Where the fifty-seven-year-old debtor’s current income and anticipated future income would both be insufficient to pay even the interest on his student loans, his expenses were not excessive, and he acted in good faith, he was entitled to partial discharge under section 523(a)(8), and the bankruptcy court had leeway to determine which of his several loans to discharge. ECMC v. Goodvin, No. 20-1247 (D. Kan. March 17, 2021). [Read more…] about Reasonable Application of Brunner Test Supports Undue Hardship Discharge
Ex-Wife’s Interest In Marital Residence Does Not Enter Debtor’s Estate
The debtor’s ex-wife’s interest in the marital residence did not enter the bankruptcy estate even though the property was titled to the debtor, where their dissolution agreement gave her half interest and the debtor was prohibited from unilaterally disposing of the property. But the debtor’s ex-wife did not show that his failure to comply with the dissolution agreement generally, was an indication that he undertook the debts created by the agreement by fraud where the evidence did not support her contention that he never intended to comply. Williams v. Williams, No. 18-1197 (Bankr. D. Colo. Jan. 8, 2021). [Read more…] about Ex-Wife’s Interest In Marital Residence Does Not Enter Debtor’s Estate
Debtor’s Challenge to Dischargeability Barred by Laches
The debtor was barred by the doctrines of laches and equitable estoppel from asserting that a debt was nondischargeable where he had stipulated to its nondischargeability in an earlier bankruptcy and had not raised the issue of nondischargeability during several subsequent years of litigation concerning that debt. Storick v. CFG LLC, No. 20-80126 (S.D. Fla. Jan. 21, 2021). [Read more…] about Debtor’s Challenge to Dischargeability Barred by Laches
Debtors Entitled to Fees for Creditor’s Collateral Attack on Contempt Motion
Where the creditor raised all its defenses to the debtors’ contempt motion in a collateral adversary complaint, the debtors were entitled to at least a portion of their attorney fees incurred in litigating the adversary proceeding under section 362(k)(1). Moon v. Rushmore Loan Management Services, LLC., No. 20-1199 (B.A.P. 9th Cir. Feb. 4, 2021) (unpublished). [Read more…] about Debtors Entitled to Fees for Creditor’s Collateral Attack on Contempt Motion
NACBA Files Amicus in Technical Abandonment Case
NACBA/NCBRC filed an amicus brief in support of the debtors in a case where, two years after he elected not to administer a fully-disclosed cause of action against Ocwen, and the debtors’ bankruptcy case was closed, the chapter 7 trustee moved to reopen the case to obtain approval for a settlement agreement with Ocwen. Stevens v. Whitmore (In re Stevens), No. 20-60044 (9th Cir.) (filed Feb. 26, 2021). [Read more…] about NACBA Files Amicus in Technical Abandonment Case
Modification under CARES Act
For plan modification under the CARES Act, the debtor need not have been current in plan payments prior to enactment of the Act. In re Gilbert, No. 16-12120 (Bankr. E.D. La. Oct. 6, 2020).
In four separate cases, debtors sought to modify their chapter 13 plans under section 1329(d) which Congress added to the Bankruptcy Code as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). In all four cases, the debtors’ plans were confirmed and they fell behind on payments prior to March 27, 2020. In three of the cases, the debtors sought modification of their plans to pay off the arrearages and extend the length of the plan beyond sixty months. In the fourth case, the debtor sought only to reduce payments to unsecured creditors. The trustee opposed the modifications arguing that the CARES Act permits modifications only if the debtors first fell behind in their plan payments after March 27, 2020, and the sole reason for the default was the pandemic.
The bankruptcy court disagreed. [Read more…] about Modification under CARES Act
Tribe Has Sovereign Immunity from Stay Violation Suit
Payday lenders belonging to a Native American Tribe enjoy sovereign immunity from suit under section 362 for violation of the automatic stay. In re Coughlin, No. 19-14142 (Bankr. D. Mass. Oct. 19, 2020).
The chapter 13 debtor filed a motion seeking a finding that a group of payday lenders violated the automatic stay when they continued to dun him for payments after he filed his bankruptcy petition. The creditors, all members of a Native American Tribe, moved to dismiss the complaint, arguing that they were entitled to sovereign immunity for their conduct. [Read more…] about Tribe Has Sovereign Immunity from Stay Violation Suit
Legal Malpractice Claim Accrued When Debtors Denied Discharge
Where the only injury resulting from bankruptcy counsel’s conduct was denial of discharge, the cause of action for legal malpractice accrued post-petition and belonged to the debtors rather than the chapter 7 bankruptcy estate. Church Joint Venture, L.P. v. Blasingame, No. 19-5505 (6th Cir. Jan. 26, 2021).
The debtors filed for chapter 7 bankruptcy but were denied discharge when the court learned of undisclosed assets in the form of personal property, shell companies, family trusts, etc. The debtors filed a malpractice lawsuit against their bankruptcy attorneys in state court. When the trustee declined to bring a suit against the debtors’ attorneys on behalf of the bankruptcy estate, the debtors’ primary creditor, CJV, obtained derivative standing to do so. CJV moved for summary judgment on the issue of whether the cause of action belonged to the estate. The court treated the debtors’ response as a cross-motion for summary judgment and granted judgment in favor of the debtors. The BAP for the Sixth Circuit affirmed. Church Joint Ventures, L.P. v. Blasingame (In re Blasingame), 597 B.R. 614 (B.A.P. 6th Cir. 2019). [Read more…] about Legal Malpractice Claim Accrued When Debtors Denied Discharge
Notification to State Tax Board of Federal Tax Reevaluation is Return “Equivalent”
A state-mandated notification with 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. Calif. Franchise Tax Bd., No. 20-1025 (B.A.P. 9th Cir. Oct. 5, 2020). [Read more…] about Notification to State Tax Board of Federal Tax Reevaluation is Return “Equivalent”
Voluntary Dismissal Under 1307(b) over Objection by Creditor
The debtor was permitted to voluntarily dismiss her chapter 13 case under section 1307(b) despite the judgment creditor’s objections and a technical error, where, even if a good faith component is read into the statute, the creditor failed to provide evidence of bad faith and was otherwise provided due process. Murphy v. Marinari (In re Marinari), No. 19-3642 (3rd Cir. Jan. 19, 2021) (unpublished).
The judgment creditor filed a claim and an adversary proceeding in the debtor’s chapter 13 case. The debtor filed an “application” to voluntarily dismiss her bankruptcy case under section 1307(b). When the bankruptcy court dismissed the case over the creditor’s objection, the creditor appealed. The district court affirmed. [Read more…] about Voluntary Dismissal Under 1307(b) over Objection by Creditor