The debtors’ missed plan payments to the mortgage creditor were a result of forbearance and COVID 19-related financial difficulties and were therefore not an impediment to discharge under section 1328. In re McCollum, No. 15-3502 (Bankr. D. S.C. Feb. 4, 2021). Read More
Tag Archive: discharge
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Missed Payments to Mortgagee Do Not Preclude Discharge
Posted by NCBRC - May 10th, 2021
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District Court Refuses to Dismiss FCRA Class Action Lawsuit For Negligent Incorrect Credit Reporting On Discharged Student Loan Subtitle: Court finds CRA’s failure to have a procedure in place to distinguish which student loans are discharged is negligence.
Posted by NCBRC - January 24th, 2020
Prior to filing for bankruptcy, the Debtor incurred a student loan (ultimately held by Navient) to attend the Reformed Theological Seminary. The seminary was not a Title IV accredited institution.
The Debtor filed bankruptcy, listed this loan and received an order of discharge. Both Navient and Experian Information Solutions LLC. (“Experian”) received notice of the discharge order. Experian prepared the Debtor’s credit report and described the Navient Loan as “account charged off,” with an outstanding balance and a past due balance.
On April 29, 2019, the Debtor filed a Complaint against Experian in the District Court for the Southern District of New York alleging violations of the Fair Credit Reporting Act (“FCRA”) found at 15 U.S.C. § 1681 et seq and the New York Fair Credit Reporting Act (“NY FCRA”) which has similar provisions. The Debtor claimed that Experian negligently (Count I) and intentionally (Count II) violated 15 U.S.C. § 1681e(b) and the companion New York statutes (Counts III and IV).
15 U.S.C. § 1681e(b) states
Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.
The Complaint pled that Experian prepared Debtor’s credit report with an inaccuracy in that Debtor’s debt with Navient should have been reported as discharged in his bankruptcy. This is because the loan was for a non-Title IV school and therefore was not subject to the exceptions to discharge found at 11 U.S.C. § 523(a)(8)(B).
Experian filed a motion to dismiss. Experian first argued that the Complaint pled only a dispute about the legal effect of the discharge, not a factual inaccuracy. The Court disagreed.
To read more go to NACBA News or click here.
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Bankruptcy Court Joins Minority, Grants Discharge, and Denies the Trustee’s Motion to Dismiss for Delinquent Post-Petition Mortgage Payments
Posted by NCBRC - April 3rd, 2019
On March 28, 2019 the Bankruptcy Court for the District of Arizona Denied the Trustee’s Motion to Dismiss based on the Debtors’ post-petition mortgage default. In doing so, she joined the minority position on this issue.
The Debtors filed their chapter 13 bankruptcy on July 18, 2014. Their plan proposed to pay back mortgage arrears to their mortgage lender through plan payments to the trustee. The plan also indicated that they would make direct payments to the mortgage lender for the future monthly mortgage payments. At the end of the plan the mortgage lender filed Response to Trustee’s Notice of Final Cure for Prepetition Arrears on Mortgage Claim, agreeing that the prepetition default was cured, but stating that the post-petition payments due on and after September 1, 2017 were delinquent. The Trustee then filed a motion to dismiss.
The court addressed the issue whether payments on a mortgage paid directly to mortgage holder and referenced in a chapter 13 plan are “payments under the plan” for purposes of 11 U.S.C. §1328(a) and if delinquent are a legitimate basis to dismiss the bankruptcy and deny a discharge.
Section 1328(a) states in pertinent part: “as soon as practicable after completion by the debtor of all payments under the plan,… the court shall grant the debtor a discharge of all debts provided for by the plan…” Similarly 11 U.S.C. § 1307(c)(6) allows a trustee to move to dismiss for cause including “material default by the debtor with respect to a term of a confirmed plan;…” As a result several chapter 13 trustees file motions to dismiss if they discover that a debtor is delinquent in mortgage payments.
There are two schools of interpretation of “payments under the plan.”
To read more click here.
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Bankruptcy Court holds Debtor is Entitled to Chapter 13 Discharge even if Co-Debtor is Delinquent on Post-Petition DSO Payments
Posted by NCBRC - February 15th, 2019
A bankruptcy court recently reviewed the issue whether a debtor can receive a discharge under § 1328 even if her co-debtor husband is delinquent on a post-petition DSO payment. The court examined the requirements for discharge using the plain language of § 1328(a).
In this case the debtors, Mr. and Mrs. Hernandez, filed a joint chapter 13 bankruptcy. At filing neither owed a DSO. Approximately two years into their confirmed plan, Mr. Hernandez became liable for a DSO and subsequently fell behind in those payments. Both parties were aware of the DSO and neither reported the delinquency to their attorney nor the trustee.
After completion of the plan payments, Mrs. Hernandez moved for entry of discharge pursuant to 11 U.S.C. § 1328(a). The Trustee objected arguing Mrs. Hernandez was unjustly enriched and that failure to amend the plan demonstrates bad faith. No party disputed that all plan payments were made.
To read more and access the opinion click here.
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HAVEN Act Guide
The Honoring American Veterans in Extreme Need Act of 2019 (“HAVEN Act”) excludes certain benefits paid to veterans or their family members from the definition of current monthly income (“CMI”) found in the Bankruptcy Code. The HAVEN Act amends § 101(10A) of the Bankruptcy Code and supplements the 2005 amendments to the Code that excluded other government benefits, such as social security income.
This Guide provides an overview of the HAVEN Act identifies benefits that are excluded, and answers frequently asked questions.
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