South Carolina Bankruptcy Case Law Update

Some of Debtor’s payment to sister for her credit card use held to be a preference: Section 548 provides in relevant part: (a) The trustee may avoid any transfer of an interest of the debtor in property . . . that was made . . . within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily (2)(A) received less than a reasonably equivalent value in exchange for such transfer or obligation.

Transfers made or obligations incurred solely for the benefit of third parties do not furnish reasonably equivalent value, . . . unless the debtor’s net worth is unaffected because [she] received a direct or indirect economic benefit from the transfer. In Re Guerrera, 225 B.R. 32 (Bankr. D. Conn. 1998)

Reopening a Chapter 7 no asset case to add a creditor: To reopen a Chapter 7 bankruptcy case, the Debtor must must met his / her burden to
establish cause to reopen. In this case, Debtor was held to not have met his burden because reopening the case merely to amend schedules would not affect the dischargeability of the debts to be added. If the debt was fraud, it was not dischargeable and if the debt was not fraud, it was already discharged.

“In a no-asset chapter 7 case, unless ordered otherwise, all of a debtor’s prepetition debts—both those scheduled and those not scheduled—are discharged upon entry of the discharge order, except for those debts which are of the kind specified in section 523(a)(2), (4), or (6)(Fraud).” Rollison, Western District of Virginia

Automatic stay under 11 U.S.C. § 362(a) is inapplicable LLC equipment for which Debtor is a personal guarantor. Citing In re Brittain, 435 B.R. 318, 320 (Bankr. D.S.C. 2010), the court holds that “the record here clearly indicates that the Equipment is property of the
LLC and not the Debtor. After reviewing §§ 362, 541, and 1207, the Court cannot find any language therein, and Debtor failed to call the Court’s attention to any language or applicable authority, that justifies the inclusion of the Equipment as property of Debtor’s bankruptcy estate or extends the automatic stay to the Equipment based on this record.” C/A No. 18-04549-HB

$1,500.00 for the attorney’s fees awarded for post-petition repossession of a vehicle. The court determined that review of the “evidence and testimony makes clear that Defendant received notice of the bankruptcy case, had actual knowledge, and chose to proceed with repossession of Plaintiff’s vehicle despite this notice.” Adv. Pro. No. 18-80074-HB, p7

South Carolina Bankruptcy Case Law Update