A Parent Plus loan made directly from the Department of Education to Penn State University prior to the debtor’s bankruptcy filing is not a fraudulent transfer where the funds were never in the debtor’s possession and would not have been available to his creditors. Eisenberg v. Pennsylvania State Univ. (In re Lewis), No. 16-12372, Adv. Proc. Nos. 16-0282, 16-0284 (Bankr. E.D. Pa. April 7, 2017). [Read more…] about Loan Paid Directly from Dept. of Educ. to Penn State Not a Fraudulent Transfer
Right to Dismiss Prevails Over Motion to Convert
A chapter 13 debtor’s right to dismiss is absolute even in the face of a creditor’s prior motion to convert to chapter 7. In re de Lamadrid Perez, 2017 WL 1458857 (Bankr. D. Puerto Rico, April 24, 2017) (No. 12-2042).
Two of Julio Enrique Gil de Lamadrid Perez’s creditors moved the court to convert his chapter 13 case to chapter 7. Mr. de Lamadrid Perez opposed the motion then moved to dismiss under section 1307(b). The creditors argued that a debtor’s right to voluntarily dismiss his bankruptcy case is limited once there has been a motion to convert. [Read more…] about Right to Dismiss Prevails Over Motion to Convert
Personal Attacks on Trustee Not Sanctionable – But Not Helpful Either
Invective and personal attacks on the chapter 7 trustee did nothing to further the debtors’ arguments in their motion to dismiss but did not amount to sanctionable conduct. Geltzer v. Brizinova (In re Brizinova), No. 12-42935, Adv. Proc. No. 15-1073 (Bankr. E.D. N.Y. March 3, 2017) (on appeal to the District Court for the Eastern District of New York, No.17-1465).
The trustee, Robert Geltzer, moved for a contempt order and sanctions against Karimvir Dahiya, counsel for the debtors, Estella Brizinova and Edward Soshkin, based on statements he made in connection with a motion to dismiss an adversary complaint in the debtors’ bankruptcy case. In the motion to dismiss, Mr. Dahiya stated, among other things, “Geltzer having realized that he has gotten money from the sons, he could extract more, he has begun his extortionist journey again.” Generally, Mr. Geltzer maintained that Mr. Dahiya’s statements were part of a personal crusade against him, were vexatious and in bad faith, and represented a course of conduct Mr. Dahiya generally followed against bankruptcy trustees. [Read more…] about Personal Attacks on Trustee Not Sanctionable – But Not Helpful Either
FDCPA and Discharge Injunction Not Incompatible
An FDCPA claim based on efforts to collect a debt discharged in bankruptcy is not precluded by the Code’s discharge injunction. Barnhill v. FirstPoint, Inc., No.15-892 (M.D. N.C. May 17, 2017).
Lara Barnhill filed a class action complaint in district court alleging that FirstPoint, Inc. and FirstPoint Collection Resources made efforts to collect a debt after her debt had been discharged in chapter 7 bankruptcy in violation of the FDCPA, North Carolina Collection Agency Act (NCCAA). The complaint also made a claim for injunctive relief. FirstPoint moved to dismiss under section 12(b)(1) and (6) for lack of subject matter jurisdiction and for failure to state a claim.
FirstPoint argued that the district court lacked subject matter jurisdiction over the FDCPA and NCCAA claims because both consumer protection laws are preempted by the Bankruptcy Code’s discharge injunction. FirstPoint further argued that Ms. Barnhill failed to allege injury-in-fact and therefore lacked Article III standing. [Read more…] about FDCPA and Discharge Injunction Not Incompatible
Debtor/Plaintiffs Overcome Hurdle to Class Certification
Denying the creditor’s motion to dismiss, the bankruptcy court in the Southern District of Texas found that it could exercise jurisdiction over a nationwide class and that the claims, based on abuse of process, satisfied the “core proceeding” requirements of subject matter jurisdiction. Jones v. Atlas Acquisitions, LLC, No. 15-34818, Adv. Proc. No. 16-3235 (Bankr. S.D. Tex. May 19, 2017).
Atlas Acquisitions filed a proof of claim in Katrina Jones’s chapter 13 bankruptcy. It later withdrew the claim. Ms. Jones then filed an adversary complaint on behalf of herself and others similarly situated, alleging “abuse of the bankruptcy system by [Atlas’s] willful and intentional disregard for the requirements for filing legitimate claims in many Chapter 13 cases throughout the country.” Specifically, the complaint alleged that, in accordance with its business model, Atlas routinely filed deficient proofs of claim only to withdraw them when challenged. The First Amended Complaint added Natasha Hill, a chapter 13 debtor in the Bankruptcy Court for the Western District of Louisiana (case no. 15-3166) as a named plaintiff and sought certification as a class action. [Read more…] about Debtor/Plaintiffs Overcome Hurdle to Class Certification
No False Representation in Loan Acquisition
Creditors failed to prove that the debtor made false representations with respect to a loan acquired by the debtor’s father claiming to represent the debtor’s company. Hasley v. Irons (In re Irons), No. 15-40876, Adv. Proc. No. 15-4051 (Bankr. D. Neb. March 9, 2017).
Ronald and Vicki Hasley, d/b/a Swite Enterprise, brought an adversary proceeding against the chapter 7 debtor, Tyler B. Irons, seeking an order of nondischargeability under section 523(a) with respect to a state court judgment on a debt.
The litigation between the parties began when the Hasleys filed suit in state court against the debtor; his father, Jack Irons; and his company J & R Motors, LLC, to recover approximately $190,000 Jack Irons borrowed from the Hasleys. The state court rendered judgment against the defendants based, at least in part, on findings of facts resulting from Tyler Irons’s failure to respond to requests for admissions which the court then deemed admitted. Tyler Irons filed chapter 7 bankruptcy shortly thereafter and the Hasleys filed an adversary complaint, seeking an order that the debt was nondischargeable under sections 523(a)(2)(A) and (a)(4). [Read more…] about No False Representation in Loan Acquisition
SCOTUS Finds Time-Barred POC Not FDCPA Violation
“Midland’s filing of a proof of claim that on its face indicates that the limitations period has run does not fall within the scope of any of the five relevant words of the Fair Debt Collection Practices Act.” Midland Funding, LLC v. Johnson, 2017 WL 2039159 (May 15, 2017) (case no. 16-348), reversing Johnson v. Midland Funding, LLC, 823 F.3d 1334 (11th Cir. 2016). [Read more…] about SCOTUS Finds Time-Barred POC Not FDCPA Violation
Third Circuit Applies Beard Test to Late-Filed Return Issue
The Third Circuit entered the late-filed tax return fray and applied the Beard test to the question of whether such return, filed post-IRS assessment, is a “return” for dischargeabilty purposes. It found that, at least in this case, it was not. Giacchi v. United States, No. 15-3761 (3rd. Cir. May 5, 2017).
Thomas Giacchi filed his income tax returns after the IRS had performed an independent assessment. The bankruptcy court found that his return was not a “return” within the meaning of section 523(a)(1)(B) and, therefore, the taxes were non-dischargeable. The district court affirmed. [Read more…] about Third Circuit Applies Beard Test to Late-Filed Return Issue
Chapter 20 and Who May Be a Debtor
In a chapter 20 case, a wholly unsecured junior lien for which the debtor has no personal liability, does not enter into the calculation in the subsequent chapter 13 case, of either secured or unsecured debt under section 109(e). Asset Management Holdings v. Hernandez, No. 16-1228, 1244 (B.A.P. 9th Cir. April 11, 2017) (unpublished).
Aleli Hernandez filed for chapter 7 bankruptcy and included in her schedules two debts secured by deeds of trust on her residence. More than four years after she obtained a discharge in that case, she filed for chapter 13 bankruptcy and sought to avoid the junior lien on the basis that the senior lien exceeded the value of the property. AMH moved to dismiss on the bases that Ms. Hernandez was ineligible for chapter 13 relief under section 109(e) and, in the alternative, that she filed her petition in bad faith. The bankruptcy court denied the motion and confirmed Ms. Hernandez’s plan. [Read more…] about Chapter 20 and Who May Be a Debtor
Eleventh Circuit Disappoints on Undue Hardship Issue
The standard for appellate review of a bankruptcy court’s decision that repayment of her student loans would constitute an “undue hardship,” in part due to a “certainty of hopelessness” as to future ability to pay, is “clear error” for the factual findings and “de novo” for application of law, and the debtor’s past financial decisions have no bearing on this forward-looking prong of the Brunner test. ECMC v. Acosta-Conniff, No. 16-12884 (11th Cir. April 19, 2017) (unpublished). [Read more…] about Eleventh Circuit Disappoints on Undue Hardship Issue