Bankruptcy’s co-debtor stay was intended to prevent indirect pressure created by creditors attempting to collect against a co-signatory on a debt belonging to the bankruptcy debtor. Therefore, it does not apply to a debt solely belonging to the bankruptcy debtor’s spouse even though state law provides for collection of that debt through marital property. Smith v. Capital One Bank, No. 16‐1422 & 16‐1423 (7th Cir. Dec. 22, 2016). [Read more…] about Seventh Circuit Discusses Application of Co-Debtor Stay
NCBRC and NACBA Weigh In on Midland v. Johnson
NCBRC is wrapping up its year-end funding campaign. There’s still time to make a tax-deductible contribution for 2016.
Meanwhile…NCBRC and NACBA weighed in on the Midland v. Johnson case pending before the Supreme Court. Click here for the brief. A big thank you to Whitman Holt, Robert Pfister, Daniel Bussel, and Ken Klee at Klee, Tuchin, Bogdanoff & Stern, LLP for all their work on the brief.
Incorrect 1099-A Form Not Objectively Coercive
An IRS 1099-A Form sent post-foreclosure by the mortgagee and misstating that the debtors were personally liable on the mortgage debt, was not an attempt to collect a debt in violation of the discharge injunction. Bates v. CitiMortgage, Inc.,– F.3d – , 2016 WL 7229754 (1st Cir. Dec. 14, 2016). [Read more…] about Incorrect 1099-A Form Not Objectively Coercive
Improper Service Precludes Default Judgment
Notwithstanding actual knowledge of the adversary complaint, where the debtor failed to serve the “insured depository institution” by certified mail, the Bank was not obliged to respond, and the bankruptcy court erred in granting default judgment. Citizens Bank v. Decena, No. 16-1918 (E.D. N.Y. Nov. 29, 2016).
Lorelei Decena attended St. Christopher’s College of Medicine for three years. She funded her education from St. Christopher’s through five separate student loans from Citizens Bank. After completing her studies, she sought to sit for the medical boards in the United States and was told that she was not eligible because St. Christopher’s was not an accredited medical school. [Read more…] about Improper Service Precludes Default Judgment
Discriminatory Treatment of Student Loan Debt Not Unfair
“This Court respectfully disagrees with other courts’ holding that, without more, nondischargeability of student loans is an insufficient reason for discriminating in favor of Student Loan Claims.”
In a thoughtful, in-depth discussion addressing the state of student loan debt and the treatment of such debts separately from other debts in chapter 13, the Kansas Bankruptcy Court found that the debtors did not unfairly discriminate against general unsecured creditors by prioritizing their student loan debts in their plan. In re Engen, No. 15-20184 (Bankr. Kans. Dec. 12, 2016). [Read more…] about Discriminatory Treatment of Student Loan Debt Not Unfair
CFPB Takes Action Against Reverse Mortgagees
On December 7, the CFPB took action against three reverse mortgage lenders for engaging in deceptive advertising practices in violation of the Mortgage Acts and Practices Advertising Rule. The companies, American Advisors Group, Reverse Mortgage Solutions, and Aegean Financial, engaged in a misleading practice by, among other things, misinforming consumers that they could not lose their homes with a reverse mortgage. The three consent orders require the companies to cease deceptive practices, implement procedures to comply with all laws, and pay penalties ranging from $65,000 to $400,000. American Advisors Group is the largest reverse mortgage lender in the country. Because of the complexity of reverse mortgages, the CFPB has made a point of studying and reporting on advertising abuses within the industry.
aegeanfinancial-consentorder
americanadvisorsgroup-consentorder
reversemortgagesolutions-consentorder
Nevada Personal Injury Exemption Applies on a Per-Claim Basis
The Nevada personal injury exemption applies to multiple claims rather than being limited to the aggregate total of all claims. Kaplan v. Dutra (In re Kaplan), No. 69065 (Nev. Dec. 1, 2016).
Chapter 7 debtor, David John Kaplan, was involved in two unrelated incidents in which his back was injured. He claimed two personal injury exemptions for $16,150 each in his bankruptcy schedules. The chapter 7 trustee objected to the exemptions arguing that the debtor was entitled to a maximum $16,150 for one or more personal injury claims. Finding no state court precedent on the issue, the bankruptcy court certified the question to the Nevada Supreme Court. [Read more…] about Nevada Personal Injury Exemption Applies on a Per-Claim Basis
NACBA Takes On 11th Circuit Judicial Estoppel Doctrine
NCBRC has filed an amicus brief in the Eleventh Circuit on behalf of the NACBA membership to address the issue of that circuit’s approach to judicial estoppel. Slater v. U.S. Steel, No. 12-15568 (filed October 24, 2016).
Twenty one months after filing an employment discrimination suit in federal district court against her former employer, U.S. Steel, Sandra Slater filed for bankruptcy. (The original case was filed under chapter 7 and later converted to chapter 13). She failed to list the pending federal case in her bankruptcy schedules. U.S. Steel then moved the district court to bar the discrimination suit based on the doctrine of judicial estoppel. The district court granted the motion and Ms. Slater appealed. [Read more…] about NACBA Takes On 11th Circuit Judicial Estoppel Doctrine
Giving Tuesday and Beyond
This year, the National Consumer Bankruptcy Rights Center, is participating in #GivingTuesday, a global day dedicated to giving. Last year, more than 45,000 organizations in 71 countries came together to celebrate #GivingTuesday. We invite you to join the movement by supporting the work NCBRC does on behalf of consumer bankruptcy debtors.
Each year millions of individuals and families across the country struggle to pay their bills. Often financial distress follows on the heels of other unanticipated events such as job loss, divorce, substantial out-of-pocket medical expenses and natural disasters. Sometimes filing for bankruptcy is the best alternative for relieving the pressure of extreme financial distress. Bankruptcy can provide debtors with a fresh start–a new opportunity in life and a clear field for future effort. The Bankruptcy Code grants financially distressed debtors certain rights that are critical to the proper functioning of the bankruptcy system as a whole. However, bankruptcy debtors, with their limited financial resources and limited exposure to the bankruptcy system, often do not have the ability to protect the integrity of the bankruptcy system and preserve the bankruptcy rights of consumer debtors more generally. The National Consumer Bankruptcy Rights Center (NCBRC) is meant to fill that vacuum by filing briefs or providing assistance to consumer debtors’ or their attorneys, especially at the appellate level where a favorable decision will often help thousands of consumer bankruptcy debtors.
Avoiding a Lien Requires that the Lien Exist
Where the creditor sought to establish a judicial lien against the debtor’s interest in a tenancy in the entirety the threshold question is not whether the lien impairs the homestead exemption and may be avoided under section 522(f)(1), but whether a lien has been created at all. CRP Holdings v. O’Sullivan, No. 16-1526 (8th Cir. Nov. 14, 2016).
CRP obtained a default judgment against Casey Drew O’Sullivan and, attempting to secure a judicial lien on his real property, filed a notice of foreign judgment in the county where Mr. O’Sullivan’s residence was located. Mr. O’Sullivan filed for chapter 7 bankruptcy and claimed the property, which he owned as tenants in the entirety with his wife, as his homestead. The bankruptcy court sustained Mr. O’Sullivan’s motion to avoid the judicial lien. The BAP affirmed, finding that while CRP’s lien may not have been enforceable, it could still be avoided. In re O’Sullivan, 544 B.R. 407 (B.A.P. 8th Cir. 2016). [Read more…] about Avoiding a Lien Requires that the Lien Exist