Judge Lawrence Kahn
In Prisco’s 2007 Chapter 13 bankruptcy case, the IRS asserted a $504 unsecured priority claim for 2005 and 2006 unpaid taxes, and a $1,144 unsecured general claim. Bankruptcy court approved Prisco’s amended plan paying the $504 unsecured priority claim. By September 2009 the IRS was paid its priority claim and was paid $8.46 for its general claim. However, due to failure to disclose a personal injury claim as an asset, bankruptcy court converted Prisco’s case to Chapter 7 before granting discharge under 11 USC §727. District court denied Prisco an injunction barring the IRS from garnishing social security payments to collect $370.98 in penalties. Among other things, the Bankruptcy Code’s waiver of sovereign immunity did not render the Anti-Injunction Act inapplicable to bankruptcy court orders. Further, because his case was converted before a Chapter 13 discharge issued, Prisco’s discharge under 11 USC §727(a) did not apply to the penalties and interest the IRS sought to collect—such debts are nondischargeable under Chapter 7. Thus because the penalties and interest sought by the IRS were not discharged, its collection efforts do not violated 11 USC §524′s injunction against creditors’ attempts to collect on discharged debts.
