The First Circuit upheld a sanction award against ECMC for abuse of bankruptcy process based on that lender’s continued efforts to collect a student loan that had been found to be fully satisfied prior to bankruptcy. Hann v. ECMC, No. 12-9006 (1st Cir. March 29, 2013). [Read more…] about Sanctions Upheld against ECMC for Trying to Collect Repaid Student Loan
McCoy: Are you out of your Vulcan mind?
No, we’re not talking about Spock and Dr. McCoy. We’re referring to the recent Fifth Circuit opinion in In re McCoy, 666 F.3d 924 (5th Cir. 2012), which held that a late-filed tax return is not a “return” for purposes of the Bankruptcy Code. The result is that a tax debt for which a late return was filed can never be discharged. This major departure from past practice is not warranted by either the plain language of the Code or the legislative history of BAPCPA, neither of which suggests that Congress intended to make tax debts related to late-filed returns non-dischargeable in all circumstances. Since McCoy was decided several bankruptcy courts have adopted a similar position.
NACBA member and tax expert Morgan King takes a closer look at this issue in his recent article “What’s Wrong with McCoy?” You can also follow the status of pending cases dealing with these issues at www.latefiledreturn.com.
NCBRC is interested in participating in cases dealing with this issue. To let us know about a pending case, please contact us at amicus.admin@nacba.org.
$3 Million Punitive Damage Award Upheld against Wells Fargo
Despite repeated bludgeoning by the courts for its conduct, Wells Fargo Home Mortgage, Inc., has tenaciously and relentlessly fought against accepting responsibility for misapplying mortgage payments and charging unapproved fees. Now the district court for the Eastern District of Louisiana has upheld a punitive damages award of over $3 million against Wells Fargo. Jones v. Wells Fargo, No. 12-1362 (E.D. La. March 19, 2013). [Read more…] about $3 Million Punitive Damage Award Upheld against Wells Fargo
Social Security Income May Not Be Considered in Good Faith Analysis
The Ninth Circuit today held that “Congress’s adoption of the BAPCPA forecloses a court’s consideration of a debtor’s Social Security income or a debtor’s payments to secured creditors as part of the inquiry into good faith under 11 U.S.C. § 1325(a).” Drummond v. Welsh (In re Welsh), No. 12-60009 (9th Cir. March 25, 2013), aff’g Drummond v. Welsh (In re Welsh), 465 B.R. 843 (B.A.P. 9th Cir. 2012).
[Read more…] about Social Security Income May Not Be Considered in Good Faith Analysis
Post-Petition Bonus Not Part of the Bankruptcy Estate
In an important win for debtors, the BAP for the Eighth Circuit found that, under section 541 a debtor’s post-petition bonuses were not property of her bankruptcy estate. Klein-Swanson v. Seaver (In re Klein-Swanson), No. 12-6054 (B.A.P. 8th Cir. March 22, 2013). [Read more…] about Post-Petition Bonus Not Part of the Bankruptcy Estate
Attorney Fees for Litigating Damage Actions Based On Stay Violation
The Ninth Circuit decision in Sternberg v. Johnston, reared its ugly head to limit recovery of attorney fees in a stay violation action in the recent case of Check Into Cash v. Snowden (In re Snowden), No. 12-1095 (W.D. Wash. March 11, 2013). Snowden came to the district court on appeal and cross-appeal of the Bankruptcy Court’s award of damages for emotional distress and punitive damages resulting from Check Into Cash (CIC)’s violation of the automatic stay.
After affirming both the emotional distress and punitive damage awards the court rejected the debtor’s invitation to revisit its earlier decision in a previous appeal that the award of attorney fees was properly limited, under Sternberg v. Johnston, 595 F.3d 937 (9th Cir. 2010), cert. denied, 131 S. Ct. 102 (2010), to those fees pre-dating the adversary proceeding. [Read more…] about Attorney Fees for Litigating Damage Actions Based On Stay Violation
Bank is Sanctioned for Rule 3001 Violation
A bankruptcy court in Colorado sanctioned FirstBank for failure to comply with the itemization requirements of Rule 3001. In re Jimenez, No. 12-26282 (Bankr. Colo. Feb. 1, 2013). [Read more…] about Bank is Sanctioned for Rule 3001 Violation
Social Security May Not Be Considered in 707(b)(3)(B) Totality of Circumstances Test
The Catch-22 of considering social security income for a Chapter 7 abuse analysis while excluding its use in a Chapter 13 plan was recently addressed by a bankruptcy court in the Central District of California. In In re Suttice, No. 12-21006 (Bankr. C.D. Cal. Jan. 9, 2013), the debtors were an 85-year-old husband and a 69-year-old wife, both with significant medical concerns. The bulk of their income consisted of social security benefits, pension and retirement accounts, and Veterans Benefits with a small amount coming from family contributions. Their combined income minus expenses left them with a monthly surplus of $896.94. The trustee sought to dismiss their Chapter 7 bankruptcy on the basis that the totality of the circumstances indicated abuse of bankruptcy under section 707(b)(3)(B). Specifically, the trustee sought to have the debtors’ social security income considered in their ability to pay. [Read more…] about Social Security May Not Be Considered in 707(b)(3)(B) Totality of Circumstances Test
Property Associations Lose Battle of the Liens in Two Florida Cases.
In two cases out of the Middle District of Florida, property associations fought for priority over mortgage lenders in order to prevent their liens from being stripped as wholly unsecured. In re Plummer, No. 12-3870 (Bankr. M.D. Fla. Jan. 14, 2013); In re Buckner, No. 12-4962 (Bankr. M.D. Fla. Jan. 17, 2013). The Associations failed to convince the court, however, and, in Plummer, the court permitted the lien stripping under section 1322(b)(1), while in Buckner, the lien was stripped under section 506(d). [Read more…] about Property Associations Lose Battle of the Liens in Two Florida Cases.
Applicable Commitment Period Where No Projected Disposable Income
The Bankruptcy Court for the Eastern District of North Carolina found that the applicable commitment period outlined in section 1325(b)(1)(B) does not apply to above-median debtors with zero or negative disposable income and that early termination of the plan does not alter the debtor’s projected disposable income calculation. In re Ballew, 12-4059 (Bankr. E.D. N.C. Jan. 11, 2013). [Read more…] about Applicable Commitment Period Where No Projected Disposable Income