National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

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Plan May Include Vesting in Unwilling Creditor

A Debtor may confirm a plan that provides for transfer of title to the secured creditor even over the creditor’s objection. In re Sagendorph, No. 14-41675 (Bankr. D. Mass. June 2015).

Paul Sagendorph’s chapter 13 plan provided for certain secured property as follows:

The debtor is Surrendering his property . . . to Wells Fargo . . . in Full Satisfaction of Any and All Claims filed. Wells Fargo . . . will Foreclose on the property in full Satisfaction of the Mortgage, Note and any outstanding Fees. Pursuant to §§ 1322(b)(8) and (9), title to the property . . . shall vest in Wells Fargo . . . upon confirmation, and the Confirmation Order shall constitute a deed of conveyance of the property when recorded at the Registry of Deeds. All secured claims will be paid by surrender of the collateral and foreclosure of the security interest. [capitalization in original] [Read more…] about Plan May Include Vesting in Unwilling Creditor

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Caulkett Does Not Affect Lien-Stripping in Chapter 13

The recent Supreme Court decision in Bank of America v. Caulkett, ___ U.S. ___, 2015 WL 2464049 (June 1, 2015), does not apply to lien stripping in chapter 13. Turman v. Pinnacle Bank, No. 14-80062, Adv. Proc. 14-8035 (Bankr. D. Neb. June 12, 2015). Alton and Leslie Turman’s residence was subject to two liens, the second of which was wholly unsecured. Relying on Minnesota Housing Fin. Agency v. Schmidt (In re Schmidt), 765 F.3d 877 (8th Cir. 2014), and noting that seven other circuits have found that wholly unsecured liens may be stripped off in chapter 13, the court granted the debtors’ motion for summary judgment to avoid Pinnacle Bank’s lien. The court briefly reiterated the well-established interpretation of Nobelman v. American Sav. Bank, 508 U.S. 324 (1993), that a lien that is wholly unsecured under section 506(a) is not a “secured claim” subject to the anti-modification provision of section 1322(b)(2) and may, therefore, be stripped off.

Allaying fears that Caulkett negatively impacted chapter 13 practice, the court stated definitively, “This case is unaffected by the recent United States Supreme Court decision of Bank of America, N.A. v. Caulkett, ___ U.S. ___, 2015 WL 2464049 (June 1, 2015) (holding that Chapter 7 debtors may not strip off wholly unsecured liens), because Caulkett applies only to Chapter 7 cases. Id. at *5” The court also cited Green Tree Servicing, LLC v. Wilson (In re Wilson), Case No. 14–CV–9543 (CS), 2015 WL 3561476 at *6 n.10 (S.D.N.Y. June 5, 2015). In that case the New York district court, likewise noted that “The recent Supreme Court decision on lien stripping, Bank of America, N.A. v. Caulkett, has no effect on the Bankruptcy Court’s order granting the [lien-stripping] motion because Caulkett only applies in the Chapter 7 context.”

Turman Bankr. Neb. opinion

Green Tree SD NY opinion

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One of Three Illinois Cases Gets it Right in FDCPA Case

Three cases out of the Northern District of Illinois address the issue of whether filing a proof of claim in chapter 13 bankruptcy for a stale debt can be the basis for a FDCPA claim. In Murff v. LVNV Funding (In re Murff), No. 13-44431, Adv. Proc. 14-790 (Bankr. N.D. Ill. June 15, 2015) and LaGrone v. LVNV Funding (In re LaGrone), 525 B.R. 419 (Bankr. N.D. Ill. Jan. 21, 2015), the courts essentially found the element of deception for a FDCPA violation is not present in the context of a bankruptcy case. In Avalos v. LVNV Funding (In re Avalos), No. 13-40865, Adv. Proc. 15-91(Bankr. N.D. Ill. June 12, 2015), Judge Schmetterer found that the determination of whether debt-collector conduct is deceptive is an issue of fact to be addressed on a case-by-case basis. [Read more…] about One of Three Illinois Cases Gets it Right in FDCPA Case

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First Circuit Opinion Heavy on Vocabulary, Light on Logic

In an opinion that would have benefited from Gertrude’s advice to Polonius “More matter, with less art,” the First Circuit found that a debtor may be sanctioned for inadvertent failure to comply with a court order despite lack of harm to creditors, trustee or court. Charbono v. Sumski, No. 14-2151 (1st Cir. June 15, 2015). [Read more…] about First Circuit Opinion Heavy on Vocabulary, Light on Logic

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Court Rejects Bank’s “Devil Made Me Do It” Defense

A bankruptcy court awarded almost $70,000.00 in damages for PNC’s stay violation. In re Ogden, No. 11-19841 (Bankr. D. Colo. June 1, 2015). It is easy to feel imaginary malice behind the often frustrating interactions with impersonal, computer operated, entities with which we all find ourselves conducting business. In this case, however, the court found that the debtor’s sense of actual ill will was confirmed by testimony from PNC’s representative in its defense to the charge of stay violation.  [Read more…] about Court Rejects Bank’s “Devil Made Me Do It” Defense