The Tenth Circuit has concluded that late-filed tax returns are not “returns” for dischargeability purposes unless filed by the IRS in cooperation with the debtor. Mallo v. IRS (In re Mallo), __ F.3d __, 2014 WL 7360130 (Dec. 29, 2014) (consolidated with In re Martin, 14-1488). [Read more…] about It’s Alive! – McCoy Adopted by Tenth Circuit
Pre-Bankruptcy Agreement Not To Discharge Debt Unenforceable
A debtor’s agreement prior to filing bankruptcy not to discharge her debt for attorney’s fees was found to be unenforceable under section 523(a)(2) and for public policy reasons. Ziegler v. Kline (In re Kline), No. 14-12815, Adv. Proc. No. 14-227 (Bankr. E.D. Pa. Nov. 20, 2014). [Read more…] about Pre-Bankruptcy Agreement Not To Discharge Debt Unenforceable
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
Ongoing Homeowners Association Assessments Dischargeable
Approximately a year and a half after the debtors abandoned their condominium and stopped paying their homeowners assessments, they filed for chapter 13 bankruptcy. Their plan proposed to transfer title to the secured creditor, Bank of America, and made no provision for payment of ongoing Homeowners Association assessments. Both the bank and the HOA objected to confirmation of the plan. The bankruptcy court sustained the Bank’s objection but denied the HOA’s and confirmed the plan insofar as it did not include payment of ongoing HOA assessments. In re Coonfield, No. 14-2533 (Bankr. E.D. Wash. Sept. 25, 2014). [Read more…] about Ongoing Homeowners Association Assessments Dischargeable
Bankruptcy Court Takes Compassionate View of Default
The evidence showed that the debtors’ breach of contract and conversion of collateral was not willful and malicious for purposes of nondischargeability under section 523(a)(6). Mountain Am. Credit Union v. Trujillo (In re Trujillo), No. 13-12434, Adv. No. 13-1095 (Bankr. D. N.M. July 3, 2014). [Read more…] about Bankruptcy Court Takes Compassionate View of Default
Debt for Fees Related to Incarceration of Minor Not Dischargeable
A Bankruptcy Appellate Panel for the Ninth Circuit found that debt based on expenses incurred by the county juvenile justice system for the care of the debtor’s son while incarcerated is nondischargeable Rivera v. Orange County Probation Dept. (In re Rivera), No. 13-1476 (B.A.P. 9th Cir. June 4, 2014). [Read more…] about Debt for Fees Related to Incarceration of Minor Not Dischargeable
Cybersquatting Judgment Results in Nondischargeable Debt
A million-dollar-plus district court judgment against the debtor for intentional trademark infringement and cybersquatting resulted in a nondischargeable debt in bankruptcy under section 523(a)(6). Nguyen v. Biondo (In re Biondo) No. 13-1612 (Bankr. S.D. Fla. June 13, 2014). [Read more…] about Cybersquatting Judgment Results in Nondischargeable Debt
California Law Precludes Claim of Nondischargeability
State law precluded a creditor’s claim of nondischargeability due to fraud in the case of Heritage Pac. Fin. v. Montano (In re Montano), __ B.R. __, 2013 W.L.5890681 (B.A.P. 9th Nov. 1, 2013). [Read more…] about California Law Precludes Claim of Nondischargeability
Heritage Pacific’s Debt Collection Practices Garner More Attention
Heritage Pacific Financial, a debt buyer of foreclosed second mortgages, first popped up on my radar screen nearly two years ago. At that time Heritage was filing multi-defendent complaints in state and federal courts against California home loan borrowers–mostly Latino–claiming that the borrowers fraudulently misstated their monthly income on their loan applications. I suspect that they were trying to get people to settle with them and save filing fees, but at least most federal district court judges recognized that suing multiple defendants on multiple contracts in the same complaint is not proper under the Rule 20 of the Federal Rules of Civil Procedure. (See Order here). As a result, those cases didn’t go very far in court. With the multi-defendant model out the door, Heritage turned its attention to bringing non-dischargeability actions against bankruptcy debtors. Court documents show debtors, many chapter 7 pro se debtors, entering into settlement agreements to pay Heritage thousands of dollars over several years. Sadly, in many of these cases, the underlying debt is uncollectable based on state anti-deficiency laws, Heritage cannot show that is has been assigned the original lender’s fraud claim, or Heritage is unable to demonstrate that the borrower made any false statements or that the original lender relied on any false statement.
Several cases are now pending against Heritage in state courts alleging violations of California’s anti-deficiency laws, the Fair Debt Collection Practices Act, the Rosenthal Act (the state’s version of FDCPA) and state unlawful business practices law.
Earlier this week, Rick Jurgens of Center for Investigative Reporting, wrote a story that focuses on some of the borrowers that have been targeted by Heritage. ABC affiliate, KGO-TV, in conjunction with CIR, also put together a video news story on Heritage.
NCBRC is looking into Heritage’s practice of bringing frivolous non-dischargeability actions in bankruptcy courts throughout California. The United States Trustee should also consider a thorough investigation of Heritage and its bankruptcy practices.