Are voluntary retirement contributions valid means test deductions in a chapter 13? (E.D.Mich.) Can a debtor claim a homestead exemption for sale proceeds received post-petition that were not reinvested timely? (D.ME.) Does the automatic stay stop a sanction proceeding by the United States Trustee? (Bankr. D.VT.) Is a “safe harbor” letter required before filing a 9011 motion if the conduct complained of involves the filing of the bankruptcy petition? (Bankr. D.N.J.) When are punitive damages warranted when a creditor violates the automatic stay? (Bankr. W.D.VA.) Can a bankruptcy court strike a 97 page pleading because it exceeded the 25 page limit in the local rules? (Bankr. N.D.GA.) Is a state court injunction prohibiting the filing of bankruptcy invalid? (Bankr. N.D.IL.)
Prior to filing bankruptcy, the Debtors were involved in a tax dispute with the IRS. The IRS demanded the Debtors pay $107,000.00 in taxes plus $80,000.00 in fraud penalties for tax years 2009-2011. The Debtors petitioned the Tax Court for review. Shortly before the trial, the parties agreed the Debtors owed $100,000.00 but were split over calculation of the penalties. The IRS sought a 75% fraud penalty under 26 U.S.C. §6663(a), while the Debtors argued for a 20% negligence penalty under 26 U.S.C. §6662(a).
In a student loan dischargeability proceeding, can a Debtor still demonstrate undue hardship if a student loan lender offers an IBRP of $0.00 per month? (Bankr. D.OR.) In a “Chapter 20” scenario, is it bad faith for the Debtor to file the chapter 13 if the plan will not strip off a wholly unsecured second mortgage? (Bankr. S.D.Fla.) In a chapter 13 confirmation context, can a creditor successfully move for summary judgment on the issues of bad faith plan and petition under 11 U.S.C. §§ 1325(a)(3) and (a)(7)? (Bankr. D.ME.) Is intentional concealment of a lawsuit in a bankruptcy grounds to bar the law suit under the judicial estoppel principle? (7th Cir.) Does a bankruptcy court have jurisdiction to enter a monetary judgment on a disputed state law claim in the course of making a dischargeability determination? (D.NV.) Can a chapter 7 trustee reopen a bankruptcy to administer a previously disclosed and abandoned asset? (Bankr. C.D.IL.) In a dischargeability sanctions proceeding, which party bears the burden to prove that there is no objectively reasonable basis for concluding the discharge makes a creditor’s actions unlawful? (Bankr. N.D.Ohio) In resolving a trustee plan objection to confirmation, can the parties agree to strike the offending language without service or notice to creditors? (Bankr. E.D.Tenn.) Does the means test allowance for mortgage expenses create a cap which disallows the extra amount of a higher mortgage payment? (Bankr. N.D.Tex.)
The Debtor and his spouse were indebted to Standard Mortgage Corporation (“SMC”) which was secured by a mortgage on the Debtor’s real estate. The Debtor became delinquent on his mortgage payments and SMC instituted a foreclosure. Two days before sale, the Debtor filed his first chapter 12 bankruptcy. Approximately six months later, SMC moved from relief from stay which was resolved with an order for certain payments and included a “drop dead” order which allowed SMC to move ex parte for a default and obtain an order granting relief from stay.
Does a default judgment entered prior to bankruptcy have preclusive effect in a dischargeability proceeding? (2nd) Can a UCC lien be avoided if it doesn’t contain a description of the collateral and instead refers to a description in another document? (7th) Do five failed attempts of chapter 13 plan confirmation constitute per se unreasonable delay and cause for dismissal under 11 U.S.C. § 1307(c)(1)? (Bankr. E.D.Va.) After a chapter 13 discharge can the IRS collect on unpaid interest on its claim? (Bankr. Neb.) If a chapter 7 debtor’s attorney exercises control over an estate asset before abandonment, is he guilty of violating the automatic stay? (Bankr. Conn.)
Prior to filing bankruptcy the Debtor was paying Defendant Americar, Inc. d/b/a Auto Brokers (“Auto Brokers”) for the purchase of a 2007 GMC Yukon Denali and written notice was sent to Auto Brokers. Auto Brokers filed a proof of claim in the amount of $11,338.40. Approximately nine months later Auto Brokers contacted the vehicle insurance company and learned the insurance policy had been cancelled. Auto Brokers hired a towing company to repossess the vehicle.
The married Debtors (Mr. Alfonso and Ms. Diaz) filed a chapter 7 bankruptcy. Prior to filing, Ms. Diaz had been injured in a slip and fall accident while working at Nordstrom. The claim was not listed in the schedules. Ms. Diaz hired a law firm to pursue her claim. The law firm (“Firm”) searched but did not find Ms. Diaz’ bankruptcy. The Debtors then received their bankruptcy discharge.
Whether a chapter 7 debtor, who wants to retain a leased vehicle, must sign a reaffirmation agreement to assume the lease. (Bankr. D.Mass.) Is an adversary proceeding required to avoid a wholly unsecured junior mortgage in addition to chapter 13 plan language doing the same? (Bankr. N.D.Ohio) Can a chapter 13 debtor who is a Successor-in-Interest to encumbered real estate, de-accelerate the mortgage in his chapter 13? (Bankr.E.D.Wis.) Can debtor’s counsel be forced to disgorge his entire fee for failure to provide notices to the debtor pursuant to 11 U.S.C. §§ 526-528? (Bankr. D.N.J)
On August 28, 2019, the First Circuit Bankruptcy Appellate Panel affirmed a pair of orders from the Bankruptcy Court denying Debtor’s motions to vacate. This was an unpublished opinion. The Debtor filed a chapter 13 petition in September 2016 asserting an ownership interest in a two-family dwelling (the “Property”). Prior to the bankruptcy filing the Debtor and the Property were involved in foreclosure actions. The Debtor filed a plan that did not provide any treatment for the secured claims. He also asserted a homestead exemption on the Property.
Can a discharge be denied under 11 U.S.C. §§ 727(a)(2) and (4) when Debtors failed to disclose a $46,000.00 ring previously thrown into the lake behind their home? (D.ID.)
Are payments (received under the Adoption Assistance and Child Welfare Act of 1980) considered benefits received under the Social Security Act and therefore excluded from the means test? (Bankr. M.D.PA.) Does a debtor lose the exempt status of tax refunds if they are deposited and co-mingled in a non-exempt bank account? (Bankr. N.D. Miss.) Is it a violation of the automatic stay for a university to withhold a diploma and transcripts for unpaid student debt? (M.D.PA.)
The following are all cases citing the Supreme Court opinion of In re Taggart, 139 S. Ct. 1795, 204 L. Ed. 2d 129 (U.S. June 2019) through August 29, 2019. Case outlines follow below. Also, NACBA recently presented a webinar on the Taggart case. It can be found at NACBA.org under the Webinar tab.
On July 25, 2019, the Bankruptcy Court for the District of Colorado denied confirmation of a plan based on the failure of the Debtors to submit their disposable income per the means test. The Debtors claimed a special circumstance expense of $900.00 per month for a chronic and severely painful medical condition for which marijuana is the only effective remedy.
On August 23, 2019, the Bankruptcy Court for the District of Oregon partially discharged an attorney’s private student loans in an unpublished opinion. NACBA member Richard Parker of Parker, Butte & Lane, P.C. of Portland Oregon argued on behalf of the Debtor. The Debtor is an attorney who has expertise in indigent criminal defense. She has no medical issues or children. At the time of filing her bankruptcy she owed $198,691.00 in federal loans to ECMC. She reached a settlement with ECMC under the REPAYE program for an affordable monthly payment.
Is property awarded but not transferred to a non-filing spouse considered property of the estate? (Bankr. W.D.PA.) Does the automatic stay prevent a creditor from deposing the debtor’s attorney? (Bankr. D.MD.) Does a secured creditor’s inaction indicate acceptance of a chapter 13 plan under Section 1325(a)(5)(A)? (Bankr. E.D.WI.) Is a dismissal with prejudice warranted when a jailed Debtor makes multiple false representations about her incarceration? (Bankr. S.D.GA.) Is a luxury secured debt expense an allowed deduction on the means test for an above median income chapter 13 debtor? (Bankr. W.D.LA.)
Can a debtor waive a written affirmative defense to relief from stay by failing to argue or prove it at trial? (Bankr. E.D.Ark.) Is a DSO creditor entitled to object to a plan if the creditor didn’t timely file a proof of claim? (Bankr. N.D.OH.) Is a Debtor’s disclosure of property interests in his schedules considered a judicial admission that the property is property of the estate? (Bankr. N.D.GA.) Does a debtor have to prove a “change in circumstances” before a confirmed chapter 13 plan can be modified under Section 1329? (Bankr. M.D.Penn).
On August 13, 2019, the Seventh Circuit Court of Appeals reversed in part and affirmed in part the lower courts. On appeal, NACBA board member Tara Twomey submitted an amicus brief on behalf the National Consumer Bankruptcy Rights Center (NCBRC) supporting the Debtor. The facts underlying the case started in 2001. Jacqueline M. Sterling (“Debtor”) was sued in state court for approximately $520.00 in membership fees owed to Southlake Nautilus Health & Racquett Club (“Creditor”). The Creditor was represented by the law firm Austgen, Kuiper & Associates (“Creditor’s Counsel”). After obtaining a judgment in 2002, Creditor’s Counsel filed “proceeding supplemental” in state court to collect on the judgment. The Debtor did not appear at the collection hearings and ultimately the state court issued a “body attachment” (bench warrant) against Debtor to show cause for violating the court’s orders.
On August 7, 2019, the Eleventh Circuit Court of Appeals determined that the Debtors were not eligible for discharge under 11 U.S.C. § 362(a)(19). Prior to the bankruptcy filing, the Debtors were sued by Plaintiffs in Illinois state court alleging that the Debtors sold them unregistered securities without a license and made material misrepresentations about the investment violating Illinois and Florida securities laws. The Debtors answered the state court complaint asserted affirmative defenses and responded to motions. However, they refused to respond to interrogatories or request for production despite orders compelling discovery. The state court ultimately sanctioned the Debtors by entering a default judgment against them for $981,010.63 plus $547.00 in costs.
In a Chapter 20 cramdown of a junior lien, can the junior lienholder file an unsecured claim for the amount of the voided lien? (9th Cir. BAP) Can an heir to real estate cram down a reverse mortgage in chapter 13? (Bankr. S.D.Miss.) Does a non-filing ex-spouse have to ask the bankruptcy court for permission to modify a domestic support order in the divorce case? (Bankr. N.D.IL.) Is the confirmation of a chapter 13 plan res judicata on the amount of mortgage arrears? (Bankr. W.D.PA.) Can a bankruptcy abstain from reopening a bankruptcy when the Debtors have been litigating dischargeability in state court? (Bankr. N.D.GA.) Is surrender of secured collateral post-confirmation per se bad faith to justify denial of the plan amendment? (Bankr. E.D.WI.)
On August 5, 2019, the Bankruptcy Court for the Western District of Pennsylvania entered an order sanctioning Debtors’ counsel. In this miscellaneous proceeding, the Court examined the practices of a large volume bankruptcy filer in multiple cases. Compare this result with the disbarment and report to the UST, USA, and to other disciplinary bodies in In re Pina, No. 18-15928-JKO, 2019 Bankr. LEXIS 1915, at *1 (Bankr. S.D. Fla. June 25, 2019).
In 2004 the Debtors purchased their home with a $209,000.00 purchase money deed of trust held by Bayview Loan Servicing (Bayview). In 2006 the Debtors obtained a second mortgage from Madison Management Services (Madison). In 2017, the Debtors and Bayview entered into a loan modification agreement that provided for a new principal balance of $257,566.94.
Can a chapter 13 plan modify student loans so that interest does not accrue during the bankruptcy? (Bankr. D.CT. July 23, 2019) Can an above-median income debtor’s confirmed chapter 13 plan payment be modified 18 days post-confirmation using schedules I and J? (Bankr. S.D.IL.) Is an owner/manager of an incorporated creditor liable for a creditor’s violations of the automatic stay? (Bankr. S.D.TX.) Can a debtor change the venue of their case? (Bankr. D.Tenn.) Does a chapter 13 debtor have to file her tax returns before the deadline in order to have them available at the 341 meeting of creditors? (Bankr. E.D.WI.)
The debtor filed a chapter 13 bankruptcy case the day before the foreclosure sale of his residence. The debtor notified creditor’s counsel of the filing but counsel proceeded with the foreclosure sale regardless. Creditors’ counsel believed the residence was not property of the estate based on the local land records.
The value of Debtor’s real estate was $90,147.00. The first mortgage was $70,100.13 and the judicial lien was $88,609.56. The Debtor’s homestead exemption is $15,000. 735 ILCS 5/12-901. The Bankruptcy Court addressed Debtor’s argument that when a judicial lien partially impairs an exemption, it can be fully avoided under Section 522(f)(1)(A).
Within one year of filing his chapter 13, the Debtor jointly purchased a vehicle and cosigned a note with his son. The son does not live with the Debtor and the Debtor has not used the vehicle. At filing, the Debtor proposed to cram down the total amount owed to the value of the vehicle. The Debtor argued that the 730-day anti-modification provision in the hanging paragraph of Section 1325(a)(9) doesn’t apply because the vehicle was not purchased for his benefit.
The Debtors filed a chapter 7 bankruptcy and listed a 1937 Ford Tudor as an asset. The vehicle was described as “Bad Transmission — fair condition.” At filing the transmission was inoperable and the seats were removed. As such, the vehicle was not capable of being driven or operated on the roadway. However, the vehicle was registered and insured. After the bankruptcy was filed, the car was repaired and operable. The Debtors claimed the vehicle exempt under the Idaho motor vehicle exemption ($7,000.00) which provides in relevant part “[a]n individual is entitled … to an exemption of one (1) motor vehicle to the extent of a value not exceeding seven thousand dollars ($7,000).” Idaho Code § 11-605(3).
This case consolidated three bankruptcy cases with similar facts. In two cases (Gravel and Beaulieu), the Court entered an order determining that the Debtors had cured all prepetition defaults and were current on all post petition mortgage payments (Debtor Current Orders) to the PHH Corporation (PHH). Thereafter PHH issued incorrect mortgage statements including charges that contradicted the Debtor Current Orders. The chapter 13 trustee filed a motion for sanctions based on PHH’s flagrant violation the orders and of Fed. R. Bankr. P. 3002.1.
The most recent case to cite Taggart v. Lorenzen, 139 S. Ct. 1795 (2019) is a non-bankruptcy case discussing the enforcement of an injunction against the defendant and against third parties conspiring to violate the injunction. This case is interesting as it raises the possibility of enforcing the discharge order against not only the creditor but other third parties who conspire with the creditor to violate the discharge order.
On June 25, 2019 the District Court for the Eastern District of Michigan reversed and remanded a decision by the Bankruptcy Court about late plan payments. The Debtors were in a 60 month plan which provided for monthly payments and payment of their 2017 tax refund. At the expiration of the 60 month plan, the Debtors had not paid the refund to the Trustee. The Trustee filed a motion to dismiss and shortly thereafter the Debtors submitted their refund to the Trustee. The Debtors asked the Court to deny the motion to dismiss arguing the Bankruptcy Court had discretion to allow them to cure the default.