The District Court for the Southern District of Georgia found that a bank has no affirmative duty under section 1325(a)(5)(C) to transfer title to surrendered property out of the debtor’s name. Arsenault v. JP Morgan Chase, No. 11-106 (S.D. Ga. Aug. 27, 2012). [Read more…] about Creditor Found to Have No Obligation to Foreclose on Surrendered Property
Eighth Circuit Puts Off Lien-Stripping in Chapter 13 Issue for Another Day
In a cranky opinion chastising “judicially careless attorneys” and remanding the case to the bankruptcy court on procedural grounds, the Eighth Circuit sidestepped the issues of whether a wholly unsecured mortgage can be stripped in chapter 13, and whether, if such stripping is allowed, availability of discharge is a necessary prerequisite to it. In re Fisette, No. 11-3119 (8th Cir. Sept. 12, 2012). [Read more…] about Eighth Circuit Puts Off Lien-Stripping in Chapter 13 Issue for Another Day
Turnover Amicus Brief
NACBA has filed an amicus brief on the issue of whether a creditor must return collateral that was repossessed prior to bankruptcy once the creditor learns of the bankruptcy filing. Weber v. SEFCU, No. 12-1632 (2d Cir.). NACBA argues that section 542(a) imposes an affirmative duty on a creditor in possession of collateral to turn it over to the bankruptcy estate and that failure to do so is an unlawful “exercise of control over the property” and a violation of the automatic stay under section 362(a) meriting sanctions.
Thanks to Ray DiGuiseppe for writing NACBA’s brief.
Kagenveama Survives Direct Assault
Wielding Hamilton v. Lanning, 130 S. Ct. 2464 (2010), the trustee in the Ninth Circuit case of In re Flores, launched a full-scale attack on Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008). Kagenveama won. The Ninth Circuit stood by its previous position that an above-median debtor with zero or negative disposable income does not need to confirm a 60 month plan under section 1325(b). Danielson v. Flores (In re Flores), No. 11-55452 (9th Cir. Aug. 31, 2012). NACBA assisted in drafting the debtor’s brief in this case. [Read more…] about Kagenveama Survives Direct Assault
No Lien Stripping under Section 506(d)
The Tenth Circuit has declared what will surprise few: that a lien may not be stripped under section 506(d) in a chapter 13 case. Woolsey v. Citibank, No. 11-4014 (10th Cir. Sept. 4, 2012). [Read more…] about No Lien Stripping under Section 506(d)
Condominium Lien May Be Partially Avoided
Interpreting the condominium documents and state law, the Western District of Pennsylvania found that the debtor could partially avoid a lien based upon unpaid condominium assessments. Young v. 1200 Buena Vista Condominiums, No. 12-786 (W.D. Pa. Aug. 27, 2012), rev’g, 467 B.R. 792 (Bankr. W.D. Pa. 2012). The case turned on whether a lien created through the operation of the condominium declaration and by-laws and state statute, 68 Pa. C.S. § 3315, constituted a “security interest” under Bankruptcy Code section 101(51) which would be subject to the anti-modification provision of section 1322(b), or a “statutory lien” under section 101(53) which could be bifurcated into secured and unsecured portions. [Read more…] about Condominium Lien May Be Partially Avoided
Fifth Circuit Approves “Fee-Only” Chapter 13 Plan
In good news for bankruptcy debtors who cannot afford to file chapter 7 or for whom chapter 7 is otherwise impracticable, the Fifth Circuit affirmed the bankruptcy court’s confirmation of the debtor’s “fee-only” chapter 13 plan finding that such plan are not per se bad faith. Sikes v. Crager (In re Crager), No. 11-30982 (5th Cir. August 16, 2012), rev’g, W.D. La. 10-1863 (Sept. 30, 2011). [Read more…] about Fifth Circuit Approves “Fee-Only” Chapter 13 Plan
Bankruptcy-Specific Exemptions Found Constitutional
In a comprehensive opinion, the Sixth Circuit today joined the Fourth Circuit and upheld bankruptcy-specific exemptions against a challenge based on the Bankruptcy and Supremacy Clauses of the Constitution. Richardson v. Schafer (In re Schafer), No. 11-1340 (6th Cir. Aug. 20, 2012) (rev’g 455 B.R. 590 (B.A.P. 6th Cir. 2011)). See also Sheehan v. Peveich, 574 F.3d 248, 252 (4th Cir. 2009). [Read more…] about Bankruptcy-Specific Exemptions Found Constitutional
Arbitration vs. Bankruptcy
The Ninth Circuit found that the creditor’s motion to compel arbitration was properly denied where arbitration would have resolved the core bankruptcy issue of dischargeability and, therefore, the Federal Arbitration Act conflicted with the underlying purposes of the Bankruptcy Code. In re Eber, No. 11-55341 (9th Cir. July 9, 2012). Specifically, the creditors sought arbitration to determine whether the debtor had committed fraud, breach of fiduciary duty, and willful injury, with respect to a contract for construction and operation of a hair salon. The bankruptcy court denied the motion on the basis that findings on these issues would essentially decide the issue of whether the debts were nondischargeable under sections 523(a)(2), (4) and (6) of the Bankruptcy Code. [Read more…] about Arbitration vs. Bankruptcy
Post-Petition 401(k) Contributions
Two recent cases came out the wrong way on the issue of whether a debtor may deduct post-petition contributions to his 401(k) from calculation of disposable income. In re Parks, No. 11-1366 (B.A.P. 9th Cir. August 6, 2012), and In re Jenkins, No. 11-16960 (Bankr. E.D. Tenn. July 5, 2012). [Read more…] about Post-Petition 401(k) Contributions