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Warsco v. Creditmax Collection Agency, Inc.

56 F. 4th 1134 (2023)

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Warsco v. Creditmax Collection Agency, Inc.

United States Court of Appeals for the Seventh Circuit
56 F. 4th 1134 (2023)

SC

Facts

Creditmax Collection Agency, Inc. (Creditmax) (creditor) held a judgment against Isaiah Harris (debtor). An Indiana state court awarded Creditmax a garnishment order against Harris, requiring Harris to pay a portion of his wages to Creditmax. More than 90 days after the issuance of the garnishment order, Harris filed a petition for bankruptcy. In the 90 days prior to the bankruptcy petition, Harris had paid over $3,700 to Creditmax as a result of the garnishment order. Mark Warsco was a trustee in Harris’s bankruptcy. Warsco filed an application seeking to recover the $3,700 and to distribute it among Harris’s creditors. Warsco relied on a provision in the Bankruptcy Code allowing recovery of certain transfers made in the 90 days before the filing of a bankruptcy petition. The bankruptcy court denied Warsco’s application on the ground that under Indiana law, the timing of a “transfer” related to a garnishment order is tied to the date of the garnishment order, not the date the payment is made. Because the date of the garnishment order was more than 90 days prior to Harris’s bankruptcy petition, the court held that the $3,700 was not recoverable. Warsco appealed.

Rule of Law

Issue

Holding and Reasoning (Easterbrook, J.)

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