable.

STRACK (11/8/94) (Unpublished)

In wife's action to have certain debts declared non-dischargeable under 11 U.S.C. § 523(a)(5), the court determined that a portion of the debts which the debtor was to have indemnified his former spouse from constituted obligations "actually in the nature of" alimony, maintenance or support. The issue of dischargeability under § 523(a)(5) is a matter of federal law, not state law. The court found that it was not possible to consider the debtor's present financial condition or the changes in circumstance of both parties since the time of the divorce. The purpose of the section was to look at whether the obligation was intended as support at the time of the divorce. As a result, the court found certain obligations to have been contemplated as support, and others, including a debt to the wife's mother, to have been intended as property division.

STRAIGHT ARROW CONSTRUCTION (3/13/08) (393 BR 652)

Trustee’s objection to claims. Debtor is a general contractor. Two subcontractors filed claims—“secured” by operation of Wisconsin’s theft by contractor statute. Wis. Stat. § 779.16. Wisconsin Dairies v. Citizens Bank & Trust controlled the outcome. 160 Wis. 2d 758 (Wis. 1991). The claims were secured only to the extent that the funds were traceable to specific construction projects on which the creditors worked, and only to the extent that funds from those projects were in the possession of the trustee. The remainder of the creditors’ claims were unsecured.

SYVERSON (9/4/92) (Unpublished)

• Chippewa County judgment docketed against property of debtors in Williams County, North Dakota, within 90 days of debtors' bankruptcy filing constitutes a "transfer" of property of the debtor for purposes of preference determination pursuant to 11 U.S.C. § 547(b). Docketing of judgment creates a lien under North Dakota law. "Transfer" is broadly defined under 11 U.S.C. § 101(54); case precedent supports finding that a docketing constitutes a "transfer" for preference purposes. Other elements of preference are present here as well.
• Trustee did not waive his right to challenge creditor's lien by signing stipulation which enabled Court to enter agreed order avoiding lien of creditor to extent of debtors' allowed exemption in the property. Trustee correctly asserted that he did not raise the preference issue at time of debtors' motion to avoid lien nor was he obligated to do so. Trustee may therefore void the lien of creditor; creditor will share in any ultimate distribution to unsecured creditors.

TAGGATZ (9/29/89) (106 B.R. 983)

Trustee's motion for turnover of property of the estate pursuant to 11 U.S.C. § 542(b) against bank which had issued letter of credit in favor of debtor is denied. Agreement between debtor and bank called for bank to fund the unfunded portion of a promissory note upon fulfillment of certain conditions precedent by the debtor. Although agreement is found to constitute an executory contract pursuant to 11 U.S.C. § 365, it is not assumable by the trustee due to the exception contained in 11 U.S.C. § 365(c)(2) -- the agreement constitutes "[a] contract to make a loan, or extend other debt financing or financial accommodations, to or for the benefit of the debtor, or to issue a security of the debtor."

TELEMARK MANAGEMENT CO., INC. (12/5/86) (77 B.R. 1022)

Motion requesting extension of time to file appeal from bankruptcy court order -- filed more than 20 days after district court dismissed appeal as untimely filed -- is itself untimely and is therefore denied.

TESAR (11/7/91) (Unpublished)

• Combined language contained in document entitled "SearsCharge Plus Security Agreement" and in sales receipts, both of which were signed by the debtor, was sufficient to grant defendant Sears a security interest [pursuant to Wis. Stat. Ann. §§ 409.105(m) and 409.203] in items of merchandise purchased by the debtors on credit.
• Description of merchandise contained on the sales receipts signed by the debtor "reasonably identifies" the collateral for purposes of Wis. Stat. § 409.110.
• Conduct of defendant Sears did not constitute commercial unconscionability under Wisconsin law.

THOMPSON (2/1/88) (82 B.R. 985)

Debtors' motion to avoid liens pursuant to 11 U.S.C. § 522(f)(2) on various farm tools and implements is granted. Farm implements of substantial value constitute "tools" or "implements" of debtor-farmer. Bankruptcy code provision allowing debtors to avoid nonpurchase money liens which impair exemptions does not provide for unconstitutional taking of creditor's property without just compensation; nor does it violate due process clause of Fifth Amendment.

TOMAS-HAARSTICK (12/7/01) (Unpublished)

This case involves hypothetical discharge and its procedural requirements.  Plaintiff filed an adversary complaint to determine whether a debt was dischargeable and the debtor answered.  But the plaintiff filed the initial complaint thinking it was against debtor’s husband who has a similar first name as debtor.  Plaintiff amended the complaint by adding allegations against debtor’s husband and objecting to the hypothetical discharge of his tortious debt.  However, plaintiff did not seek the debtor’s or court’s consent before amending the complaint.  In addition, the plaintiff did not name debtor’s spouse on the amended complaint.  The time limit to object to debtor’s discharge had since passed.  Debtor filed a motion to dismiss the adversary proceeding contending that any complaint seeking to deny debtor’s spouse’s hypothetical discharge is now time barred.  Plaintiff responded by filing a motion to enlarge the time within which to bring the action under § 523(a)(6), which motion in itself is untimely but which was considered as a motion to further amend the complaint under Fed. R. Civ. P. 15(c).  It was determined that the motion to amend the complaint to name debtor’s spouse as a defendant is granted

TOZER (6/9/08) (392 BR 758)

Chapter 13 plan modification. The debtor’s ex-attorney sought to modify the chapter 13 plan to extend payments and pay attorney’s fees. In the Seventh Circuit, § 1329 imposes no threshold requirement of a change in financial circumstances. The attorney was the “holder of an allowed unsecured claim,” thus he could seek modification to “extend . . . time for such payments.” § 1329(a). Modification of the plan was approved.

TRI-STATE HOMES, INC. (12/31/86) (Unpublished)

Application of debtor's attorney for allowance of fees and costs totaling $62,988.25 as an administrative expense is denied. Debtor's chapter 11 plan was confirmed on November 26, 1984. Case was converted to chapter 7 on March 21, 1986. Debtor's assets were sold at auction on July 16, 1986; auction proceeds totaled $296,718.50. All property sold at auction was subject to valid, unavoided security interests. Security interests attached to proceeds of auction pursuant to 11 U.S.C. § 552(b). 11 U.S.C. §§ 725 and 726 and bankruptcy rule 6007 specify how property of estate is to be distributed. It is unlikely that there is any equity in remaining property above claims of secured creditors. While applicant attorney may well have valid administrative claim pursuant to 11 U.S.C. § 503, there are no assets available for distribution toward such claims. Should unsecured assets later become available, they would be distributed in accordance with 11 U.S.C. § 726.

VANG (4/15/05) (324 B.R. 76)

Debtor sought discharge of student loans. According to testimony at trial, the debtor was mildly mentally retarded and had difficulty speaking, reading, and writing the English language. In addition, he lived at or about the poverty level and cared for two preschool age sons, both of whom suffered from developmental delays. Accordingly, the Court discharged the debt as an "undue hardship."

VANGEN (11/23/05) (334 B.R. 241)

The debtor placed some $136,000.00 into retirement-related annuities immediately prior to her bankruptcy. The debtor’s former husband and the bankruptcy trustee both objected to her exemption claims. They contended that her bankruptcy planning justified denial of her exemption under Wis. Stat. § 815.18(10), which provides that an exemption may be denied if the asset was procured, concealed, or transferred with the intention of defrauding creditors. The court overruled the objections, finding that the debtor’s conduct was permissible.

VAZQUEZ (3/3/05) (325 B.R. 30)

Trustee sought approval of settlement agreement with debtor. The primary creditor objected to the settlement and offered to “fund” ongoing litigation with the debtors. The trustee has the burden of demonstrating that a settlement proposal is both reasonable and in the best interests of the bankruptcy estate. The court must consider four factors when reviewing a proposed settlement: (1) probability of success in the litigation; (2) the difficulties, if any, to be encountered in collection; (3) the complexity of litigation and the expense, inconvenience, and delay associated with it; (4) the paramount interest of creditors and a proper deference to their reasonable views in the premises. The court found that despite the creditor’s promise to “fund” future litigation, all other circumstances supported approval of the settlement and the creditor’s perspective was unreasonable.

VOELKER (12/23/93) (164 B.R. 308)

Bankruptcy court found that federal tax lien does not attach to items claimed exempt by debtor under 26 U.S.C. § 6334(a). Exemption statutes are to be liberally construed in favor of debtors. Enumerated items in § 6334(a) are not only exempt from levy, but from reach of federal tax lien as well. 26 U.S.C. § 6331(b) defines "levy" as "the power of distraint and seizure by any means."

District court reversed the bankruptcy court ruling and remanded for further proceedings. The Seventh Circuit affirmed the district court's decision, concluding that the tax lien did indeed attach to exempt property.

VOSEPKA v. GEIGER (11/9/05) (Unpublished)

This court received a complaint objecting to the dischargeability of a debt on the last day to file such complaints. The filing fee accompanying the complaint was paid by the creditor’s personal check. Court staff returned the complaint and filing fee to the creditor under the belief that the fee could not be paid by personal check. However, only personal checks of debtors cannot be accepted. By the time the creditor re-submitted his complaint and filing fee, it was 10 days past the deadline for filing and the debtor objected to the complaint as untimely. The court found for the creditor, holding that there is no authority for disallowing personal checks of non-debtors, therefore, the filing fee and the complaint should have been accepted by the court. The creditor met the requirements for timely filing, and the complaint was allowed.

WAGNER (2/4/87) (Unpublished)

• Debtors' motion to avoid lien on automobile, snowmobile and business inventory pursuant to 11 U.S.C. § 522(f) is denied. General rule in this jurisdiction is that liens on automobiles cannot be avoided. Citing In re Nowak, 48 B.R. 290 (W.D. Wis. 1984). Snowmobile does not constitute "tool of trade" for debtors' snowmobile repair business. Evidence showed snowmobile racing was not bona fide business of debtors. Citing In re Weinbrenner, 53 B.R. 571 (Bankr. W.D. Wis. 1985). Business inventory held for sale does not constitute "tool of trade" of debtors. Such inventory is not "tool" or "implement" within meaning commonly ascribed to those words.
• Debtors may avoid liens on actual tools and implements used in their repair business.
• Debtor's wife is found to be engaged in debtors' business and can therefore exercise lien avoidance pursuant to 11 U.S.C. § 522(f). Citing In re Flake, 33 B.R. 275 (Bankr. W.D. Wis. 1983)

WINK (1/15/92) (137 B.R. 297)

• State of Wisconsin may not effectively "opt out" of the federal lien avoidance provision by defining its exemptions in such a way so as to exclude encumbered property.
• Proper inquiry under 11 U.S.C. § 522(f) is to inquire whether the debtor would be entitled to a particular exemption under state law but for the existence of a lien. Wisconsin exemption laws can be reconciled with the lien-avoidance provisions of the bankruptcy code; federal law takes precedence over state law in cases involving those lien-avoidance provisions.

WEDEWARD (9/29/04) (316 B.R. 705)
Ex-husband brought adversary proceeding to establish nondischargeability of marital debts pursuant to section 523(a)(5). The Court, Judge Robert Martin, held that Matter of Woods, 561 F.2d 27, 29 (7th Cir. 1977) established that, while the nature of the obligation is ulitmately a bankruptcy court issue, if the intentions of the parties and the divorce court are clear, there is no need to consult state law to determine whether an obligation is in the nature of maintenance, alimony, or support or part of a property settlement. Nichols v. Nichols, 469 N.W. 2d 619, 625 (Wis. 1991) provides that there is nothing to prevent divorcing parties from specifically waiving maintenance and making up disparities in financial positions by assigning and assuming repsonsibility for marital debts, thereby keeping as part of support what otherwise might be characterized as a property settlement.

WRIGHT (12/1/95) (196 B.R. 97)

Dispute between two creditors over purchase money status of one creditor's lien on a tractor. Creditor claimed to have perfected its PMSI by mailing the UCC-1 financing statement to the appropriate office for filing. However, there was no record of the financing statement having been filed, or even received by the filing office. Creditor contended that the common law "presumption of receipt" mandated that it be deemed to have filed the financing statement when it was mailed.

Court held that the creditor had to demonstrate actual receipt of the financing statement by the filing office. Although Wis. Stat. § 409.403(1) relieves the creditor of any responsibility for the filing officer's failure to properly docket the financing statement, the creditor still must prove that the item was actually presented for filing. The "presumption of receipt" is insufficient to do so given the need to prove not only the fact of receipt but the time of filing for priority purposes. The court also rejected the creditor's argument that the second lienholder's claim to the tractor should be subordinated under either unjust enrichment or the principles of equitable subordination.

WUNDROW (1/24/92) (Unpublished)

• Complete liquidation of partnership assets is not required in order for winding up and termination of the partnership to occur. Debtors, members of a terminated family farm partnership, each qualify as a "debtor" for purposes of Wisconsin's exemption statute.
• Exemption rights are determined based on circumstances present at the time of filing of the bankruptcy petition. Fact that debtors were engaged in farming at time of filing and have expressed a desire to continue doing so is sufficient to entitle them to an exemption in farm machinery.

WYSS (9/27/06) (355 B.R. 130)

Creditor sought determination that its claims against the debtors were nondischargeable. The creditor alleged that the debtors had misrepresented the existence of certain accounts receivable which served as the borrowing base of a line of credit. The court found that, under the facts of the case, the debtors’ loan obligation was not a factoring arrangement but a capital loan. The debtors did not “obtain” an extension of credit from the plaintiff through the use of the allegedly fraudulent borrowing base certificates. At most, the certificates induced the creditor to forbear collection activities, but it did not surrender or lose any legal rights as a result of its reliance on the documents. The debtors also did not engage in fraud in a fiduciary capacity or harm any property interest of the plaintiff. The plaintiff’s claim was discharged.

ZERSEN (9/29/95) (189 B.R. 732)

Bank objected to confirmation of chapter 13 plan where the debtors proposed to pay the bank only what was owed on a mortgage loan on their home. The bank contended that the home constituted collateral for a business note as well, and that the home loan was secured by the guaranty of certain third parties. The court found that the effect of the co-debtor stay of 11 U.S.C. § 1301 permitted the debtors to pay obligations guaranteed by third parties under a chapter 13 plan; it was only if the plan did not provide for full payment of the guaranteed obligation that the creditor would be permitted to pursue the guarantor.

Furthermore, given the bank's lack of documentation, the only secured obligation was the home loan. The business debt was not secured by the home, as the documents were ambiguous and those ambiguities would be construed against the bank as the drafter of the documents. Accordingly, the bank's objections to confirmation were overruled, and the plan was confirmed.

ZOGLMAN (12/5/86) (Unpublished)

Debtor's motion to dismiss plaintiff's Section 523 adversary proceeding is denied for failure to timely file supportive legal memorandum.

ZOGLMAN (6/26/87) (78 B.R. 213)

Obligation to debtor's former wife, stemming from wife's payment of tax assessment for which she and debtor were jointly liable, is excepted from discharge. Former wife did not act as "volunteer" when she paid tax assessments; wife can therefore invoke equitable doctrine of subrogation to assert nondischargeability claim against debtor's bankruptcy estate. Persons who have interests of their own to protect are not "volunteers" for subrogation purposes. Former wife is therefore subrogated to the claim of the IRS. Since debtor's obligation to IRS would have been excepted from discharge had it not been paid, debt owed to former wife stemming from that obligation is excepted from discharge.