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Illinois

Must a Debtor Be Destitute Before Discharging Student Loans?

Unemployed for 16 months, surviving on food stamps, and living rent-free enabled a debtor to discharge student loans.

PACA Doesn’t Give Rise to Denial of Discharge for Defalcation, Chicago Judge Says

A PACA trust lacks the hallmarks of a trust, so a failure to pay a produce supplier doesn’t give rise to a nondischargeable debt for defalcation while acting in a fiduciary capacity, Judge Goldgar says.

Medical Bills Are Held to Be Consumer Debts, Invoking the Means Test

Someone forced into bankruptcy on account of medical bills will also be forced into chapter 13.

Receivership Court May (Sometimes) Bar the Filing of an Involuntary Bankruptcy

Court weighs the relative advantages of receivership versus bankruptcy in deciding whether to bar the filing of an involuntary bankruptcy.

Failure to Raise a Stern Objection Violates a Lawyer’s Standard of Care

The lawyer whose waiver led to Wellness International avoided malpractice by the skin of his teeth.

A Judgment Lien on Entireties Property Isn’t Avoidable in Illinois, Seventh Circuit Says

A judicial lien impairing a homestead exemption is avoidable in some states under Section 522(f), but not in others.
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Did Segal Survive Butner in Defining Property of the Estate?

Judge Perkins in Illinois says the ‘sufficiently rooted’ test from Segal v. Rochelle did not survive Butner and the adoption of the Bankruptcy Code.

Lenders Admonished to Demand Nothing More in Plans than the Law Allows

Judge Hunt in Chicago tells debtors’ counsel to oppose inclusion of unjustifiable provisions in chapter 13 plans, even if it means contested confirmation hearings.

Chicago Case May Resolve the Circuit Split on the New Value Defense

Bankruptcy judge reluctantly follows precedent where the Seventh Circuit is in the minority on the new value defense.

District Court Limits Bankruptcy Judges’ Ability to Enact Local Rules

Local rules may not impose confirmation requirements beyond those contained in the statute.

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