An overpayment resulting from the debtor’s mistakenly making mortgage payments while the chapter 13 trustee was making the same payments through the plan was properly remitted to the trustee for distribution rather than being returned to the debtor. White v. Regions Bank, No. 20-5355 (6th Cir. Sept. 30, 2021) (unpublished). [Read more…] about Refund of Mortgage Double Payment to Trustee
Appreciation Is Part of Converted Chapter 7 Estate
Post-petition appreciation in a chapter 13 case becomes part of the chapter 7 estate upon conversion. In re Castleman, No. 19-12233 (Bankr. W. D. Wash. June 4, 2021).
When the debtors filed for chapter 13 bankruptcy their residence was valued at $500,000. At the time of conversion of the case to chapter 7, the property value had appreciated to $700,000. The trustee moved to include the appreciation in the chapter 7 bankruptcy estate and the debtors opposed the motion. [Read more…] about Appreciation Is Part of Converted Chapter 7 Estate
Property Appreciation Belongs to Ch 13 Debtor
Under the “estate replenishment” theory, post-confirmation appreciation on the chapter 13 debtor’s residence belongs to the debtor. In re Larzelere, 2021 WL 3745428 (Bankr. D. N.J. Aug. 24, 2021) (case no. 1:17-bk-34411).
When the debtor filed for chapter 7 bankruptcy on December 4, 2017, his residential property was valued at $219,000 and was encumbered by a $172,877 mortgage. He converted to chapter 13 and confirmed a less-than-100% plan, which he committed to paying out of future earnings. Three years into the plan, the debtor moved the court for an order allowing him to sell his property for $348,000, use the proceeds to make all of the remaining plan payments at once, and retain the remaining proceeds. The trustee objected. She argued that, as an above median debtor, the debtor cannot complete his plan in fewer than 60 months unless he pays 100 percent of the claims. She further argued that the proceeds from the sale of the house are property of the estate under section 1306. [Read more…] about Property Appreciation Belongs to Ch 13 Debtor
Pawned Vehicle Is Part of Bankruptcy Estate
Where the maturity date on the vehicle pawn contract had not elapsed before the debtor filed for chapter 13 bankruptcy, she retained ownership of her vehicle, the vehicle became property of the estate, and the loan could be provided for in her chapter 13 plan. TitleMax of Alabama, Inc. v. Womack, — Fed. Appx. —-, 2021 WL 3856036 (11th Cir. Aug. 30, 2021) (case no. 21-11476) (unpublished).
The debtor filed her chapter 13 petition 11 days prior to the maturity date of the pawn contract on her vehicle and she proposed to pay the amount remaining on the loan through the life of the plan under section 1322(b)(2). TitleMax objected to confirmation, arguing that, under the terms of the pawn contract and state law, once the maturity date on the loan expired, the debtor’s choices were limited to redemption of the vehicle or forfeiture of title to TitleMax. The bankruptcy court overruled TitleMax’s objections, and the district court affirmed (see blog post here). [Read more…] about Pawned Vehicle Is Part of Bankruptcy Estate
Tax Credits Exemptible as Public Assistance
Where the Additional Child Tax Credit and Earned Income Tax Credit were both intended to benefit low-income households and were not limited by taxes owed, they were properly deemed “public assistance” under state exemption laws. In re Moreno, — B.R. —-, 2021 WL 1904189 (Bankr. W.D. Wash. May 11, 2021) (case no. 3:20-bk-42855). [Read more…] about Tax Credits Exemptible as Public Assistance
Modification of Pawn Contract
Where the debtor entered bankruptcy prior to the maturation date of her pawn contract, she had an ownership interest in her pawned vehicle, the lender was a lienholder, and the pawn contract could be modified under section 1322(b). TitleMax of Alabama, Inc. v. Womack, 2021 WL 1343051 (M.D. Ala. April 9, 2021) (case no. 2:20-cv-416). [Read more…] about Modification of Pawn Contract
No Deadline for Lien Avoidance Motion
The debtor was not required to file her motion to avoid a judicial lien while her case was still open, and to assert a homestead exemption in Oklahoma, the debtor need only reside on the property. In re Rose-Brownfield, 2021 WL 809767, No. 18-80342 (Bankr. E.D. Okla. Feb. 22, 2021). [Read more…] about No Deadline for Lien Avoidance Motion
Change of Beneficiary Not Avoidable Transfer
The chapter 7 debtor’s change of beneficiary in his life insurance policy from his employer to his wife was not an avoidable property transfer where the debtor retained his interest in the policy and the transfer did not diminish the bankruptcy estate. Harden v. Harrison (In re Harrison), 2021 WL 739533, No. 19-5730, Adv. Proc. No. 20-113 (Bankr. E.D. N.C. Feb. 22, 2021). [Read more…] about Change of Beneficiary Not Avoidable Transfer
TitleMax Can’t Have Its Cake and Eat it Too
TitleMax waived its right to forfeiture under a title pawn transaction when it failed to object to treatment of the loan as a secured debt prior to confirmation of the debtor’s plan. TitleMax of Alabama v. Deakle, No. 20-335 (S.D. Ala. March 31, 2021).
Prior to filing for bankruptcy, the debtor entered into a title pawn transaction with TitleMax. The pawn matured and the grace period for redemption expired before the debtor filed her chapter 13 petition. Her proposed plan provided for payments to TitleMax as a secured creditor. TitleMax raised no objection to the treatment of the loan until three months after the debtor’s plan was confirmed. At that time, TitleMax filed a motion to “confirm termination or absence of stay.” The bankruptcy court found that, by failing to object to confirmation, TitleMax had waived the forfeiture provision of Alabama’s Pawnshop Act and was bound by the terms of the confirmed plan under section 1327(a). [Read more…] about TitleMax Can’t Have Its Cake and Eat it Too
Ex-Wife’s Interest In Marital Residence Does Not Enter Debtor’s Estate
The debtor’s ex-wife’s interest in the marital residence did not enter the bankruptcy estate even though the property was titled to the debtor, where their dissolution agreement gave her half interest and the debtor was prohibited from unilaterally disposing of the property. But the debtor’s ex-wife did not show that his failure to comply with the dissolution agreement generally, was an indication that he undertook the debts created by the agreement by fraud where the evidence did not support her contention that he never intended to comply. Williams v. Williams, No. 18-1197 (Bankr. D. Colo. Jan. 8, 2021). [Read more…] about Ex-Wife’s Interest In Marital Residence Does Not Enter Debtor’s Estate