Turnover

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Debtor Stated Claim for Turnover of Repossessed Vehicle

The debtor stated a claim for turnover of the fair market value of a vehicle where the creditor repossessed the vehicle post-petition but prior to the expiration of section 108(b)’s extension of time to redeem or cure a default. Milledge v. Carolina Acceptance, No.21-2968, Adv. Proc. No. 22-80001 (Bankr. D. S.C. April 7, 2022).

The debtor bought a car under a retail installment contract obligating her to pay a $5,050.00 down payment and secure financing from the creditor, Carolina Acceptance, for the principal amount of $20,139.00 at an annual interest rate of 19.88% with 51 monthly payments of $592.87. The debtor paid all but $500.00 of the down payment and arranged with the creditor to pay that amount by November 4, 2021. She failed to make the payment and filed for chapter 13 bankruptcy on November 17, 2021, proposing a plan committing her to pay the car loan in full at 5.25% interest. Because of two prior dismissed bankruptcies the automatic stay did not take effect. [Read more…] about Debtor Stated Claim for Turnover of Repossessed Vehicle

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Transfer of Funds Divided between Creditor and Creditor’s Agent Fully Avoidable

Garnished wages divided between the creditor and his agent in accordance with their fee agreement were an avoidable transfer in their entirety even though the creditor never received the portion withheld by the agent. Hooker v. Wanigas Credit Union, No. 20-2252 (6th Cir. Jan. 26, 2021) (unpublished).

During the ninety-day preference period,Wanigas Credit Union, through its agent, Shek Law Offices, garnished $884.13 from the debtor’s wages in satisfaction of a judgment Wanigas had against the debtor. Shek retained $452.60 of the garnished wages and sent the remaining $431.53 to Wanigas. After filing for bankruptcy the debtor sought turnover of the funds under section 547(b)(1) as a preferential transfer. Wanigas turned over only the funds it received. It argued that the portion retained by Shek was not subject to turnover because Wanigas never received the funds, and in the alternative, because the funds were subject to an attorney-charging lien. The bankruptcy court denied Wanigas’s motion for summary judgment and ordered turnover of the funds. The district court granted leave to appeal and affirmed. [Read more…] about Transfer of Funds Divided between Creditor and Creditor’s Agent Fully Avoidable

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Trustee Absolutely Immune from Personal Liability

A trustee who collects fees from the debtors’ exempt property has absolute immunity from personal liability when the fees were incurred in accordance with a bankruptcy court order authorizing sale of the debtors’ homestead. Holley v. Corcoran (In re Holley), No. 20-11096 (E.D. Mich. Oct. 7, 2020). [Read more…] about Trustee Absolutely Immune from Personal Liability

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Uncashed Retirement Loan Check Not Exempt

The debtor’s uncashed loan check from her retirement account was property of the estate and was not exempt under section 522(d)(12). Ostrander v. Brown (In re Brown), No. 19-24 (B.A.P. 1st Cir. May 21, 2020).

Prior to filing her bankruptcy petition, the debtor received, but did not cash, an $18,000 check representing a loan from her retirement account. The chapter 7 trustee sought turnover of the check. The bankruptcy court denied the turnover motion finding that, because the funds were from an exempt retirement account and the debtor had not yet cashed the check, the check was likewise exempt. [Read more…] about Uncashed Retirement Loan Check Not Exempt

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Sovereign Immunity in Tax Refund Turnover Claim

Application of section 505(a)(2)(B), which carves out an exception to the government’s abrogation of sovereign immunity in tax refund claims, involved issues of both fact and law, and therefore, the district court remanded this appeal to the bankruptcy court for determination of whether it had subject matter jurisdiction over the debtors’ claim for turnover of their tax refund. United States v. Copley, No. 3:16-cv-207 (E.D. Va. March 31, 2017).

Chapter 7 debtors, Matthew and Jolinda Copley, listed the United States as a creditor for a tax debt of over $13,000 from 2008, 2009, and 2010. They also listed a 2013 tax refund in the amount of over $3,000 which they sought to exempt under Virginia’s homestead exemption statute. Post-petition, the IRS notified the Copleys that it had withheld their 2013 tax refund as set off against the tax debt. The Copleys sought turnover of the refund and both parties moved for summary judgment. The bankruptcy court granted judgment in favor of the Copleys, relying on sections 522 and 542(a) and case law establishing that, unless the IRS acts to offset the tax debt prior to bankruptcy, the refund becomes part of the bankruptcy estate. [Read more…] about Sovereign Immunity in Tax Refund Turnover Claim

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Post-Petition Lawsuit Not Property of Estate

Where the debtor had not suffered any injury from her hip replacement until post-discharge, the claim against the medical device provider was not property of the bankruptcy estate even though the hip replacement took place pre-petition. Sikirica v. Harber (In re Harber), 2016 Bankr. LEXIS 2168, No. 14-20155 (Bankr. W.D. Pa. May 31, 2016).

Elizabeth Harber underwent two hip replacement surgeries using implants produced by DePuy Orthopaedics. Three years later, she received notice that some of the implants were problematic and she was listed among the plaintiffs in a class action lawsuit against DePuy. Three years later, the she and her husband, Brent Harber, filed for chapter 7 bankruptcy. They listed the lawsuit in their schedules as a contingent, unliquidated claim with a value of $0. At that time, Ms. Harber had suffered no injury as a result of the implants. The Harbers’ bankruptcy case was closed with the potential claim against DePuy excepted from abandonment. Ms. Harber then discovered that metal had entered her bloodstream due to the implants and she was advised to have the hip replacement revised. Nonetheless, Ms. Harber dismissed her civil suit without prejudice as a “non-revised” plaintiff. She had the hip revision shortly thereafter. The Harbers’ bankruptcy attorney informed the court of a potential civil case against DePuy. The bankruptcy case was reopened and the trustee filed a turnover motion seeking to require the Harbers to contribute any settlement they might receive to the bankruptcy estate. The Harbers objected arguing that any settlement would not be property of the estate because Ms. Harber did not suffer any injury until after the bankruptcy case was closed. [Read more…] about Post-Petition Lawsuit Not Property of Estate

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Charitable Contribution in Excess of 15% Avoidable in its Entirety

In a sharply circumscribed opinion, the Tenth Circuit found that the trustee could avoid in their entirety charitable contributions in excess of 15% of the debtors’ gross annual income. Wadsworth v. The Word of Life Christian Center (In re McGough), No. 12-1142 (Dec. 16, 2013). [Read more…] about Charitable Contribution in Excess of 15% Avoidable in its Entirety

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Absolute Assignment of Rents Precludes Turnover

This case centered on whether rent collected by the debtors becomes part of the bankruptcy estate even though the right to collect the rents had been absolutely assigned to their lender PHH Mortgage (“PHH” or “assignee”). Relying on In re Jason Realty, 59 F.3d 423 (3d Cir. 1995), the bankruptcy court found that PHH, as assignee, was the owner of the right to collect rents and, therefore, the debtor had no ownership interest to augment the bankruptcy estate. The district court affirmed. In re Cordova, No. 13-810 (D. N.J. Oct. 22, 2013). [Read more…] about Absolute Assignment of Rents Precludes Turnover

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Creditor Must Return Repossessed Vehicle upon Bankruptcy Filing

The Second Circuit upheld sanctions against vehicle loan creditor, SEFCU, for refusing to return debtor’s repossessed vehicle without a court order and adequate protection. Weber v. SEFCU, No. 12-1632 (May 8, 2013). SEFCU had lawfully repossessed the debtor’s pick-up truck pursuant to the loan agreement but when the debtor filed for bankruptcy SEFCU refused to return the vehicle. The bankruptcy court determined that SEFCU’s actions did not violate the automatic stay. The district court reversed. Weber v. SEFCU, 477 B.R. 308, 311 (N.D.N.Y. 2012). [Read more…] about Creditor Must Return Repossessed Vehicle upon Bankruptcy Filing