Posted by NCBRC - July 31st, 2015
NCLC and NACBA filed a joint amicus brief in the First Circuit Court of Appeals seeking to lessen the burden on debtors trying to discharge student loans based on undue hardship. Murphy v. U.S. Dept. of Educ., No. 14-1691 (filed July 29, 2015). Read More
Posted by NCBRC - July 30th, 2015
Filing a proof of claim for a deficiency judgment that was discharged in a previous bankruptcy violates the discharge injunction. Green Point Credit v. McLean, No. 14-14002 (11th Cir. July 24, 2015). Green Point Credit, LLC and Green Tree Servicing LLC (Green Tree) filed a proof of claim for a debt that had been discharged in the McLean’s previous bankruptcy and the McLeans filed an adversary proceeding seeking damages for violation of the discharge injunction. Four days later, Green Tree, acknowledging that the claim had been filed in error, withdrew it. The bankruptcy court found that Green Tree violated the discharge injunction and awarded compensatory damages for the McLean’s emotional distress, attorney’s fees, and a “coercive” sanction. The district court affirmed. Read More
Posted by NCBRC - July 27th, 2015
Contributions to an employee retirement plan are to be excluded from the calculation of current monthly income rather than deducted from disposable income in the Means Test. In re Vu, No. 15-41405 (Bankr. W.D. Wash. June 16, 2015). Read More
Posted by NCBRC - July 22nd, 2015
Funds the debtor received through operation of a post-petition consent order between banking regulators and Bank of America were not part of the bankruptcy estate subject to turnover. MacKenzie v. Neidorf (In re Neidorf), No. 14-1496 (B.A.P. 9th Cir. July 10, 2015). Carrie Margaret Neidorf’s home was foreclosed upon while she was in bankruptcy and years later, while her bankruptcy case was still open and pursuant to a national settlement between banking regulators and Bank of America, she received $31,250 as a result of the foreclosure. The 2011 Consent Order (amended in 2013) required Bank of America to make a $1,127,453.261 cash payment to a Qualified Settlement Fund. That fund was then distributed to borrowers who had experience foreclosure within a specified period. The chapter 7 trustee sought turnover of the funds arguing that they were property of the estate. The bankruptcy court disagreed and the BAP affirmed.
The BAP stated three conditions that must be met for after-acquired property to be considered part of the estate under section 541(a)(7); “(1) It must be created with or by property of the estate; (2) acquired in the estate’s normal course of business; or (3) otherwise be traceable to or arise out of any prepetition interest included in the bankruptcy estate.” The panel found that the fact that the foreclosed residence was property of the estate was not dispositive. It found that the debtor’s entitlement to the foreclosure payment arose out of the post-petition Consent Order rather than out of her ownership of the property. The panel concluded: “Seen in this light, that the estate had an interest in Debtor’s Residence is not enough. Nowhere has Trustee shown how the estate obtained an interest in the Foreclosure Payment itself when the qualifying events giving rise to Debtor’s legal rights to the payment all occurred postpetition and were held solely by the borrowers.”
Neidorf BAP 9th opinion
Posted by NCBRC - July 20th, 2015
Filing an accurate proof of claim on a stale debt does not violate the FDCPA. Gatewood v. CP Medical, LLC, No. 15-6008 (B.A.P. 8th Cir. July 10, 2015). Mr. and Mrs. Gatewood filed for chapter 13 bankruptcy and CP Medical, a medical collection agency, filed a proof of claim on a debt that was time-barred under Arkansas law. After the Gatewoods converted to chapter 7, they filed an adversary complaint against CP Medical for seeking payment on a stale debt “as a means of debt collection that is either false, misleading, deceptive, unfair, or unconscionable” in violation of the FDCPA.
The bankruptcy court, relying on Eighth Circuit precedent, found that an attempt to collect on a stale debt is not a violation of the FDCPA. It further found that the Bankruptcy Code provides the only relief available to a debtor in cases such as these. The BAP affirmed. Read More
Posted by NCBRC - July 17th, 2015
The National Consumer Bankruptcy Rights Center (NCBRC) has been honored by a $12,500.00 first-time donation from the O. Max Gardner Foundation. NCBRC is a 501(c)(3) organization dedicated to protecting the integrity of the bankruptcy system and preserving the rights of consumer bankruptcy debtors. NCBRC advances these goals by providing assistance either through working directly with debtors’ attorneys or by filing amicus briefs in courts throughout the country. Without the support of donors like the O. Max Gardner Foundation, the assistance provided by NCBRC would not be possible.
The O. Max Gardner Foundation was established in 1943 by Oliver Max Gardner (1882 – 1947). Mr. Gardner had a varied career beginning with teaching organic chemistry and, after attending law school, ultimately entering politics. He served as the 57th Governor of North Carolina from 1929 to 1933. After his term ended, Mr. Gardner worked in the administrations of Franklin D. Roosevelt, as an informal advisor and speech writer, and Harry S. Truman, as Under Secretary of the Treasury. Mr. Gardner founded the O. Max Gardner Foundation to promote all forms of educational and community service organizations for the citizens of North Carolina.
His grandson, O. Max Gardner III, is a familiar name in the field of bankruptcy law having devoted his professional life to the service of consumer debtors and to the education of the bankruptcy bar in the intricacies of this challenging area of regulation. His efforts have gone a long way toward leveling the playing field between consumer debtors and the often predatory lenders, and unethical servicers and collectors, they face.
NCBRC’s Board of Directors is grateful to the O. Max Gardner Foundation for its confidence in our mission and support in our mutual goals of providing the best and broadest assistance to consumer debtors in their quest for a fresh start.
Posted by NCBRC - July 14th, 2015
Joining a “growing consensus” of courts, the BAP for the Ninth Circuit found that a chapter 20 debtor may strip off a wholly unsecured lien with the strip-off becoming effective upon completion of the plan. Boukatch v. MidFirst Bank (In re Boukatch), No. 14-1483 (July 9, 2015). In so holding, the BAP reversed the contrary finding by the bankruptcy court. Read More
Posted by NCBRC - July 12th, 2015
On Friday, Debtor in Johnson v. Midland Funding filed her opening brief in the Eleventh Circuit. It is well worth the read. In summary:
1. There is no textual support for the conclusion that Bankruptcy Code precludes valid FDCPA claims.
2. When it comes to proofs of claim, debt collectors do not have a “right” to file a claim on a time-barred debt. Even though the debt is not extinguished by the statute of limitations, the expiration of the SOL renders the obligation legally unenforceable. As such, it is not a “claim” for purposes of the Code.
3. The bankruptcy process is designed to run fairly and efficiently; there is no room for a pointless exercise of lodging invalid claims that require trustees or debtors to object. Debt collectors tax scarce judicial and party resources by filing such frivolous claims, and divert funds from honest creditors. The aggregate cost to the system from debt collectors filing stale claims is staggering.
4. Debt collectors can easily comply with both the Code and the FDCPA by refraining from filing stale claim. Debt collectors are not compelled to take any action under the Code that violates the FDCPA.
Posted by NCBRC - July 9th, 2015
A district court has subject matter jurisdiction over a claim under section 362(k) without regard to a standing order referring all bankruptcy-related cases to the bankruptcy courts, and dismissal under FRCP 12(b)(6) is inappropriate where the allegations in the complaint present a plausible explanation for the defendants’ conduct. Houck v. Substitute Trustee Services, No. 13-2326 (4th Cir. July 1, 2015). Read More
Posted by NCBRC - July 6th, 2015
A plan providing for delayed payments to secured creditors was confirmed over the trustee’s objection based on the creditors’ implied acceptance of the repayment terms. Bronitsky v. Bea (In re Bea), No. 14-1376, 2015 Bankr. LEXIS 1793 (B.A.P. 9th Cir. May 29, 2015). Read More