The Eleventh Circuit vacated the district court’s finding that nondischargeability of a debt, standing alone, is “cause” to grant relief from stay under section 362(d)(1). Disciplinary Board of the Supreme Court of Pa. v. Feingold (In re Feingold), No. 12-13817 (Sept. 17, 2013). [Read more…] about Nondischargeability of Debt Not Per Se “Cause” for Lifting of Stay
District Court in Colorado Declines to Adopt McCoy Approach to Late-Filed Tax Returns
In In re Mallo, No. 13-98 (Sept. 11, 2013), and In re Martin, No. 12-3380 (Sept. 23, 2013), the District Court in Colorado was faced with determining under what circumstances a late-filed tax return, filed after the IRS had conducted its own assessment, could be deemed a “return” within the meaning of section 523(a)(1)(B)(i). [Read more…] about District Court in Colorado Declines to Adopt McCoy Approach to Late-Filed Tax Returns
Hardship Test Supports Discharge of Student Loan
The Bankruptcy Appellate Panel for the Eighth Circuit found that there was insufficient evidence of the student loan debtor’s “reasonably reliable future” income to support the bankruptcy court’s finding that her student loan was nondischargeable. Conway v. National Collegiate Trust (In re Conway), No. 13-6016 (Aug. 21, 2013). [Read more…] about Hardship Test Supports Discharge of Student Loan
SunTrust Consent Order Payment Not Part of Estate
After the chapter 7 debtors received their discharge they disclosed to the trustee that they had received funds as a result of a settlement agreement between the Federal Reserve and SunTrust Mortgages. They moved to reopen their bankruptcy and amend their schedules to reflect the payment. They also sought to exempt the payment as related to a “potential wrongful foreclosure claims against SunTrust Mortgage” under applicable state exemption laws. The trustee objected to the exemption and sought to administer the payment as part of the bankruptcy estate.
The issue turned on whether the payment was a “legal or equitable interest” of the debtors that existed as of the commencement of the case. The bankruptcy court found that it was not. In re Vanwart, No. 13-515 (Bankr. E.D. N.C. Aug. 27, 2013).
[Read more…] about SunTrust Consent Order Payment Not Part of Estate
Creditor Lacks Standing to Move for Dismissal under 707(b)
In In re Gandy, No. 11-30369 (Bankr. E.D. Tenn. July 12, 2013), the court found that a creditor had no standing under section 707(b) to seek dismissal of a chapter 7 petition, after conversion from chapter 13, where debtor’s petition documents showed him to be below-median. [Read more…] about Creditor Lacks Standing to Move for Dismissal under 707(b)
Proceeds of Settlement for Stay Violation Part of Bankruptcy Estate
The district court for the southern district of Georgia held that settlement proceeds from post-confirmation violation of the automatic stay under section 362(k) are property of the chapter 13 estate under section 1306(a)(1). Crouser v. BAC Home Loans Servicing, No. 12-156 (S.D. Ga. Aug. 21, 2013). [Read more…] about Proceeds of Settlement for Stay Violation Part of Bankruptcy Estate
Lower Court Sides with “Majority View” with respect to Inherited IRAs
Despite the recent holding to the contrary by the seventh circuit, the court in In re Trawick, No. 12-12581 (Bankr. C.D. Cal. Aug. 29, 2013), held that inherited IRAs may be exempt under section 522(b)(3)(C). Exemptibility is contingent upon two elements: 1) that the IRA has received a favorable determination under IRC section 7805, or is otherwise in compliance with the requirement of the IRC, and 2) that the funds in the account are “retirement” funds. Here, the court noted that there is a split in the circuits as to whether inherited IRAs can ever be exempt, under the second factor, since the debtor himself did not contribute the funds toward his own retirement. See, e.g. Chilton v. Moser, 674 F.3d 486 (5th Cir. 2012); Mullen v. Hamlin, 465 B.R 863 (B.A.P. 9th Cir. 2012); Doeling v. Nessa, 426 B.R. 312 (B.A.P. 8th Cir. 2010) (exempt); In re Clark, 714 F.3d 559 (7th Cir. 2013), petition for cert. filed, No.13-299 (Sept. 6, 2013) (never exempt).
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Ninth and Tenth Circuits Differ on Judicial Estoppel Considerations
When determining whether judicial estoppel should be applied in cases where a debtor has failed to disclose a pending lawsuit in her bankruptcy schedules, the ninth circuit expanded the inquiry into what constitutes “inadvertence” or “mistake” to include a subjective component. [Read more…] about Ninth and Tenth Circuits Differ on Judicial Estoppel Considerations
NACBA Amicus Filed in Supreme Court Exemption Case
The NACBA membership filed an amicus brief in the Supreme Court case of Law v. Seigel (In re Law), No. 12-5196 (Sept 3, 2013), in an effort to defend the debtor’s homestead exemption against surcharge. In that case, the lower court, ostensibly pursuant to its power under section 105(a), imposed the surcharge to pay trustee fees resulting from litigation necessitated by debtor misconduct. See Law v. Siegel (In re Law), 435 Fed. Appx. 697, 2011 WL 2181198 (9th Cir. 2011). [Read more…] about NACBA Amicus Filed in Supreme Court Exemption Case
Wells Fargo Socked with Damages in Excess of $3 Million – Again
Upon the death of its mortgagor, the hulking beast that is Wells Fargo blindly slouched toward foreclosure heedless of the fact that it had sold an accidental death insurance policy to the mortgagor. The decedent’s personal representative, filed a complaint in state court alleging: 1) Wrongful foreclosure and breach of the covenant of good faith and fair dealing; 2) unconscionable and unfair trade practices; 3) breach of contract; 4) violation of the Home Loan Protection Act; and 5) attorneys’ fees under NMSA § 48-7-24. The court found Wells Fargo liable under each of the five claims except the claim for violation of the Home Loan Protection Act. Dollens v. Wells Fargo Bank, CV 2011-05295, Letter Decision (N.M. Dist. Ct. Aug. 27, 2013). [Read more…] about Wells Fargo Socked with Damages in Excess of $3 Million – Again