A pawn agreement requiring the borrower to affirm that she was not in bankruptcy and did not intend to file for bankruptcy was not unenforceable as against public policy because the agreement did not commit the borrower to an agreement not to file for bankruptcy at a later date. TitleMax v. Roby, No. 21-630 (M.D. Ala. Sept. 19, 2022). [Read more…] about Pawn Contract Disavowing Bankruptcy Intent Is Enforceable
No Discharge of Post-Petition Transaction Based on Pre-Bankruptcy Guaranty
A post-discharge liability arising out of pre-petition personal guaranty was not discharged in the debtors’ bankruptcy where the debt was based on transactions occurring four years after the debtors received their discharge. Reinhart Foodservice, LLC v. Schlundt, No. 21-1027 (E.D. Wisc. Oct. 27, 2022). [Read more…] about No Discharge of Post-Petition Transaction Based on Pre-Bankruptcy Guaranty
Creditors Cannot Rely on Verbal Agreement to Extend Deadline
The creditors were not entitled to have the court vacate its order of discharge where they claimed their untimely objection was in reliance on a verbal agreement between the debtor’s counsel and the trustee to extend the deadline but the court never ordered any extension. In re Kharlanov, No. 22-70984 (Bankr. E.D.N.Y. Sept. 22, 2022). [Read more…] about Creditors Cannot Rely on Verbal Agreement to Extend Deadline
Servicer Sanctioned for Post-Foreclosure Dunning
The bankruptcy court did not err in finding the mortgage servicer violated the discharge injunction or in awarding over $10,000 in sanctions where the servicer continued to dun the debtor for payment after the debtor had received her chapter 7 discharge and relinquished the home in a foreclosure sale. Berry v. Fay Servicing, LLC, No. 21-8005/8007 (B.A.P. 6th Cir. Sept. 9, 2022). [Read more…] about Servicer Sanctioned for Post-Foreclosure Dunning
Lender Sanctioned for Self-Inflicted Wound
The lender’s efforts to coerce the debtors to reopen their bankruptcy case to reaffirm the mortgage agreement violated the discharge injunction where post-discharge reaffirmation was legally unavailable and the court found the lender was merely attempting to collect personally against the debtors. In re Go, No. 21-12657 (Bankr. D. Nev. June 29, 2022). [Read more…] about Lender Sanctioned for Self-Inflicted Wound
Taggart Contempt Standard Applies in Chapter 13
A bankruptcy court in the District of South Carolina found that the objective standard in a civil contempt proceeding, under which the creditor may assert a fair ground of doubt as to whether its conduct violated a court order, applies in the context of a contempt action based on violation of a chapter 13 discharge order. In re Seaver, No. 20-2238 (Bankr. D. S.C. May 13, 2022). [Read more…] about Taggart Contempt Standard Applies in Chapter 13
Post-Discharge Litigation Violates Discharge Injunction
The appellants were liable for willful violation of the discharge injunction when they pursued post-discharge state litigation and garnishment based on pre-petition conduct even though the debtor could have but did not raise the discharge as a defense in the state litigation. Morgan v. Morgan, No. 20-291 (D. Utah Oct. 25, 2021). [Read more…] about Post-Discharge Litigation Violates Discharge Injunction
Notification to State Tax Board of Federal Tax Reevaluation is Return “Equivalent”
The Ninth Circuit affirmed the opinion of the bankruptcy appellate panel finding that a state-mandated notification to the state taxing authority of a change in the taxpayer’s federal taxes is a “return, or equivalent report or notice,” which, if not filed by the taxpayer, renders the state tax debt nondischargeable under section 523(a)(1)(B). Berkovich v. Cal. Franchise Tax Bd., No 20-60046 (9th Cir. Oct. 14, 2021) (see discussion of In re Berkovich, 619 B.R. 397 (B.A.P. 9th Cir. 2020) here). [Read more…] about Notification to State Tax Board of Federal Tax Reevaluation is Return “Equivalent”
Debtor Cannot Cure Default After Expiration of Plan
The bankruptcy court correctly dismissed the debtor’s chapter 13 case after she missed her final two mortgage payments under her five-year plan, even though, shortly after the plan expired, she paid the arrears in full. In re Kinney, No. 20-1122 (10th Cir. July 23, 2021).
The debtor entered bankruptcy current on her mortgage payments, and her chapter 13 plan provided for continued payments to the mortgagee, HSBC Bank USA, “under the plan.” A few months prior to completion of her plan, the debtor was injured in a car accident and, for that reason, missed two mortgage payments before the plan expired and two additional payments after its expiration. She then made the back payments and sought discharge. The bank opposed discharge and moved to dismiss her bankruptcy. The bankruptcy court found that it lacked discretion to grant a discharge and granted the motion to dismiss. After her motion for reconsideration was denied, the debtor was granted leave to appeal directly to the Tenth Circuit. [Read more…] about Debtor Cannot Cure Default After Expiration of Plan
Private Student Loan Not “Educational Benefit”
A private student loan is not a conditional grant and therefore does not fall within the meaning of section 523(a)(8)(A)(ii) which excepts from discharge an “educational benefit, scholarship, or stipend.” Homaidan v. Sallie Mae, Inc., No. 20-1981 (2d Cir. July 15, 2021).
The chapter 7 debtor received a bankruptcy discharge that was ambiguous as to whether it applied to the “Tuition Answer Loans” he obtained from Navient (as successor to Sallie Mae,Inc.) The loans, in the amount of $12,567, were paid directly into the debtor’s bank account, and exceeded the debtor’s tuition obligation. Post-discharge, Navient pursued repayment of the loans, and the debtor complied, ultimately paying them off. The debtor then reopened his bankruptcy and filed an adversary proceeding seeking an order holding Navient in contempt for violation of the discharge violation. The court determined that the loans had been discharged and denied Navient’s motion to dismiss. Homaidan v. SLM Corp. (In re Homaidan), 596 B.R. 86, 107 (Bankr. E.D.N.Y. 2019). The Second Circuit granted Navient’s petition for direct appeal. [Read more…] about Private Student Loan Not “Educational Benefit”