News

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.

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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.

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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.

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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.

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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. 

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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.

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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.

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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.

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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.

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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.

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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. 

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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.

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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.”

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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.

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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.

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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.

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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. 

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