Bank of America’s failure to provide the debtor with a written reaffirmation agreement during the pendency of her bankruptcy led the court to deny its motion to reopen and compel surrender. In re Rodriguez, No. 12-12043 (Bankr. S.D. Fla. Aug. 12, 2015). [Read more…] about Court Denies Bank’s Motion to Reopen and Compel Surrender
Harris Precludes Attorney Fee Payments Out of Undisbursed Funds
In two cases involving the courts’ practice of permitting the chapter 13 trustee to distribute undisbursed funds to creditors upon conversion to chapter 7, the courts found that Harris v. Viegelahn, 575 U.S. ___, 135 S.Ct. 1829 (2015), dictated a different result, even with respect to the debtor’s chapter 13 attorney fees and without regard to whether the case was converted prior to confirmation of the plan. In re Beauregard, No. 11-13069, consolidated with, In re Rule-Osburn, No. 14-13624, In re Montano, No. 14-12950 (Bankr. N. M. July 10, 2015); In re Sowell, No. 14-44130 (Bankr. D. Minn. Aug. 7, 2015). [Read more…] about Harris Precludes Attorney Fee Payments Out of Undisbursed Funds
Debtors’ Failure to Mitigate Dooms Contempt Action
Debtors’ failure to prove actual damages, in addition to an apparently deliberate failure to mitigate damages deprived them of an award of sanctions without regard to whether Solutions Finance willfully violated the stay. In re Phillips, No. 15-30632 (Bankr. E.D. Tenn. July 13, 2015). [Read more…] about Debtors’ Failure to Mitigate Dooms Contempt Action
Sale of Assets Results in Disposable Income
Gliding over the crucial question of whether sale of an asset results in income, a Florida bankruptcy court ordered the debtors, Mr. and Mrs. McMillan, to distribute a portion of their sale proceeds to their creditors as disposable income. In re McMillan, No. 11-5348 (Bankr. M.D. Fla. July 2, 2015). [Read more…] about Sale of Assets Results in Disposable Income
Trustee’s Valuation of Unresolved Pre-Petition Cause of Action Rejected
A bankruptcy court rejected a chapter 13 trustee’s valuation of the debtor’s pre-petition cause of action and found that an estimated value of the state court case should not be included in the plan distributions but that the plan may be modified if the debtor obtains a money judgment during the commitment period. In re Morales, No. 12-7296 (Bankr. P.R. July 2, 2015). [Read more…] about Trustee’s Valuation of Unresolved Pre-Petition Cause of Action Rejected
Chapter 7 Trustee Fee Application Denied
Where the chapter 7 trustee did not make distributions or turn over any money to parties in interest he cannot recover fees for time spent prior to conversion to chapter 13. In re Mingledorff, No. 12-41543 (Bankr. S.D. Ga. June 23, 2015). [Read more…] about Chapter 7 Trustee Fee Application Denied
Amici NCLC and NACBA Argue Brunner Test Outdated
NCLC and NACBA filed a joint amicus brief in the First Circuit Court of Appeals seeking to lessen the burden on debtors trying to discharge student loans based on undue hardship. Murphy v. U.S. Dept. of Educ., No. 14-1691 (filed July 29, 2015). [Read more…] about Amici NCLC and NACBA Argue Brunner Test Outdated
POC Violates Discharge Injunction
Filing a proof of claim for a deficiency judgment that was discharged in a previous bankruptcy violates the discharge injunction. Green Point Credit v. McLean, No. 14-14002 (11th Cir. July 24, 2015). Green Point Credit, LLC and Green Tree Servicing LLC (Green Tree) filed a proof of claim for a debt that had been discharged in the McLean’s previous bankruptcy and the McLeans filed an adversary proceeding seeking damages for violation of the discharge injunction. Four days later, Green Tree, acknowledging that the claim had been filed in error, withdrew it. The bankruptcy court found that Green Tree violated the discharge injunction and awarded compensatory damages for the McLean’s emotional distress, attorney’s fees, and a “coercive” sanction. The district court affirmed. [Read more…] about POC Violates Discharge Injunction
Contributions to Retirement Plan Excluded from CMI
Contributions to an employee retirement plan are to be excluded from the calculation of current monthly income rather than deducted from disposable income in the Means Test. In re Vu, No. 15-41405 (Bankr. W.D. Wash. June 16, 2015). [Read more…] about Contributions to Retirement Plan Excluded from CMI
Funds from Consent Order Not Estate Property
Funds the debtor received through operation of a post-petition consent order between banking regulators and Bank of America were not part of the bankruptcy estate subject to turnover. MacKenzie v. Neidorf (In re Neidorf), No. 14-1496 (B.A.P. 9th Cir. July 10, 2015). Carrie Margaret Neidorf’s home was foreclosed upon while she was in bankruptcy and years later, while her bankruptcy case was still open and pursuant to a national settlement between banking regulators and Bank of America, she received $31,250 as a result of the foreclosure. The 2011 Consent Order (amended in 2013) required Bank of America to make a $1,127,453.261 cash payment to a Qualified Settlement Fund. That fund was then distributed to borrowers who had experience foreclosure within a specified period. The chapter 7 trustee sought turnover of the funds arguing that they were property of the estate. The bankruptcy court disagreed and the BAP affirmed.
The BAP stated three conditions that must be met for after-acquired property to be considered part of the estate under section 541(a)(7); “(1) It must be created with or by property of the estate; (2) acquired in the estate’s normal course of business; or (3) otherwise be traceable to or arise out of any prepetition interest included in the bankruptcy estate.” The panel found that the fact that the foreclosed residence was property of the estate was not dispositive. It found that the debtor’s entitlement to the foreclosure payment arose out of the post-petition Consent Order rather than out of her ownership of the property. The panel concluded: “Seen in this light, that the estate had an interest in Debtor’s Residence is not enough. Nowhere has Trustee shown how the estate obtained an interest in the Foreclosure Payment itself when the qualifying events giving rise to Debtor’s legal rights to the payment all occurred postpetition and were held solely by the borrowers.”