National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

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Estate Property Encompasses Post-Discharge Consent Decree

A post-discharge settlement based on a consent decree relating to the lender’s misconduct at the time it entered into a lending agreement with the chapter 7 debtors was property of the estate. In re Porrett, No. 09-3881 (Bankr. D. Idaho March 10, 2016).

Gary Allen and Jennifer Sue Porrett had a mortgage through Wells Fargo. They filed chapter 7 bankruptcy and Wells Fargo obtained relief from stay and foreclosed on the property. The Porretts were discharged in 2009. Two years later, Wells Fargo entered into a consent decree with federal regulators based upon Wells Fargo’s practice of pressing borrowers to take sub-prime mortgages even though they were eligible for more favorable prime loans during the period that the Porretts obtained their mortgage. Upon hearing of the consent decree the trustee moved to reopen the Porretts’ bankruptcy to compromise the claim and accept Wells Fargo’s offer of a $8,120.23 settlement. The Porretts argued that because the consent decree was entered into post-bankruptcy it was not property of the estate. The court disagreed.

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Bleak House Comes to the Bankruptcy Court

In a scenario worthy of Dickens, a once-thriving family business, Ainsworth Feed Yards (AFY), was liquidated and distributed to creditors while the family members engaged in six years of legal battles with each other. In the Matter of Sears, 2016 Bankr. LEXIS 926, No. 10-40275 (Bankr. D. Neb. March 23, 2016). [Read more…] about Bleak House Comes to the Bankruptcy Court

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Obligations Under Condo Declaration Run with the Land

Obligations under a Condominium Association Declaration agreement run with the land and a condominium association may rent properties surrendered in bankruptcy and apply rent monies to pre-petition assessments without violating the discharge injunction. In re Montalvo, No. 10-8338 (Bankr. M.D. Fla. Feb. 25, 2016). [Read more…] about Obligations Under Condo Declaration Run with the Land

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Eleventh Circuit Adds its Voice to Late-Filed Return Issue

The Eleventh Circuit applied the Beard test to the question of whether and when a late-filed tax return is a “return” for purposes of dischargeability. The court adopted the middle ground finding that timing is relevant to the issue of the debtor’s “honest and reasonable” attempt to comply with tax laws. Justice v. U.S.A., No. 15-10273 (11th Cir. March 30, 2016). [Read more…] about Eleventh Circuit Adds its Voice to Late-Filed Return Issue