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08/14/97 MATTER APPLICATION COUNTY COLLECTOR FOR

August 14, 1997

IN THE MATTER OF THE APPLICATION OF THE COUNTY COLLECTOR FOR DELINQUENT TAXES PETITION OF: DENNIS D. BALLINGER, PETITIONER-APPELLANT,
v.
HICKORY POINT BANK & TRUST, VERNON H. HOUCHEN, BANKRUPTCY TRUSTEE, AND ORDER FOR SALE IN ERROR FILED BY CATHY L. ASHBY, MACON COUNTY TAX COLLECTOR AND LARRY WARD, RESPONDENTS-APPELLEES.



Appeal from Circuit Court of Macon County. No. 95TX182. Honorable John K. Greanias, Judge Presiding.

Released for Publication September 12, 1997.

Honorable James A. Knecht, J., Honorable Robert W. Cook, J. - Concur, Honorable Frederick S. Green, J. - Concur. Justice Knecht delivered the opinion of the court. Cook and Green, JJ., concur.

The opinion of the court was delivered by: Knecht

The Honorable Justice KNECHT delivered the opinion of the court:

Respondents, Hickory Point Bank and Trust (Hickory Point), Vernon Houchen, bankruptcy trustee, and Cathy L. Ashby, Macon County tax collector, filed motions to set aside a tax sale and requested a sale in error under section 21-310 of the Property Tax Code. 35 ILCS 200/21-310 (West 1994). They argued the owners of the home involved in the tax sale were in bankruptcy at the time of the sale and an automatic stay was in effect prohibiting the tax sale from taking place. The trial court vacated the order for tax deed and granted the petition for sale in error. Dennis Ballinger, petitioner, was the tax purchaser and has appealed the judgment of the trial court. We affirm.

On July 7, 1992, Larry and Nancy Ward filed for bankruptcy protection under chapter 13 of the Bankruptcy Code. 11 U.S.C. ยง 101 et seq. (1988). The Wards later moved to convert their bankruptcy action to one under chapter 11 of the Bankruptcy Code. On October 13, 1992, the bankruptcy judge ordered the Wards to supply certain information and pay a filing fee in order to convert to a chapter 11 proceeding. When the Wards failed to file the required fee, their case was dismissed on October 22, 1992.

The Wards filed a motion to reinstate their bankruptcy on October 30 and it was allowed on November 19, 1992. A notice of commencement of case under chapter 11 was sent by the bankruptcy court to all creditors on November 19, 1992. The notice stated the case was filed or converted on October 13, 1992. The Wards later converted their chapter 11 bankruptcy proceeding to one under chapter 7 on March 1, 1993, and were granted a discharge in bankruptcy on December 6, 1993. Prior to the discharge, Hickory Point, mortgagee of the home, requested the automatic stay be lifted on theWards' home, and the request was granted by the bankruptcy court on September 23, 1993. Sometime after that, the bank brought a foreclosure action against the Wards.

At the time the Wards originally filed their bankruptcy petition, the real estate taxes on their residence were delinquent. No notice was given to the Macon County collector of either the filing of the bankruptcy petition or its dismissal. The taxes on the property were sold at the annual Macon County tax sale on October 26, 1992. Dome Tax Service was the successful bidder and obtained a certificate, which was assigned to Ballinger on May 18, 1995. On May 19 Ballinger filed a petition for tax deed and forwarded required notices to various interested parties, including Hickory Point. On October 2, 1995, the period of redemption ended without the real estate taxes being redeemed and Ballinger filed an application for issuance of a tax deed on October 4, 1995. Ballinger received an order issuing the tax deed that same day.

On October 23, 1995, motions for sale in error were filed by Hickory Point, Vernon Houchen, bankruptcy trustee, and Cathy Ashby, Macon County collector. In addition, motions to set aside the order for tax deed were filed by Hickory Point and the bankruptcy trustee.

At a hearing held on December 8, 1995, the trial court dismissed the motions to compel sale in error filed by Hickory Point and the trustee. The trial court granted the motion for sale in error filed by the Macon County collector and also the motions to set aside the tax deed. On December 11, 1995, Ballinger filed a notice of appeal.

When a bankruptcy petition has been filed, the real property of debtors such as the Wards is protected from a tax sale by both federal and Illinois law. Under federal law, when debtors enter bankruptcy, their assets are protected from action against them by their creditors by the provisions of an automatic stay provided by section 362 of the Bankruptcy Code. 11 U.S.C. ยง 362 (1994). Subsection 362(c)(2) provides the stay shall remain in effect

"*** until the earliest of-

(A) the time the case is closed;

(B) the time the case is ...


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