National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

NCBRC News

by on

Contrasting Cases on Undue Hardship and Summary Judgment

Speculation, begging the question, and the absence of countervailing evidence doomed the debtor’s defense to a motion for summary judgment on her student loan discharge action. Markwood v. U.S. Dept. of Educ. (In re Markwood), No. 13-1390, Adv. Proc. 14-4 (Bankr. N.D. W.Va. Oct. 31, 2014).

The court applied the three-part test developed in Brunner v. New York State Higher Educ. Servs. Corp., 831 F.2d 395, 396 (2nd Cir. 1987) (per curiam): “(1) that the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for herself and her dependents if forced to repay the loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.” The court found the debtor failed the first two prongs of this test. [Read more…] about Contrasting Cases on Undue Hardship and Summary Judgment

by on

“Non-Routine” Fees for Objections to Late Claims Allowed

In two nearly identical cases, the bankruptcy court granted the debtors’ attorney’s supplemental fee motions seeking compensation for work performed opposing proofs of claim for debts that were unenforceable due to the lapse of the state statute of limitations. In re Swilling, No. 13-12583 (Bankr. E.D. Tenn. Oct. 23, 2014), In re Alexander, No. 13-13462 (Bankr. E.D. Tenn. Oct. 22, 2014) (debtor’s attorney filed motions in five other cases based on similar factual scenarios).The court noted, however, that since the 2012 changes to Fed. Bankr. R. 3001(c), objections to those claims would now be deemed “routine.” [Read more…] about “Non-Routine” Fees for Objections to Late Claims Allowed

by on

Not Even the IRS Approves of McCoy

The IRS has filed an amicus brief in the First Circuit taking the position that the Fifth Circuit erred in McCoy v. Miss. State Tax Comm’n, 666 F.3d 924 (5th Cir. 2012), when it held that a late-filed return can never be a “return” for dischargeability purposes unless filed under IRC section 6020(a). Wood v. Mass. Dept. of Rev., Nos. 14-9004, 14-9006 and Pendergast v. Mass. Dept. of Rev., 14-9005, 14-9007 (1st Cir.) (amicus brief filed Nov. 4, 2104). [Read more…] about Not Even the IRS Approves of McCoy

by on

Supreme Court to Hear Chapter 7 Lien Stripping Cases

The Supreme Court granted certiorari today in two of the three Chapter 7 lien-strip-off cases challenging the Eleventh Circuit decision in McNeal. Bank of Amer. v. Toledo-Cardona, No. 14-163 and Bank of Amer. v. Caulkett, No. 13-1421 (petition granted Nov. 17, 2014) (consolidated for argument) (Bank of Amer. v. Bello, No. 14-235 is still pending). In McNeal v. GMAC Mortg., 735 F.3d 1263 (11th Cir. 2012) pet. den. (May 20, 2014), the court bucked the trend to find that Dewsnup v. Timm, 502 U.S. 410 (1992), which held that a partially secured lien could not be stripped-down in chapter 7, did not apply to wholly unsecured liens. There are more than a dozen cases currently pending in the Eleventh Circuit challenging this decision, but, after an early abortive attempt to bring the issue before the Supreme Court (Bank of America v. Sinkfield, No. 13-700 (cert. denied, March 31, 2014)) the issue is now on track for final resolution. Briefing should be completed by March and argument is likely to be scheduled for the last week of March, with decision by June. The debtor is being represented by Stephanos Bibas, the Director of the Supreme Court Clinic at the University of Pennsylvania Law School.

by on

Arbitration Judgment Applies to Determination of Nondischargeability

The doctrine of collateral estoppel mandated that findings in a state court arbitration judgment applied to the determination of nondischargeability of a debt in chapter 7 bankruptcy. Margolis v. Hensley (In re Hensley), No. 12-42785, Adv. Pro. 12-4180 (Bankr. E.D. Tex. Oct. 1, 2014). [Read more…] about Arbitration Judgment Applies to Determination of Nondischargeability

by on

Nevada Banks Take a Gamble when it Comes to HOA Liens

In a 4-3 decision, the Nevada Supreme Court decided that Nev. Rev. St. 116.3116 gives a homeowners’ association (HOA) a superpriority lien based on certain unpaid dues and assessments so as to extinguish the first deed of trust upon foreclosure. SFR Investments Pool v. U.S. Bank, No. 63078 (Nev. S. Ct. Sept. 18, 2014). The court also held that, under the statute, an HOA may use a non-judicial foreclosure.

[Read more…] about Nevada Banks Take a Gamble when it Comes to HOA Liens