When a debt is the result of fraud may the debtor still discharge it if he was not complicit in the fraud? What if the fraudulent actor was an agent of the debtor? Judge Posner of the Seventh Circuit answered both questions in the negative. Sullivan v. Glenn (In re Glenn), No. 14-3213 (7th Cir. Apr. 2, 2015). [Read more…] about Agent’s Fraud Does Not Lead To Nondischargeability
Tuition Credit Dischargeable
Where the debtor did not actually receive any funds, her debt based on a tuition credit agreement with a for-profit institution was not excepted from discharge under section 523(a)(8)(A)(ii). Institute of Imaginal Studies v. Christoff, No. 14-1336 (B.A.P. 9th Cir. March 27, 2015). [Read more…] about Tuition Credit Dischargeable
Co-Debtor’s Death Drops Debtor to Below-Median Permitting Reduced ACP
When the major contributor to the debtors’ joint chapter 13 plan died, the surviving spouse fell to below median status and the applicable commitment period fell from 5 years to 3 years. In re Childers, No. 10-10405 (Bankr. N.D. Tex. Jan. 26, 2015). [Read more…] about Co-Debtor’s Death Drops Debtor to Below-Median Permitting Reduced ACP
IRS Tax Lien Secured by All Debtor’s Property
An IRS tax lien attaches to all of debtor’s property, both personal and real, therefore, so long as there is some equity to which it can attach it may not be stripped off. In re Blackburn, No. 12-31658 (Bankr. N.D. Fla. Feb. 3, 2015). [Read more…] about IRS Tax Lien Secured by All Debtor’s Property
Debtor Lacks Standing to Bring Adversary Complaint Based on Pre-Petition Claims
The debtor’s pre-petition TILA claims were part of his chapter 7 bankruptcy estate and, therefore, only the trustee had standing to bring those claims while the bankruptcy was pending. Bernstein v. Wells Fargo (In re Bernstein), No. 14-65054, Adv. Proc. 14-5306 (Bankr. N.D. Ga. Jan. 2, 2015). [Read more…] about Debtor Lacks Standing to Bring Adversary Complaint Based on Pre-Petition Claims
Fourth Circuit Addresses CashCall’s Arbitration Clause
In a lengthy, per curiam opinion, the Fourth Circuit affirmed in part and reversed in part a district court decision declining to enforce CashCall’s notorious arbitration clause. Moses v. CashCall, No. 14-1195 (4th Cir. March 16, 2015). [Read more…] about Fourth Circuit Addresses CashCall’s Arbitration Clause
Right to Cure Preempts State Law Property Rights
Bankruptcy law enhances and expands a debtor’s state law property rights by specifying the time within which a debtor may cure a mortgage default. In re Ausburn, No. 16153 (Bankr. E.D. Ark. Feb. 10, 2015). [Read more…] about Right to Cure Preempts State Law Property Rights
Ocwen Stuck with Debtor’s Proof of Claim for $1
Relying on equitable principles, the court declined to allow Ocwen’s late-filed proof of claim after the debtor filed a proof of claim on its behalf in the amount of $1. In re Egan, No. 14-36831, __ B.R. __ (Bankr. S.D. N.Y. March 2, 2015). [Read more…] about Ocwen Stuck with Debtor’s Proof of Claim for $1
Chapter 13 Dismissed When Infeasibility Discovered at End of Plan
After making plan payments for fifty-eight months, the debtors’ chapter 13 was dismissed due to infeasibility that was built into the confirmed plan. Schlegel v. Billingslea (In re Schlegel), No. 14-1132 (B.A.P. 9th Cir. Feb. 25, 2015). [Read more…] about Chapter 13 Dismissed When Infeasibility Discovered at End of Plan
NACBA Weighs in on Chapter 7 Lien Stripping
NACBA has filed an amicus brief seeking affirmance of the Eleventh Circuit decisions in the consolidated cases of Bank of Amer. v. Toledo-Cardona, No. 14-163 and Bank of Amer. v. Caulkett, No. 13-1421 (filed Feb. 23, 2015), adding its voice to the discussion of lien stripping in chapter 7 cases. The brief, authored by David R. Kuney, argues that section 506(a) values liens according to the worth of the collateral, and section 506(d) renders liens void to the extent that they have no value. The Supreme Court ruling in Dewsnup v. Timm, 502 U.S. 410 (1992), prohibiting strip-down of partially secured liens has been improperly extended to find that wholly unsecured liens cannot be stripped off in chapter 7. In Dewsnup the Court took pains to make clear that its decision was limited to the facts before it. The brief asks the Court to reconsider, or at least limit, its holding in Dewsnup to the extent that it turns on whether the underlying claim has been disallowed rather than on whether the lien is supported by value. The brief urges the Court to adhere to the reasoning in Nobelman v. American Sav. Bank, 508 U.S. 324 (1993) and United States v. Ron Pair Enter., Inc. 489 U.S. 235 (1989) ,which confirm that the starting point for treatment of secured claims is section 506(a). The “statutory and constitutional authority to modify, extinguish or avoid secured debts, even without full payment of the face amount of the debt, is in harmony with the economic reality that a lien is only as valuable as the collateral that underlies it.”