Author Archives: NCBRC

Cert. Denied in Stay Case Involving Passive Conduct

The Supreme Court declined cert. in Davis v. Tyson Prepared Foods, No. 18-941 (May 20, 2019), a case out of the Tenth Circuit presenting the issue of whether section 362(a) applies when a creditor passively holds or obtains an interest in property of the debtor or the estate. The case involved a lien which arose […]

Proceeds from Sale of Fraudulently Transferred Property May Be Recovered from Third Party

The chapter 7 trustee may “recover money from the entity who received the proceeds from the sale of fraudulently transferred property, but to whom the property itself was never transferred.” Rajala v. Husch Blackwell LLP, No. 08-20957, Adv. Proc. No. 18-6016; Rajala v. Spencer Fane LLP, Adv. Proc. No. 18-6020 (Bankr. D. Kans. Aug. 14, […]

5th Circuit Finds No Room for Sympathy for Student Loan Debtor

In an exercise in disingenuous hand-wringing, the Fifth Circuit essentially acknowledged that its application of the Brunner test eviscerates the undue hardship avenue to discharge of student debts. In so holding, the court affirmed the denial of discharge and sent the debtor packing to perform, if not the impossible, at least the highly improbable task […]

No Unsecured Claim against the Estate in Chapter 20 Lien Strip Case

Reversing the bankruptcy court, the BAP for the Ninth Circuit found that a wholly unsecured junior lienholder’s claim was not allowable as a general unsecured debt against the bankruptcy estate where the chapter 13 debtor had obtained a discharge on her personal liability in a prior chapter 7 bankruptcy. Washington v. Real Time Resolution, Inc., […]

Withholding Graduation Date from Transcript Violates Stay

Excluding the graduation date from the debtor’s transcript was tantamount to withholding the transcript altogether and constituted a violation of the automatic stay for which the debtor was entitled to damages, even though those damages consisted only of the costs associated with vindicating her rights. California Coast Univ. v. Aleckna, No. 16-158 (M.D. Pa. Aug. […]

Adoption Assistance Payments Excluded from Current Monthly Income

The debtors’ Adoption Assistance payments were “benefits received under the Social Security Act” and were therefore excluded from the calculation of their current monthly income. In re Isaacs, No. 18-1651 (Bankr. M.D. Pa. Aug. 26, 2019). The above-median debtors proposed a 21% plan and the trustee objected to confirmation on the basis that they were […]

Direct Payments to Creditor Are Not “Under the Plan” for Discharge Purposes

Adopting the minority view, the Bankruptcy Court for the D.C. Circuit found that the chapter 13 debtor’s direct payments to a residential lienholder were not provided for under the plan and, therefore, her failure to make all the payments did not preclude entry of discharge. In re Drabo, No. 1:15-bk-653 (Bankr. D. D.C. May 10, […]

Contingent Future Interest In Tenancy by Entirety Not Exempt

Where state exemption law does not specifically apply to a contingent future interest in a tenancy by the entirety, the interest is not exempt under bankruptcy law and the debtor cannot avoid a judgment lien under section 522(f). In re Jaffe, No. 18-2726 (7th Cir. Aug. 5, 2019). Including a mini-tutorial on the history of […]

Court Improperly Considered Exempt Home Equity in Finding No Undue Hardship

Under the totality of the circumstances test, the bankruptcy court erred when it found that the debtor’s student loans of $106,000 were not dischargeable as undue hardship because she had sufficient exempt equity in her home to fully repay the debt. Schatz v. Access Group, No. 18-16 (B.A.P. 1st Cir. July 26, 2019). In an […]

Payment of Pre-Petition Debt by Debtor’s Mother Is Preferential Transfer

In what the panel called a strained application of a legal fiction, the BAP for the Tenth Circuit found that money paid by the chapter 7 debtor’s mother directly to one of the debtor’s creditors was a preferential transfer where it preceded the bankruptcy by fewer than 90 days, was secured by a promissory note […]