The debtor’s proposed amendment to file her chapter 11 petition under the newly enacted SBRA under which only the debtor could have a plan confirmed, would unduly prejudice the mortgage creditor who expended a great deal of time, expense, and effort to negotiate and obtain approval of its own plan. Ventura v. Gregory Funding, No. 20-1949 (E.D.N.Y. April 21, 2022). [Read more…] about Chapter 11 Debtor’s Amendment to File under SBRA Would Prejudice Creditor
Filing Petition Three Days after Loan Does Not Make Debt Nondischargeable
The debtors were entitled to summary judgment on the issue of dischargeability of their payday loans despite the fact that they took out the loans three days prior to filing for bankruptcy. Ameri Best, LLC, v. Holmes, No. 18-20578, Adv. Proc. No. 18-6044 (Bankr. D. Kans. April 27, 2022).
As they had done many times before, in March, 2018, the debtors, James and Stacy Holmes, each borrowed $500 from payday lender, Ameribest. The loans were due two weeks later with $75 interest. Three days later, they filed for bankruptcy owing Ameribest $1,150. Ameribest filed an adversary proceeding seeking an order that the debt was nondischargeable under sections 523(a)(2)(A) and (a)(6). It moved for summary judgment. The court denied the motion and ordered Ameribest to show cause why it should not enter summary judgment in favor of the debtors. The debtors then filed their own motion for summary judgment seeking an order of dischargeability and an award of attorney fees and costs under section 523(d). [Read more…] about Filing Petition Three Days after Loan Does Not Make Debt Nondischargeable
Failure to Pay Property Taxes Precludes Discharge
A mortgage refinance agreement approved by the court is not equivalent to a motion to modify under section 1329. The debtors, who failed to pay their property taxes directly as required by their plan were not entitled to discharge even though the mortgagee paid those taxes on their behalf and the debtors and mortgagee refinanced their lending agreement to encompass that change. In re Villarreal, No. 16-10106 (Bankr. S.D. Tex. April 12, 2022). [Read more…] about Failure to Pay Property Taxes Precludes Discharge
Debtor Stated Claim for Turnover of Repossessed Vehicle
The debtor stated a claim for turnover of the fair market value of a vehicle where the creditor repossessed the vehicle post-petition but prior to the expiration of section 108(b)’s extension of time to redeem or cure a default. Milledge v. Carolina Acceptance, No.21-2968, Adv. Proc. No. 22-80001 (Bankr. D. S.C. April 7, 2022).
The debtor bought a car under a retail installment contract obligating her to pay a $5,050.00 down payment and secure financing from the creditor, Carolina Acceptance, for the principal amount of $20,139.00 at an annual interest rate of 19.88% with 51 monthly payments of $592.87. The debtor paid all but $500.00 of the down payment and arranged with the creditor to pay that amount by November 4, 2021. She failed to make the payment and filed for chapter 13 bankruptcy on November 17, 2021, proposing a plan committing her to pay the car loan in full at 5.25% interest. Because of two prior dismissed bankruptcies the automatic stay did not take effect. [Read more…] about Debtor Stated Claim for Turnover of Repossessed Vehicle
Discharge Despite Unpaid Mortgage Fees
The chapter 13 debtor was entitled to discharge despite the fact that she had incurred but not paid fees and assessments under her mortgage contract while she was paying the mortgage outside the plan, where the creditor had not sought payment of those fees and assessments prior to plan completion. In re Brown, — B.R. —-, 2021 WL 4480832 (Bankr. D. S.C. Sept. 15, 2021) (case no. 16-4122).
In this case, the debtor’s plan provided for the trustee to pay off the mortgage arrears through the plan and the debtor to maintain all other payments according to the mortgage agreement outside the plan. After she successfully completed her plan, the mortgage creditor, Citizen’s Bank, objected to discharge arguing that the debtor owed $1,085 in post-petition fees and assessments.
While the debtor did not dispute that she had incurred the fees and assessments, she argued that they were not “payments under the plan,” as contemplated by section 1328(a), which would preclude discharge if not paid at plan completion. [Read more…] about Discharge Despite Unpaid Mortgage Fees
Debtor Entitled to Attorney Fees from Defense of Motion for Relief from Stay
The chapter 13 debtor was entitled, under Oregon’s reciprocal fee statute, to recover attorney fees for successfully defending a motion for relief from stay where the motion required interpretation of the terms of the motor vehicle lease. In re Gilgan, 2021 WL 4047463 (Bankr. D. Or. Sept. 3, 2021) (case no. 19-32009). [Read more…] about Debtor Entitled to Attorney Fees from Defense of Motion for Relief from Stay
Debtor Lacked Standing to Appeal Order Approving Agreement between Trustee and Creditor
The debtor lacked standing to appeal the bankruptcy court’s order approving an agreement between the chapter 7 trustee and a creditor under which the creditor agreed to fund litigation on behalf of the bankruptcy estate, where the order would not have a direct, adverse, financial effect on the debtor. Dean v. Seigel (In re Dean), No. 21-10468 (5th Cir. Dec. 7, 2021).
Lacking funds to pursue litigation on behalf of the bankruptcy estate, the chapter 7 trustee entered into an agreement with one of the debtor’s creditors, Reticulum Management, LLC, under which Reticulum supplied the funds for the litigation in exchange for a percentage of any recovery the trustee might make. The debtor objected on the grounds that the arrangement unfairly altered distribution of the estate in favor of Reticulum to the detriment of other creditors. The bankruptcy court approved the agreement and the district court affirmed. The debtor appealed to the Fifth Circuit. [Read more…] about Debtor Lacked Standing to Appeal Order Approving Agreement between Trustee and Creditor
Pre-Petition Increase in Retirement Account Contributions
A chapter 13 debtor’s post-petition contributions to his qualified retirement account may be deducted from the calculation of his projected disposable income and the amount of those contributions is presumed to be the average contribution made during the six months preceding bankruptcy. Where, as here, the debtor substantially increased his contributions on the eve of bankruptcy, he bears the burden of proving that his projected disposable income calculation should be reduced by the increased retirement account contributions. In re Huston, 2021 WL 4528883 (Bankr. N.D. Ill. Sept. 30, 2021) (case no. 20-81689). [Read more…] about Pre-Petition Increase in Retirement Account Contributions
Standing Trustee Must Return Fee if Plan Not Confirmed
The standing chapter 13 trustee must return his percentage fee to the debtor when the debtor’s plan is not confirmed. Doll v. Goodman (In re Doll), No. 21-731 (D. Colo. Dec. 6, 2021).
The debtor filed for chapter 13 bankruptcy and made $29,900 in plan payments to the standing trustee prior to confirmation. Of that amount, $19,800 went to his counsel, $7,503.30 was disbursed to the Colorado Department of Revenue on a priority tax claim, and the remaining $2,596.70 was retained by the standing trustee as part of his statutory 10% trustee fee. The plan was not confirmed and the bankruptcy court allowed the trustee to retain his fee over the debtor’s objection. The debtor appealed to the district court. [Read more…] about Standing Trustee Must Return Fee if Plan Not Confirmed
Debtor Need Not Provide for Secured Claim in Plan
Nothing in the Code requires a debtor to provide for a claim secured by his principal residence in his chapter 13 plan. In re Jones, 2021 WL 4465554 (Bankr. E.D. N.C. Sept. 29, 2021) (case no. 20-03607).
When he filed for chapter 13 bankruptcy, the debtor listed food stamps and VA disability benefits as his only source of income. He also listed his principal residence as securing a debt to Bank of New York Mellon (BONY). The debtor’s second amended proposed plan omitted any provision for BONY’s claim relating to the residence. The plan also specified that the debtor could sell the property without notice to the court or the chapter 13 trustee. BONY objected to confirmation arguing that section 1325(a) required the debtor to provide for its secured claim in the plan. The trustee also objected to confirmation on feasibility grounds and because of the provision relating to non-notification in the event of sale. The standing chapter 13 trustee filed an amicus brief on the issue of notice and on the grounds that the debtor’s failure to treat the secured claim in his plan violated section 1325(a)(3) and (5). [Read more…] about Debtor Need Not Provide for Secured Claim in Plan