Posted by NCBRC - June 8th, 2022
The below-median debtor was entitled to confirmation of his chapter 13 plan where he proposed his plan in good faith and committed all of his disposable income to it despite the fact that he was in the middle of a divorce and his income and expenses were in a state of flux. In re Szafraniec, No. 21-10216 (Bankr. N.D. Ill. May 27, 2022). Read More
Posted by NCBRC - June 3rd, 2022
A fee arrangement bifurcating the chapter 7 bankruptcy attorney’s representation into separate pre-petition and post-petition agreements violated sections 526 and 528 and was void. In re Siegle, No. 21-42321 (Bankr. D. Minn. May 19, 2022).
The chapter 7 debtor’s counsel used a bifurcated fee system under which he offered a pre-petition fee agreement which obligated him only to file the bankruptcy petition. After that, the agreement specified that the debtor had three options: “(1) complete the case pro se; (2) hire another bankruptcy attorney; or (3) execute the Post-Petition Agreement.” The agreement came to the court’s attention when the debtor entered into the post-petition agreement and her attorney filed for court approval. Read More
Posted by NCBRC - June 1st, 2022
A “bankruptcy court’s traditional power to impose contempt sanctions carries with it the authority to award damages and attorneys’ fees – including appellate attorneys’ fees.” Law Offices of Francis J. O’Reilly, Esq. v. Selene Finance L.P. (In re DiBattista), No. 20-4067 (2d Cir. May 17, 2022).
After the debtor received his chapter 7 discharge, his mortgagee, Selene, continued to hound him for mortgage payments. The debtor’s bankruptcy attorney, O’Reilly, moved to reopen the debtor’s bankruptcy in order to seek contempt sanctions against Selene for violation of the discharge injunction. The bankruptcy court granted the motions and sanctioned Selene in the amount of $9,046.60 in legal fees and expenses, and $17,500.00 in damages. Selene appealed to the district court which affirmed but noted discrepancies in the bankruptcy court’s description of the damage award. Read More
Posted by NCBRC - May 26th, 2022
Plaintiff’s attorneys were liable for monetary contempt sanctions for violating the automatic stay due to their failure to investigate the plaintiff’s bankruptcy petition which was filed decades earlier to determine whether he had disclosed his interest in mineral rights in land that was the subject of a current state lawsuit. In re McConathy, No. 90-13449 (Bankr. W.D. La. May 20, 2022).
In 1990, the debtor and his wife filed a chapter 7 bankruptcy petition for which they received a discharge. On two occasions they reopened their bankruptcy to disclose previously undisclosed assets and in both cases the assets were addressed and the case closed. However, unbeknownst to the bankruptcy court and chapter 7 trustee, at the time he filed his petition, the debtor owned mineral rights on land in Kansas. Read More
Posted by NCBRC - May 23rd, 2022
A retirement annuity account funded by a rolled-over IRA in the debtor’s name which was in turn funded by a contribution in excess of that allowed for tax exempt status, may not be exempted from the debtor’s bankruptcy estate. In re Farber, No. 21-12147 (Bankr. E.D. Pa. April 26, 2022).
The chapter 7 debtor sought to exempt her Allianz retirement annuity account in the amount of $27,102.57 from her bankruptcy estate. The trustee objected on the basis that the IRA was not subject to exemption under section 522(d)(12), because the debtor inherited the account from her father. Read More
Posted by NCBRC - May 19th, 2022
The debtor has standing to avoid a tax sale under section 548 but only to the extent of her exemption and allowed claims. She may not recover her equity in the property. Morawski v. Effect Lake, LLC., No. 20-1125 (Bankr. D.N.J. April 11, 2022).
On October 3, 2016, Effect Lake purchased a tax sale certificate encumbering the debtor’s home. In January, 2019, Effect Lake filed a tax sale foreclosure action in the state court and a lis pendens for the foreclosure action with the Essex County Register’s Office. The state court entered final judgment on September 30, 2019. The debtor filed her chapter 13 bankruptcy petition on February 7, 2020. Effect Lake filed a proof of claim for $141,947.88. At the time the debtor filed for bankruptcy, the redemption amount for the tax sale certificate was $90,323.88 and the property was valued at between $544,000 and $600,000.
The debtor filed an adversary proceeding seeking a finding that the tax sale was a fraudulent conveyance under section 548. The parties filed cross-motions for summary judgment. The bankruptcy court held a hearing and issued the following findings. Read More
Posted by NCBRC - May 16th, 2022
The debtor’s proposed amendment to file her chapter 11 petition under the newly enacted SBRA under which only the debtor could have a plan confirmed, would unduly prejudice the mortgage creditor who expended a great deal of time, expense, and effort to negotiate and obtain approval of its own plan. Ventura v. Gregory Funding, No. 20-1949 (E.D.N.Y. April 21, 2022). Read More
Posted by NCBRC - May 13th, 2022
The debtors were entitled to summary judgment on the issue of dischargeability of their payday loans despite the fact that they took out the loans three days prior to filing for bankruptcy. Ameri Best, LLC, v. Holmes, No. 18-20578, Adv. Proc. No. 18-6044 (Bankr. D. Kans. April 27, 2022).
As they had done many times before, in March, 2018, the debtors, James and Stacy Holmes, each borrowed $500 from payday lender, Ameribest. The loans were due two weeks later with $75 interest. Three days later, they filed for bankruptcy owing Ameribest $1,150. Ameribest filed an adversary proceeding seeking an order that the debt was nondischargeable under sections 523(a)(2)(A) and (a)(6). It moved for summary judgment. The court denied the motion and ordered Ameribest to show cause why it should not enter summary judgment in favor of the debtors. The debtors then filed their own motion for summary judgment seeking an order of dischargeability and an award of attorney fees and costs under section 523(d). Read More
Posted by NCBRC - May 12th, 2022
A mortgage refinance agreement approved by the court is not equivalent to a motion to modify under section 1329. The debtors, who failed to pay their property taxes directly as required by their plan were not entitled to discharge even though the mortgagee paid those taxes on their behalf and the debtors and mortgagee refinanced their lending agreement to encompass that change. In re Villarreal, No. 16-10106 (Bankr. S.D. Tex. April 12, 2022). Read More
Posted by NCBRC - April 25th, 2022
The debtor stated a claim for turnover of the fair market value of a vehicle where the creditor repossessed the vehicle post-petition but prior to the expiration of section 108(b)’s extension of time to redeem or cure a default. Milledge v. Carolina Acceptance, No.21-2968, Adv. Proc. No. 22-80001 (Bankr. D. S.C. April 7, 2022).
The debtor bought a car under a retail installment contract obligating her to pay a $5,050.00 down payment and secure financing from the creditor, Carolina Acceptance, for the principal amount of $20,139.00 at an annual interest rate of 19.88% with 51 monthly payments of $592.87. The debtor paid all but $500.00 of the down payment and arranged with the creditor to pay that amount by November 4, 2021. She failed to make the payment and filed for chapter 13 bankruptcy on November 17, 2021, proposing a plan committing her to pay the car loan in full at 5.25% interest. Because of two prior dismissed bankruptcies the automatic stay did not take effect. Read More