The court granted a secured creditor’s request for turnover of $40,000 in insurance proceeds for a stolen tractor owned by the debtor. The debtor had been ordered to deliver the tractor and other machinery and equipment to the secured creditor prior to the time it was stolen, but failed to do so. Members of the debtor paid for the insurance policy and listed themselves as named insureds. The secured creditor was not named a loss payee. The insurance check was made out to the debtor, members of the debtor, and the secured creditor.

The court determined the members did not have an insurable interest in the tractor under Nebraska law. “Using this tractor and paying the insurance premiums on it does not create or establish a legally enforceable interest in it.” The members also argued that the insurance proceeds were not property of the bankruptcy estate because the insurance policy was obtained long after the plan was confirmed. The court was not persuaded by this argument, stating that the right to the proceeds is determined by who was named as an insured under the policy and who held an insurable interest, and in this case the answer to both questions was the debtor.

While the secured creditor had a lien on the tractor, it was not named as a loss payee on the insurance policy, so it had no direct right to the proceeds. Instead, its rights were dependent on and subordinate to the debtor’s interest in the proceeds. Under the confirmed plan, the secured creditor was entitled to proceeds from the sale or liquidation of the debtor’s assets, but insurance proceeds were not addressed. The court ruled that the equities of the case favored the secured creditor: “In the confirmed plan, the parties contemplated sale or liquidation of assets including the MX 285 tractor. Although the confirmed plan did not specifically require Debtor to turnover insurance proceeds, the Court finds that Debtor’s repeated refusal to comply with the terms of the plan and Court orders to turn over the MX 285 tractor and other machinery and equipment warrants an equitable remedy in favor of Rabo.”

The court denied a debtor’s motion to reopen her Chapter 7 case to file a reaffirmation agreement. The discharge had been entered and the case was closed more than a year before the motion to reopen was filed. Because § 524(c)(1), which says that a reaffirmation agreement is enforceable only if filed before a discharge is granted, is strictly construed by courts, granting the motion to reopen the case simply to file an unenforceable reaffirmation agreement would be futile.

The court denied the debtor’s motion for judgment on the pleadings and gave creditors who moved for an extension of time to file a dischargeability proceeding – after the deadline had expired – an opportunity to show that equitable grounds exist for extending the deadline. To equitably toll the deadline, the creditors must prove they pursued their rights diligently and that some extraordinary circumstance stood in their way. An evidentiary hearing was scheduled on the creditors’ motion.

The court granted summary judgment to the debtor’s former spouse, finding the debt owed by the debtor to equitably divide the parties’ property pursuant to the divorce decree is excepted from discharge under § 523(a)(15). The non-dischargeable amount includes the attorney’s fees awarded by the state court in connection with a contempt order entered in the plaintiff’s favor when the debtor failed to make an installment payment on the property judgment when due.