A late-filed tax return is not an “equivalent report” for purposes of dischargeability. Nilsen v. Mass. Dept. of Rev., No. 16-10148 (D. Mass. Sept. 6, 2016). Johan Nilsen filed several of his state and federal tax returns one to five years late. Neither the IRS nor the state department of revenue had conducted their own assessment of Mr. Nilsen’s taxes prior to his filing. After some of his debts were discharged in chapter 7 bankruptcy, Mr. Nilsen filed an adversary complaint seeking to discharge his tax debts. The bankruptcy court granted the tax authorities’ motion for summary judgment finding that the tax debts were nondischargeable under section 523(a)(1)(B). In re Nilsen, 542 B.R. 640 (Bankr. D. Mass. 2015). [Read more…] about “Equivalent Report” Workaround Fails in First Circuit
Title Pawn Loan Not “Ownership Cost”
A debtor may not deduct “ownership costs” under the IRS National and Local Standards for a non-purchase-money security interest in his car. Feagan v. Townson (In re Feagan), No. 16-108 (N.D. Ga. Sept. 6, 2016).
When he filed for chapter 13 bankruptcy, Brian Keith Feagan, an above-median debtor, deducted “ownership costs” for his vehicle based on payments he made on a post-purchase loan secured by the vehicle. Mr. Feagan paid $51.43 per month on a “title pawn” secured by his vehicle which he deducted on the Means Test as “payments on a secured debt” under section 707(b(2)(A)(iii). He also deducted $517.00 from his income as a vehicle ownership expense under the IRS Local Standards based on that loan. His proposed plan did not pay unsecured creditors in full. In order to avoid duplicative deductions, the bankruptcy court required Mr. Feagan to reduce his ownership costs deduction by the amount of his average monthly payment on the secured debt for a total reduction of his projected disposable income by $465.57. The bankruptcy court then confirmed the plan over the trustee’s objection. [Read more…] about Title Pawn Loan Not “Ownership Cost”
Court Rejects McCoy and Sticks with Beard
Whether a post-assessment tax return represents an honest and reasonable attempt to comply with tax laws and is a “return” within the meaning of section 523(a)(*), depends on the taxpayer’s subjective intent and the content of the information provided in the late-filed return. Biggers v. I.R.S., No. 15-41 (M.D. Tenn. Sept. 9, 2016).
After Pamela and James Biggers failed to file tax returns for several years, the IRS assessed federal taxes against James. In February, 2007, approximately one year after the IRS performed its final tax assessment, the Biggers filed joint tax returns for the years that had been assessed against James. Their returns showed different tax liability than that which had been determined by the IRS with several years claiming a lower liability and one year claiming higher liability. The Biggers then filed a chapter 7 bankruptcy petition and sought to discharge their tax debts for those years. [Read more…] about Court Rejects McCoy and Sticks with Beard
Non-Threatening Collection Letter May Underlie FDCPA Claim
The Fifth Circuit held that “a collection letter violates the FDCPA when its statements could mislead an unsophisticated consumer to believe that her time-barred debt is legally enforceable, regardless of whether litigation is threatened.” Daugherty v. Convergent Outsourcing Inc., No. 15-20392 (5th Cir. Sept. 8, 2016). [Read more…] about Non-Threatening Collection Letter May Underlie FDCPA Claim
NACBA and NCLC Enter Fair Credit Reporting Arena
On September, 2, 2016, NACBA and the NCLC joined forces to file an amicus brief in a case addressing credit reporting standards under the FCRA. Abeyta v. Bank of America, No. 16-15707 (9th Cir.).
Ginny Abeyta filed for chapter 13 bankruptcy in June, 2010, and successfully completed her plan in April, 2014. In October, 2014, she requested her credit report and found that Bank of America had reported her debt as “past due” as of July, 2010, and in “major delinquency” as of August, 2010. There was no mention of her successful chapter 13 bankruptcy. She requested reinvestigation of the debt and the new credit report contained the same inaccuracies. [Read more…] about NACBA and NCLC Enter Fair Credit Reporting Arena
Limit on Right to Amend Homestead Exemption
Notwithstanding a debtor’s absolute right to amend her schedules, “a debtor can only amend her homestead exemption postpetition if on the petition date the debtor could have legally claimed an exemption for the property in question.” Earl v. Lund Cadillac, LLC. (In re Earl), No. 15-1693 (D. Ariz. Aug. 5, 2016).
When she filed for chapter 13 bankruptcy, Rachael Anne Earl, lived with her husband and four children in the house they had lived in for four years (Claiborne property). Ms. Earl did not have title to the Claiborne property because the property had been sold at a trustee’s sale. At the same time, she owned another single-family home that she had been renting to third parties for four years (Sunnyvale property). After her attempts to overturn the trustee sale of the Claiborne property were unsuccessful, and ten months post-petition, Ms. Earl filed a notice of change of address to the Sunnyvale property and amended her schedules to claim a homestead exemption in that property. Her case was converted to chapter 7 and the bankruptcy court granted Lund Cadillac’s objection to the amendment to Ms. Earl’s homestead exemption. [Read more…] about Limit on Right to Amend Homestead Exemption
NACBA and the NCLC Seek Rejection of Brunner Test
NACBA and the NCLC have added their voices to an Eleventh Circuit student loan discharge case. Acosta Conniff v. ECMC, No. 16-12884 (11th Cir.). The amicus brief, filed August 22, begins with a direct attack on the Brunner, hardship test as straying too far from the plain language of section 523(a)(8) and from congressional intent to permit discharge of student loans under certain circumstances. [Read more…] about NACBA and the NCLC Seek Rejection of Brunner Test
Fourth and Seventh Circuits Peer Down from the Ivory Tower on FDCPA Issue
The Seventh and Fourth Circuits have joined the fantasy world in which the debtor, the trustee or the court stand as gatekeepers against debt collectors determined to sneak an collectible debt into the debtor’s chapter 13 plan. Owens v. LVNV Funding, LLC., Nos. 15‐2044, 15‐2082, 15‐2109 (7th Cir. Aug. 10, 2016); Dubois v. Atlas Acquisitions, LLC. No. (4th Cir. Aug. 25, 2016). In both cases the voice of reason was represented by a dissenting opinion. [Read more…] about Fourth and Seventh Circuits Peer Down from the Ivory Tower on FDCPA Issue
Mortgage Current Despite PNC’s Claim for Escrow Advances
Where the court previously precluded evidence of unpaid escrow advances due to the creditor’s failure to comply with the evidentiary requirements of Bankruptcy Rule 3002.1(g), and the debtor made all plan payments as well as continuing mortgage payments outside the plan, the debtor was entitled to an order deeming the mortgage current under Rule 3002.1(h). In re Howard, No. 10-52527 (Bankr. N.D. Cal. Aug.15, 2016). [Read more…] about Mortgage Current Despite PNC’s Claim for Escrow Advances
DOR Collection Violates Confirmation Order
The Florida Department of Revenue violated the bankruptcy court’s confirmation order when it intercepted the debtor’s travel reimbursement funds for payment toward a domestic relations order. Florida Dept. of Rev.v. Gonzalez, No. 15-14804 (11th Cir. Aug. 11, 2016).
Irain Gonzalez’s confirmed chapter 13 plan provided for payment of his domestic support arrearages and for direct ongoing payments on that support obligation. Nonetheless, the Florida DOR intercepted his work-related travel reimbursement money and applied it to the support obligation. Mr. Gonzalez filed a motion for contempt due to the DOR’s contravention of the terms of the confirmed plan. During the contempt hearing the DOR agreed to release the funds and cease collection efforts. The bankruptcy court granted the motion for contempt and awarded attorney’s fees. In re Gonzalez, No. 11-23183-BKC-LMI, 2012 WL 2974813 (Bankr. S.D. Fla. July 20, 2012). The district court affirmed. In re Irain Gonzalez, No. 1:15-CV-20023-KAM, 2015 WL 5692561 (S.D. Fla. Sept. 29, 2015). [Read more…] about DOR Collection Violates Confirmation Order