Contributions to an employee retirement plan are to be excluded from the calculation of current monthly income rather than deducted from disposable income in the Means Test. In re Vu, No. 15-41405 (Bankr. W.D. Wash. June 16, 2015). [Read more…] about Contributions to Retirement Plan Excluded from CMI
Funds from Consent Order Not Estate Property
Funds the debtor received through operation of a post-petition consent order between banking regulators and Bank of America were not part of the bankruptcy estate subject to turnover. MacKenzie v. Neidorf (In re Neidorf), No. 14-1496 (B.A.P. 9th Cir. July 10, 2015). Carrie Margaret Neidorf’s home was foreclosed upon while she was in bankruptcy and years later, while her bankruptcy case was still open and pursuant to a national settlement between banking regulators and Bank of America, she received $31,250 as a result of the foreclosure. The 2011 Consent Order (amended in 2013) required Bank of America to make a $1,127,453.261 cash payment to a Qualified Settlement Fund. That fund was then distributed to borrowers who had experience foreclosure within a specified period. The chapter 7 trustee sought turnover of the funds arguing that they were property of the estate. The bankruptcy court disagreed and the BAP affirmed.
The BAP stated three conditions that must be met for after-acquired property to be considered part of the estate under section 541(a)(7); “(1) It must be created with or by property of the estate; (2) acquired in the estate’s normal course of business; or (3) otherwise be traceable to or arise out of any prepetition interest included in the bankruptcy estate.” The panel found that the fact that the foreclosed residence was property of the estate was not dispositive. It found that the debtor’s entitlement to the foreclosure payment arose out of the post-petition Consent Order rather than out of her ownership of the property. The panel concluded: “Seen in this light, that the estate had an interest in Debtor’s Residence is not enough. Nowhere has Trustee shown how the estate obtained an interest in the Foreclosure Payment itself when the qualifying events giving rise to Debtor’s legal rights to the payment all occurred postpetition and were held solely by the borrowers.”
Eighth Circuit BAP Gets it Wrong in FDCPA Case
Filing an accurate proof of claim on a stale debt does not violate the FDCPA. Gatewood v. CP Medical, LLC, No. 15-6008 (B.A.P. 8th Cir. July 10, 2015). Mr. and Mrs. Gatewood filed for chapter 13 bankruptcy and CP Medical, a medical collection agency, filed a proof of claim on a debt that was time-barred under Arkansas law. After the Gatewoods converted to chapter 7, they filed an adversary complaint against CP Medical for seeking payment on a stale debt “as a means of debt collection that is either false, misleading, deceptive, unfair, or unconscionable” in violation of the FDCPA.
The bankruptcy court, relying on Eighth Circuit precedent, found that an attempt to collect on a stale debt is not a violation of the FDCPA. It further found that the Bankruptcy Code provides the only relief available to a debtor in cases such as these. The BAP affirmed. [Read more…] about Eighth Circuit BAP Gets it Wrong in FDCPA Case
NCBRC Grateful for the Support of the O. Max Gardner Foundation
The National Consumer Bankruptcy Rights Center (NCBRC) has been honored by a $12,500.00 first-time donation from the O. Max Gardner Foundation. NCBRC is a 501(c)(3) organization dedicated to protecting the integrity of the bankruptcy system and preserving the rights of consumer bankruptcy debtors. NCBRC advances these goals by providing assistance either through working directly with debtors’ attorneys or by filing amicus briefs in courts throughout the country. Without the support of donors like the O. Max Gardner Foundation, the assistance provided by NCBRC would not be possible.
The O. Max Gardner Foundation was established in 1943 by Oliver Max Gardner (1882 – 1947). Mr. Gardner had a varied career beginning with teaching organic chemistry and, after attending law school, ultimately entering politics. He served as the 57th Governor of North Carolina from 1929 to 1933. After his term ended, Mr. Gardner worked in the administrations of Franklin D. Roosevelt, as an informal advisor and speech writer, and Harry S. Truman, as Under Secretary of the Treasury. Mr. Gardner founded the O. Max Gardner Foundation to promote all forms of educational and community service organizations for the citizens of North Carolina.
His grandson, O. Max Gardner III, is a familiar name in the field of bankruptcy law having devoted his professional life to the service of consumer debtors and to the education of the bankruptcy bar in the intricacies of this challenging area of regulation. His efforts have gone a long way toward leveling the playing field between consumer debtors and the often predatory lenders, and unethical servicers and collectors, they face.
NCBRC’s Board of Directors is grateful to the O. Max Gardner Foundation for its confidence in our mission and support in our mutual goals of providing the best and broadest assistance to consumer debtors in their quest for a fresh start.
Growing Consensus Permits Lien Strip in Chapter 20
Joining a “growing consensus” of courts, the BAP for the Ninth Circuit found that a chapter 20 debtor may strip off a wholly unsecured lien with the strip-off becoming effective upon completion of the plan. Boukatch v. MidFirst Bank (In re Boukatch), No. 14-1483 (July 9, 2015). In so holding, the BAP reversed the contrary finding by the bankruptcy court. [Read more…] about Growing Consensus Permits Lien Strip in Chapter 20
District Court Has Original Jurisdiction over 362(k) Claim
A district court has subject matter jurisdiction over a claim under section 362(k) without regard to a standing order referring all bankruptcy-related cases to the bankruptcy courts, and dismissal under FRCP 12(b)(6) is inappropriate where the allegations in the complaint present a plausible explanation for the defendants’ conduct. Houck v. Substitute Trustee Services, No. 13-2326 (4th Cir. July 1, 2015). [Read more…] about District Court Has Original Jurisdiction over 362(k) Claim
Implied Consent Supports Plan Confirmation
A plan providing for delayed payments to secured creditors was confirmed over the trustee’s objection based on the creditors’ implied acceptance of the repayment terms. Bronitsky v. Bea (In re Bea), No. 14-1376, 2015 Bankr. LEXIS 1793 (B.A.P. 9th Cir. May 29, 2015). [Read more…] about Implied Consent Supports Plan Confirmation
Debtor Takes Road Less Traveled to POC Challenge and Hits Dead End
Evidence that would be inadmissible hearsay in state court satisfied Bankruptcy Rule 3001 for purposes of establishing the validity of the debt buyer’s proofs of claim. Walston v. PYOD, LLC, No. 14-14593 (11th Cir. June 2, 2015). [Read more…] about Debtor Takes Road Less Traveled to POC Challenge and Hits Dead End
IRA Exemption Lost Due to Prohibited Transaction
The debtors’ use of funds in the husband’s self-directed IRA to fund the purchase and development of property was a prohibited transaction that disqualified the IRA from exemption in bankruptcy. In re Kellerman, No. 09-13935 (Bankr. E.D. Ark. May 26, 2015). [Read more…] about IRA Exemption Lost Due to Prohibited Transaction
NABCA Weighs in on Intersection between Bankruptcy Code and FDCPA
NCBRC filed an amicus brief on behalf of the NACBA membership in the case of Garfield v. Ocwen Loan Servicing, No. 15-527 (2d Cir. filed June 13, 2015). The brief seeks reversal of a district court finding that the Bankruptcy Code precludes application of the FDCPA in any case involving a discharged debt. Overlapping federal statutory schemes are presumed to be non-preclusive unless the plain text of one or the other explicitly creates preclusion or where there is an irreconcilable conflict between the two. Morton v. Mancari, 417 U.S. 535, 550 (1974). [Read more…] about NABCA Weighs in on Intersection between Bankruptcy Code and FDCPA