National Consumer Bankruptcy Rights Center
Protecting The Rights Of Consumer Debtors In Bankruptcy
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The bankruptcy court ignored the plain language of section 522(c) to find that exempt funds may be used in the calculation of disposable income in a chapter 13 bankruptcy. In re Ortiz-Peredo, No. 17-50814 (Bankr. W.D. Tex. July 18, 2017).
[Read more…] about Court Gets It Wrong on Exempt Property as Disposable Income
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The interpretation in Clark v. Rameker of the federal exemption relating to inherited IRAs does not preclude a state from providing a broader exemption for inherited IRAs in its exemption scheme.
When Waheeda Kara filed for chapter 7 bankruptcy she opted to use Texas state exemptions and claimed an exemption in an inherited IRA under section 42.0021 of the Texas Property Code. The trustee objected to the exemption arguing that it did not meet the criteria set forth in Clark for an exemptible “retirement fund.” The court found that state exemptions permitted her to exempt the IRA and overruled the objection. In re Kara, No. 16-51059 (Bankr. W.D. Tex. July 13, 2017). [Read more…] about Clark v. Rameker Does Not Limit State IRA Exemption
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The debtor’s anticipated bonus was not part of the bankruptcy estate where its issuance was discretionary and the employee had no enforceable interest in it at the time of the petition. In re Bronikowski, No. 16-50719 (Bankr. W.D. N.C. June 16, 2017).
Vincent and Lisa Bronikowski filed a chapter 7 petition in November, 2016. In their schedules, Ms. Bronikowski listed, and claimed an exemption for, an anticipated bonus from her employer for the 2016 year. Ms. Bronikowski’s employee handbook provided that the employer had “full and final discretionary authority to interpret and administer the Plan as well as determine the amount, if any, and payment of all incentive bonuses, awards and other compensation pursuant to the Plan.” The trustee objected to the exemption. The Bronikowskis amended their schedules asserting that the anticipated bonus should not be deemed property of the bankruptcy estate. [Read more…] about Anticipated Discretionary Bonus Not Property of Estate
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“[N]otwithstanding a debtor’s potential eligibility for an extended term student loan repayment program, if a debtor chose not to enter such a program in good faith, the repayment period under the second Brunner prong is the remaining contractual term of the debtor’s loan.” Price v. Devos (In re Price), No. 15-17645, Adv. Proc. No. 16-11 (Bankr. E.D. Pa. June 23, 2017).
The debtor, Kristin M. Price, was a twenty-nine-year old, soon-to-be-divorced, mother of three young children. She was educated and trained to work in vascular sonography and was employed part-time in that field. She filed for chapter 7 bankruptcy in October, 2015. At that time, she had an outstanding student loan from the Department of Education which she sought to discharge under section 523(a)(8). [Read more…] about Court Rejects “Certainty of Hopelessness” and Limits Repayment Period
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A creditor may abandon acceleration of a Note either by explicit agreement or by actions consistent with abandonment. In re Williams, No. 16-33276 (Bankr. S.D. Tex. Aug. 3, 2017).
Chapter 13 debtor, Durwyn Williams, defaulted on his home equity loan from U.S. Bank Trust which was serviced by Caliber Home Loans. On June 28, 2010, Caliber accelerated the balance due on the Note, and commenced foreclosure proceedings against the property securing the Note. In August, 2014, with foreclosure proceedings still ongoing, Caliber sent Mr. Williams a notice reiterating that his property was in foreclosure and that there was an outstanding balance of approximately $250,000.00. When Mr. Williams filed chapter 13 bankruptcy in June, 2016, Caliber filed a proof of claim for over $500,000.00. Mr. Williams objected to the proof of claim as precluded by the four-year statute of limitations triggered when Caliber invoked the Note’s acceleration clause. [Read more…] about Abandonment of Acceleration
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Where the chapter 13 debtor failed to redeem property sold in a tax sale within the time period laid out in section 108(b)(2), the tax purchaser had an ownership interest in the property rather than a lien and was, therefore, entitled to relief from stay to take possession. In re Millington, No. 17-31290 (Bankr. S.D. Tex. Aug. 8, 2017).
Derron Millington filed for chapter 13 bankruptcy three days before expiration of the Texas deadline for redeeming property sold through tax foreclosure. When he failed to redeem after filing his petition, Gulf States, the tax purchaser, moved for relief from stay. [Read more…] about Texas Tax Purchaser’s Rights Cannot Be Modified
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Where the debtor has a right to due process prior to the fixing of a debt, the lien acquired by the clerk of court’s filing the certificate of the debt is a judicial lien subject to avoidance in bankruptcy. Arkansas Dept. of Workforce Serv. v. Leaks, No. 16-8036 (E.D. Ark. June 14, 2017).
Tilda Marie Chambers Leaks received two overpayments of unemployment benefits. The Arkansas Department of Workforce Service (ADWS) concluded that the overpayments were due to fraud. It filed with the county clerk’s office Certificates of Overpayments of Unemployment Benefits and certified that all appeal rights had been exhausted. When the clerk filed the certificates of debt, liens against Ms. Leaks’ property were automatically created. In her chapter 13 bankruptcy, Ms. Leaks sought to avoid both liens as judicial liens impairing an exemption under section 522(f). The bankruptcy court granted the motion. [Read more…] about What Makes a Lien “Judicial”?
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Where the debtor did not discover the injury giving rise to a medical product liability class action suit until after her bankruptcy was closed, the settlement proceeds from that cause of action were not property of the estate even though the debtor underwent the medical procedure while the bankruptcy was still pending. In re Purcell, No. 08-40224 (Bankr. D. Kan. July 19, 2017). [Read more…] about Discovery Rule Applies to Accrual of Cause of Action
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Section 522(f)(2)(C) does not create an exception to lien avoidance for mortgage deficiency judgment liens. In re Pace, No.16-8036 (B.A.P. 6th Cir. June 20, 2017).
Antoinette Pace filed a chapter 13 petition in which she scheduled her residence with a value of $147,630 and claimed a homestead exemption in the amount of $132,900. At that time, Farmers National Bank (FNB) held two judicial liens resulting from post-foreclosure deficiency judgments (though the two liens appeared duplicative, the bankruptcy court and the BAP treated them as separate liens). There were also two liens on the house held by Midland Credit Management (MCM) and Matthew Giannini, as well as a county lien against the property for unpaid real estate taxes. Ms. Pace converted to chapter 7 and moved to avoid the non-tax liens as impairing her homestead exemption. The motion was unopposed. The bankruptcy court granted the motion to avoid the MCM and Giannini liens, but denied the motion to avoid the liens held by FNB. [Read more…] about Mortgage Deficiency Judgment Liens Are Avoidable
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Where the debtor’s plan provided for repayment of child support arrearage inside the plan, the Florida Department of Revenue was precluded from post-confirmation garnishing of the debtor’s wages in connection with that debt. Dempsey v. Fla Dept. of Rev., No. 16-328 (E.D. Tenn. June 20, 2017).
Kenneth Dempsey’s confirmed chapter 13 plan provided, “Miami Dade Child Support – Arrearage Child Support to be paid in full inside the plan.” Notwithstanding its knowledge of Mr. Dempsey’s bankruptcy and his treatment of the arrearage in his plan, the Florida Department of Revenue began garnishing Mr. Dempsey’s wages. Mr. Dempsey filed a motion for contempt. The bankruptcy court ordered the FDOR to cease its garnishments, refund any amounts it had collected but not yet disbursed, and reduce its claim in the bankruptcy by the amount it had garnished and disbursed. It declined to find the FDOR in contempt, however. The parties filed cross-appeals. [Read more…] about DOR May Not Collect Child Support Arrearage Outside Plan