Consumer Law Changes Taking Effect in 2019

(This article first appeared at NCLC.org) This article lists federal and state consumer law changes that already are scheduled to go […]

In Sanctions Matter Bankruptcy Court Shuts Down Creditor’s Defense of No Notice

The Utah Bankruptcy Court framed the issue as “Is it a credible defense to a motion for sanctions for stay violations for a creditor to claim it lacked notice of the bankruptcy filing, even after service of multiple bankruptcy papers followed by phone calls from the debtors? The Court thinks not.” In re Kelley, No. 17-29915, 2019 Bankr. LEXIS 29, at *1 (Bankr. D. Utah Jan. 4, 2019).

9th Circuit Clarifies Awards of Appellate Attorney’s Fees in Sanctions Case

The Ninth Circuit recently ruled that Section 362(k) of the Bankruptcy Code allows an award of attorney’s fees when the debtor successfully defends or challenges a judgment for violation of the automatic stay.  In Easley v. Collection Serv. of Nev., No. 17-16506, 2018 U.S. App. LEXIS 35857, at *3 (9th Cir. Dec. 20, 2018), the Ninth Circuit Court of Appeals reversed the judgment of the District Court.

Ninth Circuit panel affirms that a Chapter 7 Debtor is not allowed to amend homestead exemption to protect post-petition increase in home value.

In a 2-1 decision, the panel held that the debtor’s exemption is limited to the specific amount of equity in the home as of the petition date. Wilson v. Rigby, No. 17-35716, 2018 U.S. App. LEXIS 33234 (9th Cir. Nov. 27, 2018). The panel distinguished this case from other Ninth Circuit homestead exemptions which allow a debtor to amend a homestead exemption to capture a post-petition increase in value.In a 2-1 decision, the panel held that the debtor’s exemption is limited to the specific amount of equity in the home as of the petition date.  Wilson v. Rigby, No. 17-35716, 2018 U.S. App. LEXIS 33234 (9th Cir. Nov. 27, 2018). The panel distinguished this case from other Ninth Circuit homestead exemptions which allow a debtor to amend a homestead exemption to capture a post-petition increase in value.

NACBA/NCLC Testify Before House Judiciary Subcommittee

WASHINGTON, D.C. On Wednesday, September 26, 2018 NACBA Legislative Committee Member, John Rao, testified before the House Judiciary Subcommittee on […]

Washington Update- September 4, 2018

This is the latest update from Washington, designed to keep NACBA members informed about significant and relevant activity on the […]

Funds Debtor was Awarded from Ex-Husband’s Retirement Account Could Not be Exempted as Alimony

Law Firm did Not Willfully Violate Automatic Stay, even though its Actions caused Debtor to Spend time in Jail

Debtor with $0 Monthly Student Loan Payment under Income-Based Repayment Plan Survives ECMC’s Motion for Summary Judgment in Student-Loan Discharge Case

Chapter 7 debtor, seeks to discharge her student loans despite enrolling in an income-based repayment plan (“IBR Plan”) that reduced her monthly payments to $0. The Educational Credit Management Corp. (“ECMC”)—a seasoned veteran of this line of litigation—says this should stop her at the summary-judgment stage.

Chapter 13 Plan Which Excluded Social Security Income from Funding was Proposed in Good Faith

The Debtors proposed a Chapter 13 plan that excluded their Social Security income from the funding of the plan. The Chapter 13 Trustee objected, arguing that the plan was not proposed in good faith because of the exclusion of such income.

Court Grants Chapter 13 Debtors’ Motion to Incur Student Loan Debt for Daughter

Chapter 13 debtors moved the court for authority to borrow money, specifically to incur student loan debt on behalf of their daughter. The Trustee Objected to the motion.

63-Year-Old Debtor with $0 Monthly Payment under IBR Could Not Discharge Student Loans, Notwithstanding Tax Consequences of the Repayment Program

Debtor attended several colleges starting in 1972. She took out student loans in pursuit of her undergraduate degree; those loans were discharged when she filed for bankruptcy in 1984.

After Debtors Voluntarily Dismissed Chapter 13 Case, Court Approved Attorney’s Fee Application as Administrative Expense to be Paid from Funds Held by Chapter 13 Trustee

Seeking relief from mounting business debts, the Debtors retained Attorney Parker to file a joint Chapter 13 bankruptcy. After Debtors voluntarily dismissed their case—and three days before filing Chapter 7 on their behalf-Attorney Parker submitted an application for pre-confirmation attorney fees. The Chapter 7 Trustee and a creditor object.

NFL Player’s Concussion Injury Litigation Settlement Qualified as a Disability Policy and was therefore Exempt under 11 U.S.C. § 522(d)(10)(C)

THIS CASE came before the Court for a hearing on April 4, 2018, upon Trustee’s Objection to Claim of Exemption in National Football League Player’s Concussion Injury Litigation Settlement (the “Disputed Exemption”).

Debtor Could Not Reaffirm Lease on Automobile Since §524 Does Not Apply to Leases

This matter comes on to be heard upon the Reaffirmation Agreement (“Reaffirmation Agreement”) filed by American Honda Finance Corporation (“Honda”) and the Debtor.

Student Loan Discharged since ECMC Failed to Produce Evidence that a Loan or Signature ever Existed

The Debtor/Plaintiff  filed a chapter 7 petition and, shortly after, he filed this adversary proceeding seeking a determination of dischargeability under 11 U.S.C. § 523(a)(8). He then received a discharge.

Funds Paid by GAP Insurance Provider After Debtor Totaled Car Were Not Property of the Estate and Belonged to Creditor

This matter requires deciding which party should receive funds paid by a Guaranteed Auto Protection (GAP) provider after Debtor  totaled his car. Debtor and the Chapter 13 Trustee contend that the GAP proceeds should flow to the bankruptcy estate. Creditor Credit Acceptance Corporation, which received the GAP funds directly from the GAP provider, argues that it is entitled to keep those funds.

Debtor’s Liability from Judgment for Taking Son’s Inheritance was Partially a “Consumer” Debt for §707 Analysis

This matter presents what would appear to be a relatively simple question—i.e., what qualifies as a “consumer debt” under the U.S. Bankruptcy Code.  But appearances can be deceiving. The Code defines a consumer debt as one incurred for a personal, family, or household purpose.

Trustee Who Hired Herself as Attorney had Attorneys Fees Slashed since Trustee’s Ordinary Duties are routinely Performed by a Chapter 7 Trustee Without the Assistance of Counsel

Trustee was appointed as the Chapter 7 Trustee in this reopened case and hired herself as an attorney. Before the Court is her First and Final Fee Application for Attorney Fees (the “Application”) requesting $6,270.00 for attorney fees and $14.70 for expenses.

Debtor’s Counsel Fee Request Reduced by Court Where Adversary Proceeding was Not Required and Lawyer and Paralegal Both Billed at Same Hourly Rate

The Debtors, by counsel, filed a voluntary Chapter 7 petition on May 18, 2017 at which time the automatic stay of 11 U.S.C. §362(a) went into effect. A motion to quash garnishment was filed the next day, on May 19, 2017, against Wellmont, which apparently had a judgment against the Plaintiff. An order to quash the garnishment was entered by this Court on May 22, 2017. 

Court Awards Debtor $2,080 in Compensatory Damages and $25,000 in Punitive Damages against Creditor that Coerced Debtor into Paying Discharged Debt

The Plaintiff/debtor brings this adversary proceeding against Defendants (PPR and DE III), alleging they sought to coerce the Plaintiff into paying her discharged loan in violation of the discharge injunction of 11 U.S.C. §524(a). The parties filed cross-motions for summary judgment on liability.

Court Awards NACBA Member $11,000 in Attorney’s Fees in Student Loan Discharge action, since the Work was Reasonably likely to Benefit the Debtor at the time that it was Performed

On October 13, 2016, Debtor filed this Chapter 13 case. On June 12, 2017, the Court confirmed the Debtor’s plan. On June 18, 2017, the Debtor filed an adversary proceeding against Educational Credit Management Corporation (“ECMC”) under § 523(a)(8) of the Bankruptcy Code, seeking to discharge over $223,000.00 of student loans that the Debtor took out to pay for law school and for her daughters to go to college.

Above-Median Debtor Need Not Use Actual Monthly Rental Expense on Means Test Form to Determine Disposable Income

As a matter of first impression, the question before this Court is whether an above-median income earner must, on Official Form 122C-2, account for his actual monthly rent expense in calculating his net rent expense for purposes of determining his monthly disposable income.

Debtor’s Settlement for Injuries Caused by Trans-vaginal Mesh was Property of the Estate Since the Claim Existed Pre-Petition

Co-debtor in this case (“Debtor”), filed a Motion for the court to “Determine Product Liability Settlement Is Not Property Of The Bankruptcy Estate.”  Chapter 7 Trustee (“Trustee”), filed an Opposition to the Motion.

Garnishment of Debtor’s Bank Account by Judgment Creditor did Not Extinguish Debtor’s Interest in Account; Debtor Could Recover Funds under 522(f)

Creditor obtained a judgment against the Debtor in state court on April 7, 2017 in the amount of $85,203.00 in damages, plus $30,000.00 in attorney’s fees. Thereafter, Creditor filed a request with the state court for issuance of a garnishment summons and writ of execution on the judgment.

Debtor with $700,000 in Student Loans Was Not Eligible to file Chapter 13 Since Debts Exceeded Limits Under 11 U.S.C. §109(e)

Debtor wants to be a chapter 13 debtor and use her future income to repay her substantial debts through a court-approved plan. Under 11 U.S.C. §109(e), only an individual with non-contingent, liquidated, unsecured debts of less $394,725 can be a chapter 13 debtor. The Debtor’s student loan debts alone exceed that amount. When she filed her chapter 13 petition, the Debtor’s unsecured debts totaled more than $870,000, an amount that is more than double section 109(e)’s debt limit.

Debtors’ use of a portion of Property for Commercial Purposes (Airbnb rental) did Not Remove the Property from the protection of Homestead Exemption

The Debtors filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code  on December 15, 2017 (the “Petition Date”). In their bankruptcy schedules, the Debtors disclosed their ownership interest in the Property, listing the value as $195,400, subject to a mortgage with an outstanding balance of $162,125 as of the Petition Date. On their amended Schedule C, the Debtors claimed a $500,000  homestead exemption in the Property.

Debtor’s Ability to Participate in an Income Based Repayment (IBR) plan does Not prevent a debtor from Obtaining a Hardship Discharge of Student Loan

A 58-year-old Debtor filed an adversary proceeding to discharge her student loans, which she had obtained in her mid-forties. She was trying to improve her job prospects by attending a local community college.

Washington Update- May 25, 2018

This is the latest update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks. 

NACBA Urges U.S. Department of Education to Assess & Approve Undue Hardship in Student Loan Bankruptcy Discharge

The National Association of Consumer Bankruptcy Attorneys (NACBA) submitted comments to the U.S. Department of Education (ED) on May 17, 2018, ahead of ED’s May 22, 2018, deadline requesting information on factors to be considered in evaluating undue hardship claims asserted by student loan borrowers in adversary proceedings filed in bankruptcy cases.

Same-Sex Couple with Certificate of Civil Union Can File Joint Bankruptcy Petition

Debtors filed a joint petition under chapter 13 of the Bankruptcy Code on February 5, 2018. On March 5, 2018, they attended their section 341 meeting with the office of the chapter 13 trustee. During the meeting, the Debtors were questioned about their marital status and responded by showing the trustee’s attorney a copy of their “Certificate of Civil Union.”

Condo Association was Bound by Confirmed Chapter 13 Plan where it Failed to File a Claim, and Objected Only After the Debtor Completed the Plan Payments

The confirmed the Debtor’s Chapter 13 plan commonly referred to as a “cure and maintain” plan. In the plan, the Debtor listed the amount of the prepetition arrearage she believed she owed to the Association. The plan provides for monthly payments to cure that arrearage over the life of the plan and provides for payment of the regular Association payments each month.

Don’t File Bankruptcy Without An Attorney: Pro Se, No Way!

“Pro se” means that individuals can file bankruptcy without an attorney. NACBA has launched its latest campaign, “Pro Se, No Way!”, to encourage debtors to seek the advice of a qualified attorney when filing bankruptcy.

NACBA Board Announcement

The National Association of Consumer Bankruptcy Attorneys (NACBA) is announcing the latest election results for the Board of Directors. Carol A. Colliersmith, Esq., from Marietta, GA, and Edward C. Boltz, Esq., from Durham, NC were re-elected to the Board of Directors. NACBA congratulates Jenny L. Doling, Esq. on being elected to the Board of Directors for 2018.

Chapter 13 Debtor’s Counsel Could Not be Reimbursed for Costs Advanced to Clients Since the Filing Fee, Credit Report Fees and the Like are Not Administrative Expenses

This case involves whether or not debtor’s counsel in Chapter 13 bankruptcy proceedings in this District will be reimbursed money advanced to their debtor clients for filing their bankruptcy petitions, taking required credit counseling course prior to filing bankruptcy, and for credit reports obtained by counsel prior to the petition being filed.

Washington Update- April 13, 2018

This is the latest update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks. 

Above Median Income Debtor Who Contributed to 401(k) and Who Over-withheld Income Taxes Beat the UST’s to Dismiss Case for Abuse

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64-Year-Old Debtor who Could Barely Fund her Spartan Lifestyle Could Discharge Student Loans, Even Though She Did Not Take Advantage of Income-Contingent Repayment Plan

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Were this Court to Grant Sanctions each time a Party Set Forth an Incorrect Legal Argument in its pleadings, it would Not Do Much of anything Else

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Trustee may Avoid Fraudulent Transfer under § 548(e) even if the Property was Exempt as Debtor’s homestead at the Time of Transfer

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Court Granted Discharge to Chapter 13 Debtors Who Made Pro-Rata Payment on Mortgage and Avoided the Lien, Since Mortgage-holder Failed to Object to Plan or Confirmation Order

Chapter 13 Debtors Made Pro-Rata Payment on Mortgage and Avoided the Lien, Since Mortgage-holder Failed to Object to the Plan or Confirmation Order

NACBA EVENTS

An integral part of NACBA’s mission is enhancing the ability of its members to represent their clients effectively by holding […]