Posted by NCBRC - May 22nd, 2013
The Fourth Circuit confirmed the chapter 13 debtor’s standing to pursue a pre-petition cause of action against his former employer. Wilson v. Dollar General Corp., No. 12-1573 (4th Cir. May 17, 2013). Read More
Posted by NCBRC - May 20th, 2013
The Fourth Circuit is the first circuit court to find that a debtor may strip a wholly unsecured lien in chapter 13 where no discharge is available. In re Davis, No. 12-1184 (May 10, 2013). Read More
Posted by NCBRC - May 17th, 2013
A bankruptcy court in Illinois found that JP Morgan Chase violated Rule 3002.1 by raising the debtors’ mortgage payments without providing proper notification even though there was no mortgage arrearage being cured through the chapter 13 plan. In re Tollios, No. 09-19329 (Bankr. N.D. Ill. May 13, 2013). In the Eastern District of Kentucky, the bankruptcy court found that the rule continued to apply even after the mortgagee was granted relief from stay. In re Holman, No. 12-50023 (March 15, 2013). Read More
Posted by NCBRC - May 14th, 2013
Debts for “defalcation” have been excepted from discharge for almost one hundred and fifty years, yet only now has the Supreme Court resolved the question of what mental state is required for an actor to commit defalcation within the meaning of section 523(a)(4). Bullock v. BankChampaign, 569 U. S. ____ (2013), No. 11-1518 (May 13, 2013). Read More
Posted by NCBRC - May 13th, 2013
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
Posted by NCBRC - May 8th, 2013
The Ninth Circuit is poised to be the first circuit court to address the issue of whether a lien may be stripped in a “chapter 20” case where discharge is unavailable. The Western District of Washington recently found that lien stripping was not contingent upon the availability of discharge. Litton Loan v. Blendheim, No. 11-2004 (W.D. Wash. March 29, 2013). Litton Loan filed a notice of appeal on April 26, 2013.
In upholding the bankruptcy court’s finding in favor of the debtors, the district court noted “an emerging trend” in the Ninth Circuit permitting such lien stripping. See In re Tran, 321 B.R. 230, 235 (Bankr. N.D. Cal. 2010); In re Hill, 440 B.R. 176, 182 (Bankr. S.D. Cal. 2010); In re Okosisi, 451 B.R. 90, 100 (Bankr. D. Nev. 2011), and found that those cases were correctly decided. It reasoned that the Supreme Court in Johnson v. Home State Bank, 501 U.S. 78 (1991), explicitly sanctioned chapter 20 cases, and nothing in the later amendments to the Bankruptcy Code imposed a discharge requirement upon the ability to strip a lien that is otherwise amenable to stripping. The court concluded that the lien would be stripped upon completion of plan payments.
The Eighth Circuit recently avoided the issue in the case of In re Fisette, 695 F.3d 803 (8th Cir. 2012), by concluding that the BAP’s order that liens may be stripped in chapter 20 was an interlocutory order not subject to appeal.
Posted by NCBRC - May 6th, 2013
The bankruptcy court for the Northern District of Mississippi differentiated between the shifting burdens of proof under Rule 3001, which deals with proofs of claim generally, and Rule 3002.1, relating to notice of changes to mortgage payments on debtor’s residence. In re Taylor, No. 12-11463 (March 27, 2013). Read More
Posted by NCBRC - May 1st, 2013
In In re Powell, No. 10–03859 (Bankr. E.D. N.C. June 26, 2012), the court put a leash on the creditor’s dogged pursuit of the debtors. The court found that the creditor, Bank of America and its servicer, violated the discharge injunction and the automatic stay when it foreclosed on the debtors’ residence after they filed bankruptcy, and relentlessly dunned them for payments post-discharge.
After the debtors obtained their bankruptcy discharge the creditor began sending monthly billing statements seeking to collect on the mortgage for property the debtors had surrendered. The debtors’ attorney responded with several warning letters and finally with a motion to the court for sanctions. With the exception of one letter claiming to be a debt collector under the FLSA, the creditor otherwise responded like a mindless automaton. It continued its monthly collection efforts unabated. At the hearing on the motion, which the creditor did not attend, one of the debtors testified to the stress and anxiety caused by the continued billing and the ever-increasing amount owed. The court invoked its contempt power under section 105, under which four conditions must be met: 1) there must be a valid decree of which the contemnor had actual or constructive knowledge; 2) the decree must be in the movant’s favor; 3) the contemnor must have violated the terms of the decree, with knowledge of such violations; and 4) the movant must have suffered harm as a result. Finding that each of these conditions was met, the court awarded attorney fees in the amount of $3,000.00, damages in the amount of $2,500.00 and sanctions in the amount of $50,000.00.
Posted by NCBRC - April 30th, 2013
An article in Sunday’s Los Angeles Times suggests that lenders in markets with rising property values such as California are looking to increase their subprime lending. While current mortgage interest rates are around 3.5%, these subprime loans comes with interest rates starting at 7.95% and going up from there. As with the old subprime products, high fees are common for this next generation of subprime loans. So what’s different? Most new subprime loans require much higher down payments and evidence of an ability to pay.
Posted by NCBRC - April 29th, 2013
In a departure from the majority of courts, the Seventh Circuit has found that debtors cannot exempt inherited IRAs. In re Clark, No. 12-1241 & 12-1255 (April 23, 2013). Read More