Court Rules No Discharge Violation, Debtor’s Plan Language Didn’t Require Vehicle Lien Release Upon Plan Completion

Bankruptcy Court Determines Redemption Value of Frankenstein Truck

On April 18, 2019 the Bankruptcy Court for the District of New Mexico entered an order determining the redemption value of a highly modified pickup truck.The Debtor purchased the truck in August of 2014 by obtaining a loan in the amount of $15,715.88 from State Employees Credit Union (Credit Union). Prior to filing bankruptcy, the Debtor made extensive changes to the truck. Originally a 1978 Ford F-150, it was modified to add four-wheel drive and a Super-Cab with the designation of an F-350. The Debtor valued the truck at $600.00 stating it needed repairs including a new transmission. The estimate provided did not include an amount for a transmission.

Bankruptcy Court Rejects Equitable Tolling Argument to Extend Deadline to File Dischargeability Complaint

On April 16, 2019 the Bankruptcy Court for the District of New Jersey denied the Creditors’ motion to extend the dischargeability complaint deadline.Creditors allege that they were the victims of a fraudulent real estate scheme carried out by one of the Debtors. The Creditors had filed a lawsuit in state court which was pending when the bankruptcy was filed.

District Court Affirms Chapter 13 Debtor’s Absolute Right to Dismiss Despite Bad Faith, Refuses to Extend Marrama

Noting a split in authority, the District Court for the Northern District of New York found that a chapter 13 debtor has the absolute right to dismiss her bankruptcy.

Bankruptcy Court Reviews Exceptions to General Rule Denying Discharge for Omitted Debts in Chapter 13 Cases

On April 3, 2019 the Bankruptcy Court for the District of Kansas determined that an unscheduled debt in the Debtor’s chapter 13 case was discharged. The court reviewed several arguments for exceptions from the general rule that unscheduled debts are not discharged in a chapter 13 case.

Bankruptcy Court Joins Minority, Grants Discharge, and Denies the Trustee’s Motion to Dismiss for Delinquent Post-Petition Mortgage Payments

On March 28, 2019 the Bankruptcy Court for the District of Arizona Denied the Trustee’s Motion to Dismiss based on the Debtors’ post-petition mortgage default. In doing so, she joined the minority position on this issue.

Bankruptcy Court Cites Achilles in Well-Heeled Analysis of Sovereign Immunity for the State Revenue Department

It’s going to be an interesting opinion when the first line reads “In mythological lore, the Greek hero Achilles thought himself to be invincible, impervious to the swords and arrows of his enemies.” Judge Taddonio of the Bankruptcy Court for the Western District of Pennsylvania goes on to discuss the sovereign immunity claims by the Pennsylvania Department of Revenue (Revenue) in an opinion dated March 29, 2019.

Disclosure of Attorneys Fees Is Required if Services Have Any Impact on a Bankruptcy Case

On March 29, 2019, the United States Bankruptcy Court for the Eastern District of New York explained in detail the disclosure requirements under 11 U.S.C. § 329(a) and Fed. R. Bankr. P. 2016(b).

Illinois District Court Refuses to Adopt Categorical Rule that a Bankruptcy Disclaimer on a Post-Discharge Communication to a Debtor Excuses Debt Collector from Liability

On March 25, 2019, the United States District Court for the Northern District of Illinois denied a motion to dismiss an FDCPA class action lawsuit for collection on a discharged debt.

Michigan District Court Applies Judicial Estoppel to Employment Discrimination Suit – Despite Debtor’s Disclosure of the Claim to the Bankruptcy Attorney

On March 26, 2019, the United States District Court for the Eastern District of Michigan dismissed the Debtor/Plaintiff’s lawsuit against USF Holland, LLC based on judicial estoppel.

Illinois Bankruptcy Court Examines Whether Severance Pay is Estate Property

On May 1, 2018 the Debtor was laid off from his job. His employer offered the Debtor a separation agreement offering the debtor the amount of $83,333.33 which was four months of base salary. These payments were to be paid out to the Debtor in bi-weekly installments. In exchange, the Debtor had to agree to a non-compete provision, release of claims, be available to help transition his duties to others, and cooperate with and assist his former employer in connection with any audits, inspections, inquiries or legal proceedings.

Texas Bankruptcy Court Says Surrender Doesn’t Require Delivery

In 2005 the Debtors purchased a used mobile home with a secured loan from 21st Mortgage Corporation (21st Mortgage). In August 2018 the Debtors filed a chapter 7 bankruptcy petition with the intent of reaffirming the debt to 21st Mortgage. After their 341 Debtors decided to surrender the mobile home to 21st Mortgage.

Georgia Bankruptcy Court Reviews Case Split on Bases to Amend Plan Under 1329 (Subtitle: When the Original Plan was Confirmed with Inclusion of SSI Benefits, Can the Debtor Later Amend the Plan to Remove That Contribution?)

In this case the debtor had a confirmed plan in which he had pledged some of his fiancé’s SSI income to make his plan payments feasible. The debtor then moved to amend the plan to reduce his plan payment by withdrawing this contribution. This was based on a recent decision by the bankruptcy court concluding SSI is not included in current monthly income, and that it is not per se bad faith to exclude SSI from plan payments. In re Green, 2018 WL 1581635, at *2 (Bankr. S.D. Ga. Mar. 27, 2018).

7th Circuit Reverses Bankruptcy Courts’ Uniform Rule to Keep Debtor’s Vehicle in Chapter 13 Post-Confirmation Estate

This opinion was based on the consolidated appeals of seven cases. Each of the seven debtors filed a petition for bankruptcy under Chapter 13 of the Bankruptcy Code in the Bankruptcy Court for the Northern District of Illinois. The uniform confirmation order in this district (in most cases) is that upon confirmation, the property of the estate remains property of the estate. City of Chi. v. Marshall, 281 F. Supp. 3d 702, 704 (N.D. Ill. 2017).

In Stay Violation Proceeding, Florida Bankruptcy Court Awards Debtor $45,500.00 against the Creditor, $15,000.00 against Creditor’s Counsel, Plus a Show Cause Order Why The Court Shouldn’t Impose Additional Sanctions Against Counsel

The Bankruptcy Court for the Northern District of Florida recently issued an opinion that all debtors’ counsel should read. The court reviewed in detail the requirements of the automatic stay, including the duty to correct a violation, the bases for awards of actual damages (including emotional distress) and punitive damages against both a creditor and the creditor’s counsel.

11th Circuit Affirms that a Final Discharge Order Moots Creditor’s Appeal of Dismissed Dischargeability Complaint

On March 8, 2019 the 11th Circuit Court of Appeals ruled that an appeal from an order denying a creditor’s complaint to determine dischargeability under 11 U.S.C. § 727 was moot when the debtor obtained a discharge.

Kansas Bankruptcy Court Denies Motion to Extend Deadline to Object to Discharge When Debtor Has Been Cooperative, Courts in the 10th Circuit Must Strictly Enforce the Discharge Objections Deadline.

On March 7, 2019 the Bankruptcy Court for the District of Kansas denied a creditor’s motion to extend the deadline to file an adversary proceeding to determine dischargeability of the underlying debt. On September 25, 2018 the Debtor filed for relief under Chapter 7 of the Bankruptcy Code. The Bank of Holyrood (Bank) is a creditor who filed a claim for more than $600,000.00. Bank’s counsel entered its appearance within two weeks of the bankruptcy filing, attended the 341 meeting of creditors and the trustee’s 2004 exam of the Debtor.

Bankruptcy Court Approves Higher Hourly Rate for Attorney Who Attended CLE

The Bankruptcy Court for the Western District of Michigan has a three-tiered presumptive hourly rate for chapter 13 debtor’s attorneys. The first, at $175.00 per hour, is the lowest tier. The second, at $220.00 per hour, is for attorneys who have attended at least seven hours of CLE and certified attendance and chapter 13 expertise to the court. The third, at $250.00 per hour, is for attorneys who are certified by the American Board of Certification (ABC).

6th Circuit BAP Holds Creditors Have a Duty to Act to Stop Civil Contempt Proceedings

On March 4, 2019 the Bankruptcy Appellate Panel of the 6th Circuit Court of Appeals ruled on multiple issues important to debtors.

7th Circuit Clarifies Issues Regarding The “Finality” of Lower Court Orders on Appeal

On February 26, 2019, the 7th Circuit Court of Appeals ruled whether a district court’s ruling on an interlocutory appeal from the bankruptcy court was “final.” Under 28 U.S.C. §158(d)(1) the circuit court only has jurisdiction from appeals from all final decisions.

9th Circuit Rules on Whether Chapter 20s Are Per Se Bad Faith Filings and Whether An Obvious Intended Lien Avoidance Action Affects Eligibility Under 11 U.S.C. § 109

The 9th Circuit Court of Appeals, in an unpublished opinion, recently ruled on two important issues. The Court examined whether filing a chapter 13 bankruptcy soon after completion of a chapter 7 is a bad faith filing per se. The Court also examined whether the amount of a wholly unsecured lien should be considered in determining debtor’s eligibility under the secured or unsecured debt caps found in §109(e) when the debtor’s obvious intention is to strip off the lien.

Nebraska Bankruptcy Court Rules §506(b) Is Not A Blank Check for Over-Secured Creditors, Knocks off $38,355.85 of Excessive Fees and Charges

The Bankruptcy Court for the District of Nebraska recently reviewed the reasonableness of the fees and charges claimed by a mortgage creditor on an over-secured loan. Prior to filing for protection under Chapter 13 of the Bankruptcy Code, the Debtor owned two properties, one residential and the other business, and pledged them as collateral for an SBA loan through the creditor. He subsequently fell behind on payments and was not able to pay the balloon amount. The properties are collectively valued at $220,000.00 and the principal and interest balance at filing was less than $70,000.00. The creditor’s claim also included $13,592.20 for late charges and $41,365.85 for expenses for appraisals, assessments and other fees. The Debtor objected to the reasonableness of the charges and expenses.

Maryland Bankruptcy Court Holds Failure to Produce Writings Doesn’t Invalidate Credit Card Claims

The Bankruptcy Court for the District of Maryland recently ruled whether several claims based on an open-ended credit card agreements could be disallowed for failure to provide the Debtors documents supporting the claim. The Debtors’ counsel had requested the creditors to deliver copies of the writings on which each of the claims was based and other documents including copies of all monthly statements to copies of all notices of transfer of the account. When the creditors failed to supply the information, the Debtors objected to those claims and asked that they be disallowed.

Bankruptcy Court Addresses Eligibility, Non-formal Notice of Bankruptcy and a Creditor’s Affirmative Duty to Correct Technical Violations of the Automatic Stay

A bankruptcy court recently ruled on several issues of importance to all potential debtors. First, the court examined the effect of a prior dismissal order (for failure to timely file certain schedules, statements or other documents) on a subsequent bankruptcy petition. Specifically, the court examined the small slice of cases where the automatic stay does not apply in a second case when the Debtor is not an “eligible Debtor” under 11 U.S.C. § 109(g). The court also examined the split in authority on who bears the burden of proof of proving eligibility.

Bankruptcy Court holds Debtor is Entitled to Chapter 13 Discharge even if Co-Debtor is Delinquent on Post-Petition DSO Payments

A bankruptcy court recently reviewed the issue whether a debtor can receive a discharge under § 1328 even if her co-debtor husband is delinquent on a post-petition DSO payment. The court examined the requirements for discharge using the plain language of § 1328(a).

Bankruptcy Court Rejects Ditech’s Standing to file Mortgage Claim

A bankruptcy court recently expunged a claim of Ditech Financial LLC (Ditech) asserting that it was the creditor and the servicer of a note secured by an investment property (the “Property”) owned by the Debtors. Ditech filed a petition for bankruptcy in Case No. 19-10414 (Bankr. S.D.NY February 11, 2019). The order was entered in another proceeding before a different judge after Ditech’s bankruptcy was filed.

Bankruptcy Court Highlights Broader Discharge Provisions in Chapter 13 and Finds that Converting a Case from 7 to 13 to Utilize the Broader Discharge is Not Bad Faith.

The United States Bankruptcy Court for the Northern District of Georgia recently denied an objection to confirmation concerning the debtors’ conversion to a chapter 13 to take advantage of the broader discharge under 11 U.S.C. § 1328.

Bankruptcy Court Denies USA’s Blanket Request for Tolling of Deadlines During Lapse of Appropriations

In an unpublished opinion, the Bankruptcy Court for the Northern District of Ohio recently denied a motion from the United States Attorney’s Office “requesting a tolling of all deadlines applicable to the United States, its agencies, or its employees, including, without limitation a tolling of all bar dates for the filing of proofs of claim and request for the payment of administrative expenses with respect to the United States and its agencies from December 22, 2018 through January 28, 2019 (the “Appropriations Lapse”).”

Should You Object to that Claim Now or in The Next Bankruptcy Case? A Bankruptcy Court Discusses the Effect of Res Judicata in Claim Allowance and Disallowance

The Bankruptcy Court for the Central District of California recently examined whether a claim, allowed or disallowed in a previously dismissed bankruptcy, has res judicata effect in a subsequent bankruptcy. The court discussed the elements of res judicata in these circumstances.

Bankruptcy Court Clarifies Authentication Standard in Motions for Summary Judgment

The Bankruptcy Court for the District of Delaware recently clarified the authentication standard for an exhibit attached to a motion for summary judgment. The court specifically examined the change in Fed.R.Civ.P. 56(c)(4) in 2010 (made applicable to bankruptcy proceedings in Fed.R.Bankr.P. 7056 and applicable to all contested matters in Fed.R.Bankr.P. 9014(c)).

10th Circuit BAP Says Amending Schedules in a Reopened Case is not Subject to Excusable Neglect Test

The Bankruptcy Appellate Panel for the 10th Circuit recently addressed a thorny issue about amending schedules in reopened cases. See In re Dollman, BAP No. NM-18-030(10th Cir. B.A.P. February 5, 2019). The question is whether a debtor in a reopened case seeking to amend schedules must first move for an extension of time pursuant to Fed.R.Bankr.P. 9006, and demonstrate excusable neglect.

Bankruptcy Court Allows Exemption of Pre-petition Disbursement from 401k

The Bankruptcy Court for the Eastern District of Louisiana recently reviewed an interesting case where the debtor’s pre-petition 401k disbursement was held by a state taxing agency. See In re Bostick, No. 18-10069 (Bankr. E.D.LA. Feb. 1, 2019). The court determined whether the money returned from the state was a tax refund or an exempt asset.

2019 President’s Letter to Membership

As we collectively depart 2018 and begin anew in 2019, it may be an overstatement to apply this famous quote to any portion of our lives, our practices, or of NACBA as a whole. Still, in looking back, one can obviously spot highlights and low lights and, importantly, use that perspective in shaping the path forward.

8th Circuit Addresses Res Judicata and Good Faith in Sanctions Case

In First State Bank of Roscoe v. Stabler, No. 17-1904, 2019 U.S. App. LEXIS 3041 (8th Cir. Jan. 30, 2019), the 8th Circuit affirmed discharge violations against the First State Bank of Roscoe and it’s principal John R. Beyers for concocting a scheme post-discharge that ended with debtors owing the Bank money originally discharged. The court rejected the preclusive effect of an underlying state court action and defendants’ good faith defense.

Bankruptcy Court defines Surrender Citing Roberto Duran, George Custer and Napoleon

The Bankruptcy Court for the Northern District of Oklahoma recently reviewed the definition of “surrender” in a chapter 13 plan. In re Ball, No. 17-10953 (Bankr. N.D..OK. Jan. 23, 2019).

Bankruptcy Court Says Call First Before Seeking Attorney’s Fees

The Bankruptcy Court for the Eastern District of Michigan recently ruled whether a creditor must pay attorney’s fees to the objecting party when the creditor filed a claim with deficient information. In re Ball, No. 17-22574 (Bankr. E.D.MI. Jan. 22, 2019).

Incarceration Does Not Exempt Debtor From Completing the Credit Counseling Requirement

The Bankruptcy Court of the Northern District of Ohio recently ruled that a debtor incarcerated in federal prison is not entitled to an exemption under 11 § U.S.C. 109(h)(4). In re Heim, No. 18-62067 (Bankr. N.D. Ohio Jan. 16, 2019).

Title Loans Aren’t Valid Deductions on Means Test Says Utah Bankruptcy Court

The Utah Bankruptcy Court recently ruled that a non-purchase money interest in a debtor’s vehicle is not a valid deduction on Form 122C-2 Calculation of Disposable Income. In re Traylor, No. 18-23314, 2019 Bankr. LEXIS 75 (Bankr. D. Utah Jan. 10, 2019).

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).

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 […]