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In re James Malec and Rita Malec; James Malec and Rita Malec v. Cook County Clerk and Cook County Treasurer

04 B 17796, 10 A 01455

In this adversary proceeding, the court found that the County violated the discharge injunction under 11 U.S.C. § 1328(a) by failing to release its lien on Debtors’ property by continuing to assess interest and penalties and selling the property taxes at a tax sale. The County argued that its lien against Debtors’ property was an in rem lien, and as such the discharge eliminated Debtors’ personal liability only, and that the in rem debt for real estate taxes remains after discharge. The court found in favor of the Debtors, and held that the County’s lien on Debtors’ property is a “claim” within the meaning of 11 U.S.C. § 101(5) and further held that the provisions of Debtors’ confirmed plan are binding pursuant to 11 U.S.C. § 1327(a). The court noted that the County failed to object to the proposed treatment of its tax claim prior to plan confirmation, and that the County acted improperly when it assessed additional interest on the tax debt and sold the taxes at a tax sale after the Debtors completed the payments required by the plan and the entry of the chapter 13 discharge that covered the tax debts.

Tuesday, January 11, 2011