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July 30, 2003


The opinion of the court was delivered by: Wayne Andersen, District Judge


This case is before the court on Defendant-Appellant S.I. Securities' appeal from a decision rendered by the United States Bankruptcy Court for the Northern District of Illinois. For the following reasons, the decision of the bankruptcy court is reversed and remanded for proceedings consistent with this opinion.


On December 16, 1997, Debtor-Appellee Joseph Dabal purchased a parcel of real estate located at 7443 West Washington, Forest Park, Illinois. In 1999, Defendant-Appellant S.I. Securities bought Dabal's unpaid real estate taxes for 1997 from Cook County. No redemption of the tax purchase, however, was ever made. On March 6, 2002, the last day of the redemption period, Dabal filed a petition for relief under Chapter 13. Under the appropriate bankruptcy provisions, he received a sixty-day extension of the redemption period, 11 U.S.C. § 108(b), as well as an automatic stay on the prosecution of the tax deed, 11 U.S.C. § 362. Appellee failed to redeem his property during the period of extension. [ Page 2]

On June 14, 2002, Dabal filed an adversary complaint against Appellant seeking damages for alleged violations of the automatic stay provisions. On July 31, 2002, Appellant countered by filing: 1) a motion to lift the automatic stay on the prosecution of the tax deed; 2) a motion to dismiss the bankruptcy case; 3) a motion to dismiss the adversary complaint; and 4) an objection to Appellee's Chapter 13 plan, filed on April 19, 2002. On August 19, 2002, the bankruptcy court dismissed Dabal's bankruptcy case, finding him ineligible for Chapter 13 protection because he was unemployed at the time of the filing. As a result of this ruling, the other three issues were also dismissed.

In response, Dabal filed a motion to reconsider and vacate the order, alleging that his unemployment status at the date of the filing should not be dispositive as to whether he was an "individual with regular income." On September 9, 2002, the Court held a hearing and requested additional briefs regarding Appellee's argument that a Chapter 7 claim could have originally been filed and then converted to a Chapter 13 case when he became employed.

On October 7, 2002, the bankruptcy court vacated its dismissal, reinstating the adversary complaint and the automatic stay. On October 28, 2002, the Appellee once again amended his bankruptcy plan, and in doing so extended the redemption of the real estate taxes over the life of the plan. As before, Appellant opposed the extension, but on December 16, 2002, the court overruled the objection, confirmed the plan, and denied the motion to lift the stay. On the same day, this appeal was filed by Appellant arguing that the bankruptcy court erred in: 1) denying [ Page 3]

Appellant's motion to lift the stay, thereby accepting the Chapter 13 plan and its extension of the redemption period; and 2) vacating the motion to dismiss.


I. Standard of Review

This court has jurisdiction over the instant appeal under 28 U.S.C. § 158 (a)(1), which vests the district court with jurisdiction over appeals from "final judgments, orders and decrees" of the bankruptcy court. Acting as an appellate court, the district court is bound to accept the bankruptcy court's findings of fact, unless they are clearly erroneous, and may only consider evidence presented before the bankruptcy court and made part of the record. In re Home Comp. Care, Inc., 221 B.R. 202, 205 (N.D. Ill. 1998) (citing In re Lefkas Gen. Partners, 112 F.3d 896, 900 (7th Cir. 1997)); In the Matter of Neis, 723 F.2d 584, 588-89 (7th Cir. 1983) (citing F.R.Bankr.P. 8013). However, when there are pure questions of law, the court reviews them de novo. Matter of UNR Indus., Inc., 986 F.2d 207, 208 (7th Cir. 1993).

II. Analysis

The issue on appeal is whether the Bankruptcy Judge erred when he approved the inclusion of an extended stay to prevent S.I Securities's acquisition of a tax deed as part of the Chapter 13 plan. Relying on In re Bates, 270 B.R, 455 (Bankr. N.D. Ill. 2001), Dabal argues that a debtor who files a bankruptcy petition prior to the expiration of the redemption period may redeem a tax purchase through a repayment plan organized under Chapter 13. Bates suggested, [ Page 4]

in dicta, that the sixty day extension of the redemption period provided for by 11 U.S.C. § 108(b) may be modified and treated as a secured claim under 11 U.S.C. § ...

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