Avoid Mistakes When Planning and Filing Illinois Bankruptcy Cases

The best-planned bankruptcy cases go unnoticed. A few debtors glide through the system without attracting attention and receive full discharges in record time. Luck is not involved, but rather each successful debtor begins planning strategically a few weeks or months in advance. These debtors know something that you don’t.

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Recent Notable Opinions of the Supreme Court of The United States:

Kontrick v. Ryan, No. 02-819 (2004), Argued November 3, 2003, Decided January 14, 2004, CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT. A creditor in Chapter 7 liquidation proceedings has "60 days after the first date set for the meeting of creditors" to file a complaint objecting to the debtor's discharge. Fed. Rule Bankruptcy Proc. 4004(a). The bankruptcy court may extend that period "for cause" on motion "filed before the time has expired." Fed. Rule Bankruptcy Proc. 4004(b). Reinforcing Rule 4004(b)'s restriction on extension of the Rule 4004(a) deadline, Rule 9006(b)(3) allows enlargement of "the time for taking action" under Rule 4004(a) "only to the extent and under the conditions stated in that rule," i.e., only as permitted by Rule 4004(b). Held: a debtor forfeits the right to rely on Rule 4004 if the debtor does not raise the Rule's time limitation before the court considers a creditor's objection to discharge. Only Congress may determine a lower federal court's subject matter jurisdiction.  U.S. Const., Art. III, Sec. 1. The Code establishes objections to discharges as core proceedings within the courts' jurisdiction. 28 U.S.C. Sec. 157(b)(2)(J). Congress did not include time constraints within the Code. As Bankruptcy Rule 9030 states, the Bankruptcy Rules shall not be construed to extend or limit the jurisdiction of the courts. The filing deadlines prescribed in Rules 4004 and 9006(b)(3) are claim-processing rules that do not determine subject matter jurisdiction.

Recent Notable Opinions from Illinois Bankruptcy Courts

In re Sims, Case No. 02-90737, Adversary No. 02-9040, April 6, 2004 before the Illinois Bankruptcy Court for the Central District. After the Sims initiated Illinois bankruptcy in a Chapter 7 proceeding, a creditor objected to discharge alleging fraud based upon the receipt of a large insurance settlement that the Sims spent prior to the date of filing. The Court nevertheless allowed discharge. Pursuant to 11 U.S.C. 727(a)(2)(A) debtors filing Illinois bankruptcy must be denied a discharge where it is found that the debtor, within one year before the date of filing, with the intent to hinder, delay, or defraud a creditor or an officer of the estate has transferred, removed, destroyed, mutilated, or concealed property of the debtor. An Illinois bankruptcy court must find that the debtor acted with actual intent requiring a showing of extrinsic evidence suggesting that fraud exists. In re Smiley, 864 F.2d 562 (7th Cir, 1989). Because direct evidence of a debtor's intent usually is unavailable, intent may be inferred from the circumstances surrounding the debtor's conduct. In re Smiley, supra at 566. The question of intent generally will depend upon assessment of the credibility of witnesses and the court's assessment of that credibility. In re Bonnett, 895 F.2d 1155 (7th Cir. 1989). The burden of proof is placed upon the party filing the complaint in an adversary proceeding to establish all elements of 11 U.S.C. 727 by a preponderance of the evidence. Grogan v. Garner, 111 S.Ct. 654 (1991).