In a chapter 13 bankruptcy filed prior to the expiration of the redemption period, a real property tax purchaser’s claim is treated as a secured claim which may be modified in the plan. Alexandrov v. LaMont (In re LaMont), No. 13-1187 (7th Cir. Jan. 7, 2014). [Read more…] about Tax Purchaser Claim May Be Modified in Chapter 13
Current Possession of Bank Funds Not Necessary for Turnover
In an unfortunate decision, the Ninth Circuit held that current possession is not necessary to turnover of funds in a checking account. Shapiro v. Henson (In re Henson), No. 11-16019 (9th Cir. Jan. 9, 2014). [Read more…] about Current Possession of Bank Funds Not Necessary for Turnover
Debtor Need Not Commit All PDI in 100% Plan
It was not enough that the chapter 13 debtors committed to paying off their unsecured debts in their entirety, the trustee demanded that they comply with the disposable income test of section 1325(b)(1)(B). In re Bailey, No. 13-60782 (Bankr. E.D. Ky. Nov. 21, 2013). [Read more…] about Debtor Need Not Commit All PDI in 100% Plan
Exemption Allowed Where No Intent to Defraud
Actual intent to hinder, delay, or defraud a creditor is a required element for a reduction of homestead exemption under section 522(o). In re Halinga, No. 13-925 (Bankr. Idaho Nov. 27, 2013). [Read more…] about Exemption Allowed Where No Intent to Defraud
Bankruptcy Cannot Be Reopened to Permit Reaffirmation Agreement
Some banks are refusing to enter into post-discharge mortgage modification agreements when debtors have not reaffirmed the debt in bankruptcy. In In re Conner, No. 09-42532 (Bankr. S.D. Ga. Oct. 25, 2013), the debtor moved to reopen his chapter 7 bankruptcy in order to reaffirm his mortgage and clear the way to enter into a mortgage modification agreement with Wells Fargo. [Read more…] about Bankruptcy Cannot Be Reopened to Permit Reaffirmation Agreement
Debtor Has Standing to Argue Failure to Comply with Terms of PSA
A Michigan state court found that a debtor may oppose foreclosure on the basis that the assignment of the mortgage to the foreclosing party was in violation of the Pooling and Service Agreement and, therefore, ineffective. HSBC Bank, USA v. Young, No. 11-693 (Cir. Ct. Mich. Oct. 16, 2012). HSBC conducted a foreclosure by advertisement and bought the property at the foreclosure sale. When it moved the court for possession of the property the debtor challenged the legitimacy of the foreclosure on the basis that the assignment of the note and mortgage from Wells Fargo to HSBC took place after the note was in default in violation of the terms of the PSA. [Read more…] about Debtor Has Standing to Argue Failure to Comply with Terms of PSA
NACBA Argues that Possession Necessary for Turnover Obligation
NACBA has filed an amicus brief in the case of In re Henson, No. 11-16019 (9th Cir.), seeking a finding by the Ninth Circuit that the trustee may not use his turnover power under section 542 to require a debtor to pay into the estate funds that are no longer in the debtor’s possession. In this case, the debtor had written a check prior to bankruptcy which was not cashed until after the bankruptcy filing. Instead of using his avoidance power under section 549 to recover the funds from the payee, the trustee sought to obtain the money from the debtor, thereby exposing the debtor to double payment and allowing the payee to receive more than he would have been entitled to through bankruptcy distribution. [Read more…] about NACBA Argues that Possession Necessary for Turnover Obligation
NACBA Files Amicus in Bifurcated Lien Treatment in Chapter 13
NACBA has filed an amicus brief in the case of In re Bullard, No. 12-54 (B.A.P. 1st Cir.). That case involves a chapter 13 plan under which a mortgage is bifurcated into secured and unsecured portions with the unsecured portion being paid, pro rata, through the plan, and the secured portion being paid according to the terms of the contract outside the plan and extending beyond the plan period. The trustee objected to the plan arguing that if modification is permitted under section 1322(b), the payments on the mortgage must be completed within the plan period. In its brief, NACBA argues that the plain language of section 1322 permits such lien treatment. Specifically, “[a]ll section 1322(b)(5) requires is that the debtor cure any arrearage and make payments on the creditor’s secured claim according to the contract during the life of the plan. Section 1322(b)(2) is permissive allowing debtors to modify certain claims. Section 1322(d) limits the life of the plan to five years. These sections do not require the debtor to pay the claim in full while the case is pending, nor do they preclude the debtor from making payments on the long-term obligation after the plan has been completed.”
David Barnes drafted NACBA’s brief.
Attorney/Client Privilege Protects Intake Questionnaire
The Bankruptcy Court for the Southern District of Texas issued a memorandum “in order to clarify the scope of the attorney/client privilege and the work product doctrine” in the bankruptcy context. In re McDowell, No. 12-31231 (Bankr. S.D. Tex. Nov. 16, 2012). There, the UST sought to compel production of three documents: 1) the attorney’s intake questionnaire, 2) a copy of the original draft Schedule F with debtors’ handwritten notes on it, 3) debtors’ counsel’s draft copy of the Schedule F with his handwritten notes on it. The debtors asserted attorney/client privilege and work product with respect to the questionnaire, attorney/client privilege with respect to the debtors’ draft of the Schedule F form, and work product with respect to the attorney’s draft of the Schedule F form.
[Read more…] about Attorney/Client Privilege Protects Intake Questionnaire
Sanctions for Willful Violation of the Automatic Stay
The Bankruptcy Court for the Northern District of Illinois took decisive action to sanction an internationally active telecommunications company, Owtel Inc., for persistent violations of the automatic stay under section 362(a)(6). In re Galutan, No. 12-31837 (Bankr. N.D. Ill. Nov. 16, 2012). The court found that Owtel was informed of the debtor’s bankruptcy filing on August 12, 2012, but continued to dun her for payments of the $74.00 debt with repeated letters and telephone calls to her home phone and cell phone as often as twice a day. Finding that the conduct was willful the court turned to the appropriate damage award under section 362(k). Although the Seventh Circuit does not permit monetary awards for emotional distress the court found actual damages in the amount of $2,940.00 for attorney fees and costs incurred in pursuing the stay violation. In addition, the court found that the egregious nature of Owtel’s relentless pursuit warranted a punitive damage award of $15,000.00. The court ended with the warning that if the violations continue, it would consider further sanctions in the amount of $500.00 per day.