66 East Main Street, 3rd Floor Little Falls, NJ 07424

Chap. 13 Case Dismissed – Adversary Proceeding Must Stop

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  • Debtor (attorney) and his wife filed for Chapter 13 Bankruptcy.
  • Prior to filing for Bankruptcy, Debtor was convicted of stealing money from elderly clients.
  • Complaint was filed by Debtor’s victim that the restitution could not be discharged in bankruptcy.
  • Adversary proceeding was started.
  • Debtor’s wife severed the joint bankruptcy.
  • Debtor eventually voluntarily dismissed his case shortly thereafter.
  • Debtor’s victim wanted the adversary proceeding to continue in Bankruptcy Court so this claim could never be included in another bankruptcy and Exempt from Discharge.

Court Decision

  • After the bankruptcies were dismissed by the Debtors, Court was to consider whether the adversary proceeding could continue.
  • Since the Debtor stopped pursuing the bankruptcy, the case was moot.
  • Article III of the Constitution limits federal court jurisdiction to actual cases and controversies.
  • Since the case was dismissed the Federal Bankruptcy Court had no jurisdiction in this case at all.

Although the Court could see why the victim wants to assure that the Debtor could not try again to get this debt dismissed, any opinion by the Court would exceed the boundaries of its jurisdiction.