Illinois Bankruptcy Options - Credit Counseling

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

Lamie v. United States, No. 02-693 (2004), Argued November 10, 2003, Decided January 26, 2004, CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT. Prior to 1994, 11 U.S.C. 330(a) authorized courts to award trustees, examiners, professional persons employed under 11 U.S.C. 327, or debtors' attorneys reasonable compensation for services rendered. In 1994, Congress amended 11 U.S.C. 330(a) by deleting "or to the debtor's attorney" from what was 11 U.S.C. 330(a) and is now Sec. 330(a)(1). This change was apparently a legislative drafting error. The section is missing "or" that infects its grammar. And its inclusion of "attorney" in what was Sec. 330(a)(1) and is now Sec. 330(a)(1)(A) defeats the parallelism between current Secs. 330(a)(1) ("trustee, examiner, or professional person") and 330(a)(1)(A) ("trustee, examiner, professional person, or attorney"). In this case, the petitioner filed an application seeking attorney's fees under new 11 U.S.C. 327330(a)(1) for the time he spent working on a behalf of a debtor in a chapter 7 proceeding. The Government objected. Petitioner admitted he was not employed by the trustee or approved by the court , but nonetheless contended new 11 U.S.C. 330(a)(1) authorized a fee award because he was a "debtor's attorney." In denying the petitioner's application, the Bk. Court, District Court, and 4th Circuit all held 11 U.S.C.330(a)(1) does not authorize payment of attorney's fees to debtors' attorneys unless the attorney has been appointed under Sec. 327. Held: under the Code's plain language, Sec. 330(a)(1) does not authorize compensation awards to debtors' attorneys from estate funds unless employed under 11 U.S.C.327.

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).