In his paper, “Medical Debt as a Cause of Consumer Bankruptcy,” Daniel A. Austin reports on the results of a study suggesting that “medical bills are the single largest causal factor in consumer bankruptcy—but not to the degree found in the study cited by President Obama.” [Read more…] about Medical Debt Causes 18% – 26% of Bankruptcy Filings
“Non-Routine” Fees for Objections to Late Claims Allowed
In two nearly identical cases, the bankruptcy court granted the debtors’ attorney’s supplemental fee motions seeking compensation for work performed opposing proofs of claim for debts that were unenforceable due to the lapse of the state statute of limitations. In re Swilling, No. 13-12583 (Bankr. E.D. Tenn. Oct. 23, 2014), In re Alexander, No. 13-13462 (Bankr. E.D. Tenn. Oct. 22, 2014) (debtor’s attorney filed motions in five other cases based on similar factual scenarios).The court noted, however, that since the 2012 changes to Fed. Bankr. R. 3001(c), objections to those claims would now be deemed “routine.” [Read more…] about “Non-Routine” Fees for Objections to Late Claims Allowed
Rent-Stabilized Lease Is Exempt as Public Assistance Benefit
The New York Court of Appeals determined that a rent-stabilized lease is a public assistance benefit subject to state exemption laws. Santiago-Monteverdi v. Pereira (In re Santiago-Monteverdi), 2014 NY Slip Op. 8051 (N.Y. Nov. 20, 2014). [Read more…] about Rent-Stabilized Lease Is Exempt as Public Assistance Benefit
Not Even the IRS Approves of McCoy
The IRS has filed an amicus brief in the First Circuit taking the position that the Fifth Circuit erred in McCoy v. Miss. State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012), when it held that a late-filed return can never be a “return” for dischargeability purposes unless filed under IRC section 6020(a). Wood v. Mass. Dept. of Rev., Nos. 14-9004, 14-9006 and Pendergast v. Mass. Dept. of Rev., 14-9005, 14-9007 (1st Cir.) (amicus brief filed Nov. 4, 2104). [Read more…] about Not Even the IRS Approves of McCoy
Supreme Court to Hear Chapter 7 Lien Stripping Cases
The Supreme Court granted certiorari today in two of the three Chapter 7 lien-strip-off cases challenging the Eleventh Circuit decision in McNeal. Bank of Amer. v. Toledo-Cardona, No. 14-163 and Bank of Amer. v. Caulkett, No. 13-1421 (petition granted Nov. 17, 2014) (consolidated for argument) (Bank of Amer. v. Bello, No. 14-235 is still pending). In McNeal v. GMAC Mortg., 735 F.3d 1263 (11th Cir. 2012) pet. den. (May 20, 2014), the court bucked the trend to find that Dewsnup v. Timm, 502 U.S. 410 (1992), which held that a partially secured lien could not be stripped-down in chapter 7, did not apply to wholly unsecured liens. There are more than a dozen cases currently pending in the Eleventh Circuit challenging this decision, but, after an early abortive attempt to bring the issue before the Supreme Court (Bank of America v. Sinkfield, No. 13-700 (cert. denied, March 31, 2014)) the issue is now on track for final resolution. Briefing should be completed by March and argument is likely to be scheduled for the last week of March, with decision by June. The debtor is being represented by Stephanos Bibas, the Director of the Supreme Court Clinic at the University of Pennsylvania Law School.
Arbitration Judgment Applies to Determination of Nondischargeability
The doctrine of collateral estoppel mandated that findings in a state court arbitration judgment applied to the determination of nondischargeability of a debt in chapter 7 bankruptcy. Margolis v. Hensley (In re Hensley), No. 12-42785, Adv. Pro. 12-4180 (Bankr. E.D. Tex. Oct. 1, 2014). [Read more…] about Arbitration Judgment Applies to Determination of Nondischargeability
Lender May Be Compelled to Take Title to Surrendered Property
Under section 1322(b)(9), the chapter 13 plan may provide for vesting of title to property that the debtor has surrendered in an entity (the mortgagee) without that entity’s consent. In re Watt, No. 14-31295 (Bankr. D. Or. Oct. 15, 2014). [Read more…] about Lender May Be Compelled to Take Title to Surrendered Property
Late Proof of Claim Amendment Rejected
A proof of claim amendment filed after the debtor successfully completed his chapter 13 plan was too late to increase the mortgage arrears. In re Mason, No. 10-4195, 2014 WL 5502385 (Bankr. S.D. Miss. Oct. 30, 2014). [Read more…] about Late Proof of Claim Amendment Rejected
Nevada Banks Take a Gamble when it Comes to HOA Liens
In a 4-3 decision, the Nevada Supreme Court decided that Nev. Rev. St. 116.3116 gives a homeowners’ association (HOA) a superpriority lien based on certain unpaid dues and assessments so as to extinguish the first deed of trust upon foreclosure. SFR Investments Pool v. U.S. Bank, No. 63078 (Nev. S. Ct. Sept. 18, 2014). The court also held that, under the statute, an HOA may use a non-judicial foreclosure.
[Read more…] about Nevada Banks Take a Gamble when it Comes to HOA Liens
Violation of Discharge Injunction and Abuse of Process
There is no private right of action for violation of the discharge injunction but a debtor may move for contempt in the main bankruptcy case. An abuse of process action, however, may be brought in an adversary proceeding and be established by repeated use of protected personally identifiable information of debtors to file unenforceable proofs of claim in Chapter 13 cases. Moore v. Comenity Capital Bank, No. 13-11325, Adv. Pro. 14-1011 (Bankr. E.D. Tenn. Sept. 29, 2014). [Read more…] about Violation of Discharge Injunction and Abuse of Process