Chapter 13 Plan Disturbed for Want of Service

In a Chapter 13 bankruptcy, the bankruptcy court granted a debtor's unopposed motion ordering the IRS to release a levy and return the debtor's funds. The IRS was also ordered to pay the debtor's attorney fees, costs and actual damages. The United States sought to vacate the order and allow the IRS to retain the levy and debtor's funds based on the court's lack of jurisdiction over the United States and its agencies. The United States argument was grounded in the debtor's failure to provide proper notice of the debtor's motion to the clerk for the U.S. attorney for the district of New Jersey or the attorney general in Washington, D.C. Under Federal Rule of Bankruptcy Procedure 7004. Bankr. R. 7004(4) includes, in pertinent part, that service "upon the United States is effected by mailing a copy of the summons and complaint to the civil process clerk at the office of the United States attorney for the district in which the action is brought and by mailing a copy of the summons and complaint to the Attorney General of the United States at Washington, District of Columbia…" Although the premise behind bankruptcy discharges and confirmation of plans is the provision of a clean slate and a fresh start for the debtor without the need to worry about prior creditors returning, debts may not discharged if the debtor was not properly noticed of the bankruptcy. Under Federal Rule of Bankruptcy Procedure 9024, Federal Rule of Civil Procedure 60(b)(4) operates to allow relief from a judgment or order for failure to properly notice the creditor in a Chapter 13 bankruptcy. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.