NCBRC Editor

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Debtor Correctly Excluded Mother’s Social Security From PDI

Where the debtor lived with his mother, and they shared all income and expenses, he correctly included her expenses and excluded her social security benefits in his projected disposable income calculation. In re Palcher, 2018 WL 481863, No. 7:17-bk-3938 (Bankr. D. S.C. Jan. 16, 2018).

Above-median debtor, Michael Palcher, proposed a Chapter 13 plan to pay his mortgage directly and pay approximately 6.7% to unsecured creditors through the plan. The trustee objected to confirmation, arguing that, because Mr. Palcher did not include his mother’s Social Security in his projected disposable income, the plan did not comply with Section 1325(b) and was proposed in bad faith. [Read more…] about Debtor Correctly Excluded Mother’s Social Security From PDI

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Stay Does Not Require Bank to Release Citation Lien

Reasoning that the case involved a lien rather than an administrative freeze on funds in a bank account, the bankruptcy court found that the automatic stay did not require the bank to take affirmative steps to release its citation lien. In re Smiley, No. 17-27169 (Bankr. N.D. Ill. Jan 11, 2018).

J.P. Morgan Chase Bank froze the bank accounts belonging to Chapter 13 debtor, Kim Smiley, pursuant to a citation to discover assets filed by Bank of America. Under Illinois law, the citation created a lien on Ms. Smiley’s accounts. After Ms. Smiley filed her bankruptcy petition, Bank of America refused to release the lien and unfreeze the funds. Ms. Smiley sought sanctions for violation of the automatic stay under Section 362(k). [Read more…] about Stay Does Not Require Bank to Release Citation Lien

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Fourth Circuit Looks at Multiple Factors in Bad Faith Analysis

Filing bankruptcy for the primary purpose of discharging one debt is not, in itself, bad faith, and the bankruptcy court did not abuse its discretion when weighing several factors in denying the creditor’s motion to dismiss for cause under section 707(a). Janvey v. Romero (In re Romero), No. 17-1197 (4th Cir. Feb. 21, 2018).

Peter Romero was found liable to the victims of a Ponzi scheme in which he was involved. Pursuant to that judgment, he owed $1.275 million to Ralph Janvey, the court-appointed Receiver in the Ponzi litigation. Mr. Janvey rejected without counteroffers Mr. Romero’s attempts to settle, and Mr. Romero filed for Chapter 7 bankruptcy. The bankruptcy court denied Mr. Janvey’s motion to dismiss and granted Mr. Romero’s discharge. In re Romero, 557 B.R. 875 (Bankr. D. Md. 2016). The district court affirmed. [Read more…] about Fourth Circuit Looks at Multiple Factors in Bad Faith Analysis

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Bank May Not Hide Settlement Amount

The amount of a settlement was not “confidential commercial information” requiring that it be sealed by the bankruptcy court. In re Gibbs, No. 11-3070 (Bankr. D. Haw. Dec. 19, 2017).

Judith Lynn Gibbs’s bankruptcy estate included a claim against Bank of America for wrongful foreclosure. The Bank and the bankruptcy trustee settled and jointly sought an order to seal the settlement agreement and redact the settlement amount from any other court records. The Office of the U.S. Trustee opposed the motion. [Read more…] about Bank May Not Hide Settlement Amount

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Criminal Restitution Is Nondischargeable

A debt is nondischargeable when it is incurred as part of a criminal sentence. Medical Lien Management, Inc. v. Dampier, No. 17-1160 (10th Cir. Feb. 14, 2018) (unpublished).

Billy Dampier was convicted of theft from his employer and, as part of his criminal sentencing, was ordered to make restitution. His efforts to discharge that debt failed in the bankruptcy court and before the BAP for the Tenth Circuit. On appeal to the Tenth Circuit, the court addressed two issues: 1. Whether his former employer had standing to object to the discharge of the debt, 2. Whether the debt was dischargeable under Section 523(a)(7). Section 523(a)(7) provides for the nondischargeability of a debt which is “a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for  actual pecuniary loss.” [Read more…] about Criminal Restitution Is Nondischargeable

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No Excuses for Student Loan Servicer’s Failure to Comply with Plan

The Chapter 13 debtor was entitled to an award of attorney’s fees for her efforts to get the DOE’s student loan servicer to comply with the terms of her confirmed Plan. In re Berry, No. 16-1460 (Bankr. D. S.C. Feb. 2, 2018). [Read more…] about No Excuses for Student Loan Servicer’s Failure to Comply with Plan

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Debtor May Not Modify Rights of Tax Purchaser

By operation of state law, a tax sale purchaser has title to the purchased property and cannot have its rights modified in Chapter 13 to permit the debtor to redeem over the course of the plan. Deed Co. v. Jimerson, No. 17-513 (N.D. Ga. Jan. 23, 2018). [Read more…] about Debtor May Not Modify Rights of Tax Purchaser

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Court Not Required to Dismiss Case Exceeding Debt Limits

A court is not required to dismiss a Chapter 13 case where the debtor’s student loan debt causes his total unsecured debts to exceed the statutory debt cap. In re Pratola, 578 B.R. 414 (Bankr. N.D. Ill. Dec. 27, 2017), appeal filed, Stearns v. Pratola, Case No. 1:18-cv-213 (N.D. Ill. filed Jan. 11, 2018). [Read more…] about Court Not Required to Dismiss Case Exceeding Debt Limits

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District Court Reassesses Evidence of Undue Hardship

The district court reassessed the evidence presented at the adversary hearing and overturned the discharge of the debtor’s student loan debt. DeVos v. Price (In re Price), No. 17-3064 (E.D. Pa. Jan. 24, 2018). Chapter 7 debtor, Kristin M. Price, was a mother of three pre-school children, separated from her husband, and employed part-time as a vascular sonographer. She sought to discharge her almost $26,000.00 federal student loan. The bankruptcy court applied the three-part Brunner test, specifically finding that Ms. Price’s financial distress was likely to persist for at least five of the seven years remaining on her loan contract. Because this constituted a “significant portion of the repayment period,” the court granted discharge under section 523(a)(8). [Read more…] about District Court Reassesses Evidence of Undue Hardship

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How Much Notice is Enough?

The Eleventh Circuit found that even though Nationstar did not receive notice of the debtor’s objection to its claim, it was enough that Nationstar had actual notice of a court-ordered change in the status of its claim from secured to unsecured and failed to take timely action to protect its interest. Nationstar Mortgage v. Iliceto, No. 16-16815 (11th Cir. Dec. 11, 2017) (unpublished).

Robert Iliceto filed for Chapter 13 bankruptcy, listing U.S. Bank as his mortgage creditor. Nationstar filed a transfer of claim establishing itself as the assignee of the mortgage from U.S. Bank. Nationstar listed both its street address and a P.O. Box as “preferred” addresses. Mr. Iliceto filed a claim on Nationstar’s behalf in his Chapter 13 bankruptcy and, at the same time, objected to the claim on the basis that Nationstar was not a proper assignee. Mr. Iliceto failed to serve the objection on Nationstar as required by Rule 3007(a) and Section 502 of the Code. [Read more…] about How Much Notice is Enough?