automatic stay

The Supreme Court’s decision in City of Chicago v. Fulton, 141 S. Ct. 585 (2021), effectively overruled Ninth Circuit precedent to the effect that a creditor has an affirmative obligation to return pre-petition funds to a debtor even if those funds are held by a third party. Therefore, when the creditor here stayed its garnishment action and acquiesced to release of funds by the debtor’s bank, it maintained the status quo and fulfilled its automatic stay obligations. Stuart v. City of Scottsdale, No. 21-1063 (B.A.P. 9th Cir. Nov. 10, 2021). [Read more…] about Ninth Circuit BAP Addresses Impact of Fulton

The Third Circuit’s 1992 precedent establishing that a creditor’s reliance on persuasive legal authority may be a defense to the “willfulness” element of a stay violation is still good law but does not apply to a creditor who argued unsettled law but did not rely on any compelling legal authority to justify its conduct. California Coast Univ. v. Aleckna, No. 20-1309 (3rd Cir. Sept. 9, 2021).

When the debtor completed the course work necessary for graduation from California Coast University, she still owed $6,300 in tuition. She filed for bankruptcy and then requested her certified transcript from CCU. CCU, aware of her bankruptcy filing, ceased its collection efforts and eventually gave her an uncertified copy of her transcript with no graduation date listed on it. CCU maintained that the incomplete transcript was part of its policy that students who owe tuition at the completion of their studies have not technically graduated. CCU conceded that the tuition debt was dischargeable. [Read more…] about Third Circuit Reexamines Defense to Stay Violation

The bankruptcy court erred when it denied prospective relief from stay based on the same analysis it used when it denied the mortgage creditor’s retroactive annulment of stay motion. Wilmington Savings Fund Soc’y v. Fairbanks, No. 21-1019 (B.A.P. 9th Cir. Aug. 12, 2021) (unpublished).

When the debtor defaulted on her mortgage payments, she hired Home Matters USA to communicate with the foreclosure trustee. Home Matters assured her that, due to Covid foreclosure restrictions, her home would not be sold at auction. Home Matters failed to adequately protect her and her mortgage creditor, Wilmington Savings Fund Society, held a nonjudicial foreclosure auction where it sold the property for $7,000 in excess of the total debt. The sale was the first indication to the debtor that her property was not protected from foreclosure. In an effort to save her home, she immediately filed a chapter 13 petition. Three days later, the foreclosure trustee executed the deed and the purchaser recorded it within the statutory fifteen-day period. A month later, Wilmington moved for retroactive annulment of the stay to validate the transfer, or, in the alternative, for prospective relief from the stay to allow the foreclosure trustee to make the transfer again. The bankruptcy court denied both the retroactive and prospective stay motions. Wilmington appealed to the Bankruptcy Appellate Panel for the Ninth Circuit. [Read more…] about Retroactive vs Prospective Relief from Stay

Citing six separate stay violations by the homeowner’s association, the district court awarded the debtor damages for emotional distress and property interference. It also upheld the bankruptcy court’s award of punitive damages and attorney’s fees. The court remanded, however, for a determination of whether the damages for property interference should have extended beyond the end of the automatic stay. In re Parker, No. 19-2588 (N.D. Cal. March 22, 2021). [Read more…] about Smattering of Automatic Stay Violations by HOA