National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

NCBRC News

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Eighth Circuit BAP Gets it Wrong in FDCPA Case

Filing an accurate proof of claim on a stale debt does not violate the FDCPA. Gatewood v. CP Medical, LLC, No. 15-6008 (B.A.P. 8th Cir. July 10, 2015). Mr. and Mrs. Gatewood filed for chapter 13 bankruptcy and CP Medical, a medical collection agency, filed a proof of claim on a debt that was time-barred under Arkansas law. After the Gatewoods converted to chapter 7, they filed an adversary complaint against CP Medical for seeking payment on a stale debt “as a means of debt collection that is either false, misleading, deceptive, unfair, or unconscionable” in violation of the FDCPA.

The bankruptcy court, relying on Eighth Circuit precedent, found that an attempt to collect on a stale debt is not a violation of the FDCPA. It further found that the Bankruptcy Code provides the only relief available to a debtor in cases such as these. The BAP affirmed. [Read more…] about Eighth Circuit BAP Gets it Wrong in FDCPA Case

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NCBRC Grateful for the Support of the O. Max Gardner Foundation

The National Consumer Bankruptcy Rights Center (NCBRC) has been honored by a $12,500.00 first-time donation from the O. Max Gardner Foundation. NCBRC is a 501(c)(3) organization dedicated to protecting the integrity of the bankruptcy system and preserving the rights of consumer bankruptcy debtors. NCBRC advances these goals by providing assistance either through working directly with debtors’ attorneys or by filing amicus briefs in courts throughout the country. Without the support of donors like the O. Max Gardner Foundation, the assistance provided by NCBRC would not be possible.

The O. Max Gardner Foundation was established in 1943 by Oliver Max Gardner (1882 – 1947). Mr. Gardner had a varied career beginning with teaching organic chemistry and, after attending law school, ultimately entering politics. He served as the 57th Governor of North Carolina from 1929 to 1933. After his term ended, Mr. Gardner worked in the administrations of Franklin D. Roosevelt, as an informal advisor and speech writer, and Harry S. Truman, as Under Secretary of the Treasury. Mr. Gardner founded the O. Max Gardner Foundation to promote all forms of educational and community service organizations for the citizens of North Carolina.

His grandson, O. Max Gardner III, is a familiar name in the field of bankruptcy law having devoted his professional life to the service of consumer debtors and to the education of the bankruptcy bar in the intricacies of this challenging area of regulation. His efforts have gone a long way toward leveling the playing field between consumer debtors and the often predatory lenders, and unethical servicers and collectors, they face.

NCBRC’s Board of Directors is grateful to the O. Max Gardner Foundation for its confidence in our mission and support in our mutual goals of providing the best and broadest assistance to consumer debtors in their quest for a fresh start.

 

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Growing Consensus Permits Lien Strip in Chapter 20

Joining a “growing consensus” of courts, the BAP for the Ninth Circuit found that a chapter 20 debtor may strip off a wholly unsecured lien with the strip-off becoming effective upon completion of the plan. Boukatch v. MidFirst Bank (In re Boukatch), No. 14-1483 (July 9, 2015). In so holding, the BAP reversed the contrary finding by the bankruptcy court. [Read more…] about Growing Consensus Permits Lien Strip in Chapter 20

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Must Read – Why Filing Stale Claims in Bankruptcy Violates the FDCPA

On Friday, Debtor in Johnson v. Midland Funding filed her opening brief in the Eleventh Circuit.  It is well worth the read.  In summary:

1.  There is no textual support for the conclusion that Bankruptcy Code precludes valid FDCPA claims.

2.  When it comes to proofs of claim, debt collectors do not have a “right” to file a claim on a time-barred debt.  Even though the debt is not extinguished by the statute of limitations, the expiration of the SOL renders the obligation legally unenforceable.  As such, it is not a “claim” for purposes of the Code.

3.  The bankruptcy process is designed to run fairly and efficiently; there is no room for a pointless exercise of lodging invalid claims that require trustees or debtors to object.  Debt collectors tax scarce judicial and party resources by filing such frivolous claims, and divert funds from honest creditors.  The aggregate cost to the system from debt collectors filing stale claims is staggering.

4.  Debt collectors can easily comply with both the Code and the FDCPA by refraining from filing stale claim.  Debt collectors are not compelled to take any action under the Code that violates the FDCPA.

 

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District Court Has Original Jurisdiction over 362(k) Claim

A district court has subject matter jurisdiction over a claim under section 362(k) without regard to a standing order referring all bankruptcy-related cases to the bankruptcy courts, and dismissal under FRCP 12(b)(6) is inappropriate where the allegations in the complaint present a plausible explanation for the defendants’ conduct. Houck v. Substitute Trustee Services, No. 13-2326 (4th Cir. July 1, 2015). [Read more…] about District Court Has Original Jurisdiction over 362(k) Claim

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NABCA Weighs in on Intersection between Bankruptcy Code and FDCPA

NCBRC filed an amicus brief on behalf of the NACBA membership in the case of Garfield v. Ocwen Loan Servicing, No. 15-527 (2d Cir. filed June 13, 2015). The brief seeks reversal of a district court finding that the Bankruptcy Code precludes application of the FDCPA in any case involving a discharged debt. Overlapping federal statutory schemes are presumed to be non-preclusive unless the plain text of one or the other explicitly creates preclusion or where there is an irreconcilable conflict between the two. Morton v. Mancari, 417 U.S. 535, 550 (1974). [Read more…] about NABCA Weighs in on Intersection between Bankruptcy Code and FDCPA

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Plan May Include Vesting in Unwilling Creditor

A Debtor may confirm a plan that provides for transfer of title to the secured creditor even over the creditor’s objection. In re Sagendorph, No. 14-41675 (Bankr. D. Mass. June 2015).

Paul Sagendorph’s chapter 13 plan provided for certain secured property as follows:

The debtor is Surrendering his property . . . to Wells Fargo . . . in Full Satisfaction of Any and All Claims filed. Wells Fargo . . . will Foreclose on the property in full Satisfaction of the Mortgage, Note and any outstanding Fees. Pursuant to §§ 1322(b)(8) and (9), title to the property . . . shall vest in Wells Fargo . . . upon confirmation, and the Confirmation Order shall constitute a deed of conveyance of the property when recorded at the Registry of Deeds. All secured claims will be paid by surrender of the collateral and foreclosure of the security interest. [capitalization in original] [Read more…] about Plan May Include Vesting in Unwilling Creditor