Individual taxes, penalties and interest forgiven in a Chapter 7 versus a Chapter 13 bankruptcy.

Taxpayers may have tax-related government claims (i.e., individual taxes, penalties and interest) forgiven (discharged) in bankruptcy by filing a bankruptcy petition at the proper time. However, haphazard results will occur unless the tax practitioner knows whether a Chapter 13 or a Chapter 7 bankruptcy is suitable for his client. Also, reducing taxes for a client who consults his adviser just before filing time is difficult. It is as hard, after the fact, to position the taxpayer (debtor) for a useful bankruptcy filing to discharge taxes. Practitioners with a working knowledge of how a Chapter 7 or a Chapter 13 bankruptcy affects delinquent individual taxes, penalties and interest will be able to avoid leaving the results of bankruptcy to chance.

The statute of limitations allows the IRS 10 years to collect taxes,(1) starting after the date of formal recording by the Service of a taxpayer's liability (date of assessment). The collection period has been extended from six to 10 years for taxes not expiring under the previous six-year collection period as of Nov. 5,1990.(2) With the longer tax collection period and the recent recession, tax practitioners may have clients with accumulating tax debts and limited resources.

The categories that prevent the discharge of individual taxes, penalties and interest in bankruptcy are (1) government priority claims, (2) government exceptions to discharge and (3) government tax liens. Unless paid, government priority claims survive a Chapter 7 or a Chapter 13 bankruptcy.(3) Certain government claims for taxes, interest and penalties survive a Chapter 7 bankruptcy but are discharged in a Chapter 13 bankruptcy.(4) Finally, government tax liens attaching before the bankruptcy filing date generally survive any Chapter 7 or Chapter 13 bankruptcy discharge of taxes, penalties and interest.(5)

Government Priority Tax Claims

Certain government priority tax claims survive either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.(6) The nondischargeable government priority tax claims identified in the Bankruptcy Code are:

* Taxes that are due, including extensions, within three years of the bankruptcy petition filing.(7) The three-year period begins from the final due date of the return, including extensions.(8) For example, a debtor who owes 1989 Federal income taxes due Apr. 15, 1990 should not file a bankruptcy petition until after Apr. 15, 1993 to avoid paying 1989 taxes as a priority claim. If the bankruptcy petition is filed on or before Apr. 15, 1993, it is filed too early to prevent the discharge of 1989 taxes. The court may deny a debtor's motion to dismiss a bankruptcy petition filed too early to discharge the 1989 taxes if the purpose is to refile the bankruptcy petition at a later date. The United States is prejudiced by losing potential tax collections if the bankruptcy petition is dismissed and subsequently refiled.(9)

* Any taxes assessed within 240 days before the bankruptcy petition filing date.(10) A tax assessment is required before the IRS can demand payment and collect the tax through administrative powers.(11) For example, assume the 1988 taxes due on Apr. 15, 1989 are assessed on Mar. 30, 1992. Any bankruptcy petition filed within the next 240 days from Mar. 30, 1992 gives the 1988 taxes a nondischargeable priority status. To avoid such status, the taxpayer should wait 240 days after Mar. 30, 1992 before filing the bankruptcy petition.

The 240-day period increases if the taxpayer files an "offer in compromise" with the IRS. An offer in compromise is a contract agreement with the IRS (statutory contract agreement) in which the taxpayer agrees with the Service to pay less than the full amount of taxes, penalties and interest due.(12) The 240-day period is suspended temporarily (tolled) while the offer of negotiation is before the IRS. An additional 30 days is added to the original 240-day period once the offer is withdrawn or otherwise terminated. However, if an assessment of tax liability is made but the tax is not collected within 240 days, filing an offer in compromise thereafter will not revive the IRS's priority. In this circumstance, the offer in compromise will not prevent the discharge of tax.(13)

* Employment and FICA taxes collected. Employees' payroll withholdings (trust fund taxes) held for the exclusive use of the government have no time limits restricting their priority status.(14) This type of assessment, commonly termed the 100% penalty, for failing to withhold trust fund taxes is considered a tax rather than a penalty. The 100% penalty cannot be discharged in any bankruptcy.(15)

* The employer's one-half share of employment tax. For an employment return due within three years of the bankruptcy petition filing date, the employer's share of employment tax is a nondischargeable priority tax claim.(16) The employer's share of employment tax includes the employer's one-half share of FICA tax.

* A penalty that compensates for an actual monetary loss, such as prebankruptcy petition interest on taxes.(17) Prebankruptcy filing date (prepetition) interest does not punish (is not punitive), but rather compensates the government for delays in using money owed.(18) Any priority tax claim will attach with it the prepetition interest as a priority claim.(19) Prepetition interest survives bankruptcy if the underlying tax obligation survives bankruptcy.

* Taxes not assessed before, but assessable under law. Taxes not assessed before, but assessable under law, are elevated to a priority status.(20) For example, adjustments available during a normal tax audit or pending Tax Court case are elevated to a priority status. Thus, if a tax was never assessed and the general three-year statute of limitations for assessment has expired, the tax is not entitled to priority. Conversely, if the statute of limitations is open for a previously unassessed tax, it is entitled to priority status.

However, any unassessed tax not due within three years of bankruptcy that is assessable because of fraud, failure to file or delinquent filing is not elevated to a priority government tax claim. Even though the circumstances listed are not elevated to government priority claims, they do survive a Chapter 7 bankruptcy. The bankruptcy policy for this treatment of tax fraud, failure to file or delinquent filing avoids reducing the estate share available to the private general creditors due to the debtor's deliberate misconduct. Not giving priority to a tax claim means that the IRS can still collect part or all of the debt from the estate, but must do so as a general creditor sharing proportionately (pro rata) with other general unsecured creditors.(21) After a Chapter 7 bankruptcy estate is closed, the IRS can still proceed against the taxpayer for tax not discharged due to fraud, failure to file or delinquent filing.

The remaining government tax priorities concern government claims for property taxes assessed within one year of the bankruptcy filing date, excise taxes due within three years of the date of filing and certain customs duties.(22)

Unless they are settled, all of these government priority claims survive either a Chapter 7 or a Chapter 13 bankruptcy.

Chapter 13 Bankruptcy Considerations

A Chapter 13 plan is a payment plan that includes postbankruptcy filing date (postpetition) income earned, while a Chapter 7 bankruptcy is a liquidation process. Under a Chapter 13 plan, the debtor agrees to make future payments that are not required in a Chapter 7 bankruptcy.

Except for the government priority tax claims listed above, all unsecured government tax claims are considered general obligations of the bankruptcy estate in a Chapter 13 bankruptcy. Am unsecured tax claim is a tax claim without a valid tax lien filed against the property of the debtor. All unsecured taxes, penalties and interest that are not priority claims are dischargeable in a Chapter 13 bankruptcy. For example, taxes that are due outside of the three-year period before the bankruptcy filing are discharged in a successfully completed Chapter 13 bankruptcy even if they involve fraud or failure to file. A Chapter 7 bankruptcy, however, does not discharge taxes due or penalties for tax years involving fraud or failure to file.(23) Thus, a successful Chapter 13 plan may discharge taxes due on unfiled returns, delinquent returns, fraudulent returns or tax penalties, none of which are discharged under a Chapter 7 bankruptcy.

Bankruptcy can end the efforts of an IRS collection agent who is unwilling to work with a taxpayer. A bankruptcy "stay" terminates any act to collect, assess or recover claims against the debtor. The stay is effective as of the date of the bankruptcy petition filing. It continues until the case is closed, the case is dismissed, or a discharge is granted or denied. Thus, for the duration of the Chapter 13 payment plan all creditors, including the government, must seek permission of the bankruptcy court before avoiding the bankruptcy stay.(24) The government must request a determination by the court before assessing prepetition taxes.(25) Any assessment by the IRS during the bankruptcy stay without permission by the court is void from the beginning rather than voidable at a later date.(26)

The three-year statute of limitations for assessing taxes is suspended during bankruptcy,(27) as is the 10-year statute of limitations for collecting taxes.(28) The Chapter 13 filing also suspends the periods for calculating the nondischargeable tax debts and late filed returns, should the debtor convert the Chapter 13 bankruptcy to a Chapter 7 bankruptcy liquidation.(29) In effect, the Chapter 7 bankruptcy reverts back to the filing date of the Chapter 13 bankruptcy for computing taxes, penalties or interest that may be discharged.

Only a penalty that is awarded for actual damages such as prepetition interest is a priority government claim.(30) All penalties that do not compensate for actual damages are discharged in bankruptcy after the successful completion of all payments under the Chapter 13 plan.(31) This is possible because only priority claims such as prepetition interest require full payment under a Chapter 13 payment plan.(32)

Postpetition interest on an unsecured claim is discharged under a successfully completed Chapter 13 plan.(33) If the "best interest of creditors test" is satisfied, no postpetition interest on an unsecured priority claim is required.(34) The best interest of creditors test provides that the total amount of the payments to the creditor, discounted to present value, must at least equal the amount the unsecured creditor would receive out of the estate in a straight liquidation.

For example, if the IRS would receive approximately $5,000 in a straight liquidation, the best interest of creditors test requires only that the IRS receive payments over the life of the plan equal to a $5,000 present value. If the present value of payments to be made over the life of the plan is less than the $5,000 liquidation interest of the IRS, then additional payments to the IRS can be required in the form of interest. If the present value of payments to be received under the Chapter 13 plan is greater than the $5,000 liquidation value, the best interest of creditors test is satisfied. When the best interest of creditors test is satisfied, payments are made over the life of the plan to satisfy priority claims without postpetition interest.(35)

If the estate has few or no assets, the best interest of creditors test will always be satisfied because payments from future earnings of the taxpayer would always exceed the present liquidation value of the estate to the creditors. In this situation, no postpetition interest is required for priority claims in a Chapter 13 bankruptcy.

Disposable income is the debtor's future earnings remaining after expenditures for the support of the debtor and his dependents. If the debtor is in business, additional necessary expenditures are allowed for continuing the business.(36) In determining the debtor's disposable income, a court is not expected to, and should not, mandate drastic changes in the debtor's lifestyle. The debtor's expenses should be scrutinized only for luxuries that are not enjoyed by the average American family.

For example, since it is not unusual for families in some areas to send their children to parochial schools, a court should not consider that a luxury. However, sending a child to a private boarding school is much less common and is considered a luxury if no special needs are shown. Similarly, it is not unusual for a family to have two automobiles. There is no reason, however, that those automobiles both be the latest models or that they be in a luxury class.(37)

A Chapter 13 plan must provide that the debtor's disposable income will satisfy in full the unsecured priority claims.(38) Only if disposable income remains after the priority claims are satisfied is the debtor required to pay anything to the general unsecured nonpriority creditors.(39) The Chapter 13 payment provisions should classify penalties and postpetition interest as nonpriority payments. To the extent the Service does not have priority claims, it is a general unsecured creditor. The IRS is paid on its general unsecured penalty and postpetition interest only if disposable income remains after payment of living expenses and priority claims.

Chapter 7 Bankruptcy -- Additional Exceptions to Discharge

Should the debtor fail to complete payments under the Chapter 13 plan or follow an unsuccessful Chapter 13 plan with a straight Chapter 7 liquidation, the debtor is burdened with additional exceptions to discharge of tax-related claims.(40) The exceptions to discharge include the previously discussed nondischargeable government priority tax claims and the following.

* The tax on a return that was not filed or was filed delinquently within two years of the bankruptcy petition filing date.(41) The taxpayer must file his own tax return. A tax is not subject to discharge if the only filing for the tax year was a substitute for return prepared by the IRS.(42)

* The tax for which a debtor made a fraudulent return or attempted to evade taxes.(43) In 1991, the U.S. Supreme Court ruled that the "preponderance of evidence standard" rather than the more demanding "clear and convincing evidence standard" applies to all bankruptcy exceptions to discharge, including nondischargeable fraud. Fraud claims that creditors have successfully reduced to judgment in a nonbankruptcy court of record will be nondischargeable in bankruptcy under the "collateral estoppel doctrine." The judgment is binding whether it was based on the preponderance of evidence standard of proof or the clear and convincing evidence standard of proof.(44) It easier for the IRS to prove fraud under the preponderance of evidence standard as opposed to the more rigorous clear and convincing evidence standard of proof.

* Tax penalties incurred within three years of the bankruptcy petition.(45) A tax penalty is discharged if the underlying tax liability is discharged. A tax penalty is also discharged if the penalty applies to a transaction or an event that occurred prior to three years before the filing of the bankruptcy petition.(46) Thus tax fraud penalties (but not the tax) associated with tax years that preceded the bankruptcy petition filing by more than three years are discharged in a Chapter 7 bankruptcy.(47) These tax penalties incurred more than three years before bankruptcy are discharged, even though the debtor does not file any returns for the tax years in question and the underlying tax principal is not discharged.(48)

* Interest accrued after the bankruptcy petition filing date. Postpetition interest is due on nondischargeable tax obligations after a Chapter 7 bankruptcy liquidation.(49) Note: These additional four exceptions to discharge apply only to an unsuccessful Chapter 13 bankruptcy (in which the debtor fails to make scheduled payments) or a Chapter 7 bankruptcy. They do not apply to a successfully completed Chapter 13 bankruptcy plan.

Tax Liens

The final items preventing the discharge of tax, interest and penalties are liens placed by the IRS on the taxpayer's property before a bankruptcy filing. A tax lien is created under the Internal Revenue Code (statutory tax lien) and attaches as a claim in favor of the United States on all real or personal property of the taxpayer.(50) "Perfected" government tax liens block the discharge of taxes, penalties and interest for both a Chapter 7 and a Chapter 13 bankruptcy. A tax lien is perfected by filing proper notice of the tax lien with the County Recorder in the county in which the taxpayer resides and counties where the taxpayer owns real estate.(51) If a lien is perfected, it takes priority over subsequent liens and prevents the bankruptcy trustee from taking the property for the benefit of the estate's creditors. A properly filed tax lien takes priority over the debtor's homestead exemption.(52) Only tax liens perfected before the bankruptcy petition filing stop government tax, penalty and interest claims from being discharged.(53)

The filing of the bankruptcy petition results in an automatic "stay," which prevents any additional acts by the IRS against the debtor to collect a claim.(54) Outside the bankruptcy setting the IRS has levying power on property subject to a tax lien. A levy forces the taxpayer to relinquish property and operates as a seizure by the IRS to collect delinquent income taxes. The IRS's levying power is an immediate seizure not requiring judicial intervention. The bankruptcy petition filing starts the automatic stay and stops the IRS from using its levying powers during the bankruptcy process.(55)

The Federal tax lien attaches to a taxpayer's personal property even though the property is exempt from levy due to the automatic stay. Although the IRS cannot use its levying powers in the bankruptcy setting, a properly filed tax lien is not defeated by the property having exempt status under the Bankruptcy Code.(56) The tax lien is characterized as a security interest and does not involve the immediate seizure of property. The tax lien enables the taxpayer to maintain possession of the protected property while allowing the government to preserve its claim. Should the status of the property later change by sale or exchange from protected exempt property to nonprotected property, the IRS could then seek to enforce its lien.(57)

In a Chapter 7 bankruptcy, liens on real estate may not be avoided even if the dollar amount of the lien exceeds the fair market value (FMV) of the secured property. In 1992, the U.S. Supreme Court ruled that a Chapter 7 bankruptcy does not reduce a creditor's real estate lien to the judicially determined value of the collateral. The real estate lien survives intact and is not affected by the Chapter 7 bankruptcy process. The Supreme Court gave the decision a narrow scope by stating: "We therefore focus upon the case before us and allow other facts to await their legal resolution on another day .... Accordingly, we express no opinion as to whether the words |allowed secured claim' have different meaning in other provisions of the Bankruptcy Code."(58)

However, in a Chapter 13 bankruptcy the debtor may request the court to divide a real estate lien into its secured and unsecured portions. The creditor has a secured claim to the extent of the value of his collateral. In most cases the balance of the claim in excess of the value of the collateral is unsecured. However, on June 1, 1993, the U.S. Supreme Court held a secured creditor's homestead mortgage lien interest cannot be reduced by a Chapter 13 bankruptcy.(59) Under BC Sections 101(45) and 1322(b)(2), a Chapter 13 bankruptcy can modify an IRS nonconsensual statutory tax lien because it is not a lien created by agreement (security interest) on the debtor's principal residence. For example, assume a debtor's home has a first mortgage that approximately equals the residence's FMV. Should the IRS have a nonconsensual tax lien that is junior to the first mortgage, the debtor may avoid the IRS's secured lien because the debtor's residence has no value in excess of the first mortgage.

In a Chapter 13 proceeding, the nonpriority tax claim in excess of the FMV of the secured property is put. into the category of general unsecured creditors. The debtor can then treat the IRS's claim as an unsecured claim in the payment plan. This allows the undersecured nonpriority tax claim to be discharged in a Chapter 13 bankruptcy with the unsecured general creditors.

A Chapter 13 bankruptcy plan must provide for future payments equal to the FMV of property secured by liens. If plan payments are insufficient, the debtor must surrender the secured property to the creditor.(60) A confirmed Chapter 13 plan must provide for the full satisfaction of all secured claims, including a Federal tax lien on the personal belongings of the taxpayer. This is true even if the personal belongings are property exempt from levy under the Internal Revenue Code.(61) If the debtor wants to avoid making payments on a secured claim, he may surrender the property securing such claim to the IRS. Only then is a Chapter 13 plan eligible for confirmation without payments covering the secured property.

Postpetition interest is allowed to the IRS in a reorganization payment plan over and above the full payment of the tax claim if the tax lien is oversecured. In 1989, the U.S. Supreme Court ruled that the IRS is entitled to receive postpetition interest on an oversecured claim even if the claim is a nonconsensual statutory tax lien.(62)

Conclusion

The Bankruptcy Code requires a three-year filing delay from the tax return due date to discharge taxes. During this period, the tax practitioner should advise his client that the Internal Revenue Code exempts certain property from seizure (levy) even outside the bankruptcy setting;(63) certain wage amounts are also exempt from levy under the Internal Revenue Code.(64) For example, Notice 91-36(65) provides that a married taxpayer filing jointly, with four dependents, may exempt $1,458 per month from a notice of levy for collection of delinquent taxes outside the bankruptcy process.

The cleanest way to avoid payment of delinquent Federal income taxes, penalties and interest is to wait the required three-year period, living on the exempt amount of wages available, and then file Chapter 7 bankruptcy. The Chapter 7 bankruptcy is most effective should tax liens not encumber the taxpayer's property and the exceptions to discharge regarding fraud or unfiled tax returns not apply to the taxpayer.

If the taxpayer cannot wait three years from the due date of the tax return to file bankruptcy, then a Chapter 13 plan would be most beneficial. A Chapter 13 plan would clean up the priority taxes due that would otherwise survive a Chapter 7 filing. A Chapter 13 plan requires three years payment of the debtor's disposable income, but during these three years no interest or penalties would be due on taxes except for oversecured tax liens. During this three-year period, no actions could be taken against the taxpayer other than in the bankruptcy court due to the automatic stay.

Tax practitioners should not be intimidated by IRS collection agents; rather, they should work with the revenue officer for a payment plan. After three years into the payment plan, a bankruptcy discharge of taxes could be available. An immediate bankruptcy is available if the revenue officer does not allow a payment plan. A working knowledge of the Bankruptcy Code as it relates to the powers of collection stated in the Internal Revenue Code (see the summary chart on page 519) is critical for effective representation of a client with delinquent tax payments.

Renowned Tax Experts Examine New Federal Tax Law Changes at National Teleconference in September

Get the most immediate and complete coverage of the new tax law changes! Attend the 1993 Revenue Reconciliation Act Teleconference on Wednesday, Sept. 29, co-sponsored by the AICPA, your state CPA society, CPA-TV Network and Westcott Communications, Inc.

Broadcast live across the country, this eight-hour teleconference showcases 10 leading national tax authorities, such as Ray Bolton, Al Grasso and Janice Johnson. They will explore all angles of the tax law changes, compare existing and new tax laws, and discuss the law's impact on your practice and clients. This distinguished group of speakers promises to deliver critical analysis, practical advice and clear foresight on this massive tax overhaul.

Specific topics include: individual issues, compensation and fringe benefits, investments, selected business issues, business expenses, compliance and other issues, passive losses and real estate, and planning strategies and tactics.

Watch your mail in August for a registration brochure with program and location details. Or call your state CPA society. (1) Sec. 6502(a). (2) TD 8391 (2/10/92). See also In re Dakota Industries, Inc., 131 BR 437, 25 CBC2d 905 (Bankr. Ct., So. Div. S.Dak. 1991)(91-2 USTC [paragraph] 150,467). (3) Bankruptcy Code 11 U.S.C. (hereinafter BC) Section 507(a)(7). (4) BC Sections 727(b) and 1328(a). (5) Sec. 6321; BC Section 522(c)(2)(B). (6) BC Sections 727(b), 523(a)(1)(A), 507(a)(7) and 1322(a)(2). (7) BC Section 507(a)(7)(A)(i). (8) In re Raymond H. Wood, Jr., DDS, 866 F2d 1367 (11th Cir. 1989)(63 AFTR2d 89-851, 89-1 USTC [paragraph] 9283), aff'g per curiam unreported DC decision. (9) In re Mickey Dean Leach, 130 BR 855 (Bankr. Appellate Panel [BAP], 9th Cir. 1991)(69 AFTR2d 92-603, 92-1 USTC [paragraph] 50,144). (10) BC Section 507(a)(7)(A)(ii). (11) Secs. 6213(a), 6303(a) and 6321; James R. Coson, 286 F2d 453 (9th Cir. 1961)(7 AFTR2d 589, 61-1 USTC [paragraph] 9219). (12) Sec. 7122 and Regs. Sec. 301.7122-1; see Country Gas Service, Inc., 405 F2d 147 (1st Cir. 1969)(23 AFTR2d 69-452, 69-1 USTC [paragraph] 9178). See also Harold T Teti, DC Conn., 1975 (36 AFTR2d 75-5762, 75-2 USTC [paragraph] 9709); Charles Joseph Reimer, 441 F2d 1129 (5th Cir. 1971)(27 AFTR2d 71-1197, 71-1 USTC [paragraph] 9355); IRS Form 656, Offer in Compromise. (13) Collier on Bankruptcy, 15th Ed., Vol. 3, at [paragraph] 507.04[7][b]. (14) BC Section 507(a)(7)(C). (15) In re Alfredo Medina Fernandez, 130 BR 75 7 (Bankr. Ct., W.D. Mich. 1991)(91-2 USTC [paragraph] 50,476). See also In re Shirley M. Zauss, 137 BR 682 (Bankr. Ct., W.D. Tenn. 1991)(92-1 USTC [paragraph] 50,005). (16) BC Section 507(a)(7)(D). (17) BC Section 507(a)(7)(G). (18) In re Reich, 66 BR 554, 15 CBC2d 1055 (Bankr. Ct., Colo. 1986), rev'd on other grounds, 107 BR 299 (DC Colo. 1989). See also In re Craner, 110 BR 111, 119 (Bankr. Ct., N.D. N.Y. 1988). (19) In re Hirsch-Franklin Enterprises, Inc., 63 BR 864, 15 CBC2d 672 (Bankr. Ct., M.D. Ga. 1986). (20) BC Section 507(a)(7)(A)(iii). (21) In re Edwards. 74 BR 661, 17 CBC2d 509 (Bankr. Ct., N.D. Ohio 1987). (22) BC Section 507(a)(7)(B), (E) and (F), respectively. (23) BC Section 523(a)(1)(B) and (C) and (7)(B). (24) Charles A. Wahlstrom, 92 TC 703 (1989). (25) BC Sections 505(c) and 362(a)(6). (26) In re Russell Schwartz, 954 F2d 569 (9th Cir. 1992)(69 AFTR2d 92-548, 92-1 USTC, [paragraph]50,069). (27) In re William E. Richards, W.D. Okla., 1992 (69 AFTR2d 92-1145, 92-2 USTC [paragraph]50,330); Sec. 6503(h). (28) In re Dakota Industries, note 2. (29) Matter of Stoll, 132 BR 782 (Bankr. Ct., N.D. Ga. 1990). (30) See In re Reich, note 18, and In re Craner, note 18. (31) In re Craner, note 18, at 120. (32) BC Sections 1322(a)(2) and 1328(a). (33) BC Section 1325(a)(4). (34) In re Hieb, 88 BR 1019, 19 CBC2d 800 (Bankr. Ct., S. Dak. 1988). (35) In re Hieb, id.; BC Section 1325(a)(4). (36) BC Section 1325(b)(2). (37) Collier on Bankruptcy, note 13, Vol. 5, at [paragraph] 1325.08[41[b]. (38) BC Section 1322(a)(2). (39) BC Section 1325(b)(1)(B). (40) BC Sections 1328(c)(2), 727(b), and 523(a)(1) and (7). (41) BC Section 523(a)(1)(B). (42) In re Douglas W. Bergstrom, 949 F2d 341 (10th Cir. 1991)(68 AFTR2d 91-5886, 91-2 USTC [paragraph] 50,558). (43) BC Section 523(a)(1)(C). (44) Grogan v. Garner, 111 Sup. Ct. 654, 112 Led2d 755 (1991), rev'g 881 F2d 579 (8th Cir. 1989). (45) BC Section 523(a)(7). (46) Gregory W. McKay, 957 F2d 689 (9th Cir. 1992)(69 AFTR2d 92-793, 92-1 USTC [paragraph] 50,228). See also In re Vincent L. Roberts, 129 BR 171 (DC C.D. Ill. 1991). (47) In re Joanne G. Burns, 887 F2d 1541 (11th Cir. 1989)(65 AFTR2d 90-695,89-2 USTC [paragraph] 9630). (48) In re Rebecca Ann Roberts, 906 F2d 1440 (10th Cir. 1990)(66 AFTR2d 90-5315, 90-2 USTC [paragraph] 50,484). (49) In re Hanna, 872 F2d 829, 20 CBC2D 1452 (8th Cir. 1989). See also In re Burns, note 47. (50) Secs. 6303(a), 6321 and 6331(d). (51) In re James Carl, Bankr. Ct., N.D. Ill. 1992 (69 AFTR2d 92-843, 92-1 USTC [paragraph]50,153). (52) Hildegard Helen Davenport, 136 BR 125 (W.D. Ky. 1991)(91-2 USTC [paragraph] 50,531). (53) Ron Pair Enterprises, Inc., 489 US 235, Led2d 209, 20 CBC2d 267 (1989)(63 AFTR2d 89-652, 89-1 USTC [paragraph] 9179); In re Craner, note 18. (54) BC Section 362(a). (55) In the Matter of Thomas Lloyd King, 137 BR 43 (DC Neb. 1991)(91-2 USTC [paragraph]50,553). (56) BC Section 522(c)(2)(B). (57) King, note 55. (58) Dewsnup v. Timm, 112 Sup. Ct. 773 (1992) (the Court held that the Chapter 7 debtor was not allowed to reduce a $120,000 mortgage lien to the judicially determined property value of $39,000; the debtor would enjoy a windfall if the property value increased by the time of foreclosure sale). (59) Nobelman v. American Savings Bank, Sup. Ct., 6/l/93, aff'g 968 F2d 483, 486 (5th Cir. 1992). (60) BC Section 1325(a)(5). (61) Louis George Barbier, 896 F2d 377 (9th Cir. 1990)(90-1 USTC [paragraph]150,107). (62) Ron Pair Enterprises, note 53. (63) Sec. 6334(a). (64) Sec. 6334(d) and (a)(9). (65) Notice 91-36, 1991-2 CB 634 (lists wages exempt from levy).