Bankruptcy Law

David N. Gunn, Esquire

Application of the “unmarried dependent children” portion of the head of household exemption under § 513.440, RSMo, requires said children to be related to the head of family. Turpen v. Rouse, Case 12-6039 (B.A.P. 8th Circuit November 2, 2012), Kressel, Saladino, and Nail, Js.

The use of the possessive form of person in the phrase “such person’s unmarried dependent children” in § 513.440, RSMo, clearly requires that the children in question be children of the debtor and not merely children included in the household for which the debtor claims to head.

Expert testimony is not a requirement for a court to consider whether health issues alleged by a debtor limit income potential in a proceeding to determine whether excepting student loans from discharge would impose an undue hardship. Iowa Student Loan Liquidity Corporation v. Shaffer, Case 12-6010 (B.A.P. 8th Circuit October 30, 2012), Kressel, Schermer, and Nail, Js.

The bankruptcy court did not clearly err when it accepted the debtor’s testimony as to the nature of her health impairments and how these impairments affected her ability to earn income and to hold gainful employment.

Determination of value is not a final order and tax credits that run with property must be considered in determining value. US Bank National Association, LP v. Lewis and Clark Apartments, LP, Case 12-6023 (B.A.P. 8th Circuit October 11, 2012), Kressel, Federman, and Nail, Js.

A determination of value is not a final order ripe for appeal; however, leave for an interlocutory appeal is appropriate when the value of collateral is crucial to other pending matters such as confirmation of a plan or a motion for relief from the automatic stay.

Tax credits such as Low Income Housing Tax Credits that provide an economic benefit to the owner of real property, regardless of whether the property owner acquired her interest through sale or foreclosure, must be considered in determining the fair market value of property because these credits affect the price a willing buyer would pay to acquire like property from a willing seller.

Reference to a secondary document regarding application of payments does not render a promissory note conditional and thus a non-negotiable instrument. Kingge v. SunTrust Mortgage Inc., Case 12-6026 (B.A.P. 8th Circuit October 1, 2012), Kressel, Schermer, and Nail, Js.

Reference in a promissory note stating that the application of payments shall be applied to the indebtedness in accordance with language of a separate deed of trust (first to collection fees, then to matured interest, then to principal, etc.) does not constitute a conditional promise and thus disqualify the note as a negotiable instrument under § 400.3-104, RSMo.