Posted by NCBRC - June 28th, 2022
The debtor’s interest in her ex-husband’s retirement account was exemptible in her bankruptcy even though the funds had not yet transferred and the Judgment of Dissolution order stated that the funds were to be used to pay off the debtor’s credit card debt. In re Steinke, No. 21-90618 (Bankr. C.D. Ill. June 15, 2022). Read More
Posted by NCBRC - June 24th, 2022
The County Animal Control Office did not violate the automatic stay when it refused to return 36 cats it had confiscated from the debtor’s property where it acted within its police and regulatory powers, and the court lacked jurisdiction to order the return of the cats where the trustee had abandoned them. In re Mitchell-Smith, No. 21-57646 (Bankr. N.D. Ga. June 17, 2022). Read More
Posted by NCBRC - June 21st, 2022
A bankruptcy court in the District of South Carolina found that the objective standard in a civil contempt proceeding, under which the creditor may assert a fair ground of doubt as to whether its conduct violated a court order, applies in the context of a contempt action based on violation of a chapter 13 discharge order. In re Seaver, No. 20-2238 (Bankr. D. S.C. May 13, 2022). Read More
Posted by NCBRC - June 14th, 2022
The Supreme Court denied certiorari in the case of Sensenich v. PHH Mortgage Corp., No. 21-1322 (cert denied, June 13, 2022). The Chapter 13 Trustee sought reversal of the Second Circuit decision that the bankruptcy court lacked the power to monetarily sanction PHH Mortgage Corp. for its fee harvesting practice which violated Bankruptcy Rule 3002.1. The Second Circuit held that the bankruptcy rule did not allow for punitive damages. The circuit court also held that the award could not be justified under the court’s inherent power because the bankruptcy court did not analyze that ground.
Posted by NCBRC - June 14th, 2022
Where the debtor’s restitution obligation was payable to Identified Consumers rather than a governmental unit, it did not fall within section 523(a)(7)’s exception to discharge. State of New Hampshire, Banking Department v. Dargon, No. 20-30300, Adv. Proc. No. 20-3017 (Bankr. D. Mass. March 11, 2022). Read More
Posted by NCBRC - June 13th, 2022
A debt based on a civil judgment for pain and suffering arising out of an incident during which the debtor had an acute psychotic break and severely beat the claimant, was dischargeable in bankruptcy because his psychiatric condition prevented him from acting willfully within the meaning of section 523(a)(6). Lombardi v. Picard (In re Picard), No. 16-15432 Adv. Proc. No. 16-359 (Bankr. E.D. Pa. June 10, 2022). Read More
Posted by NCBRC - June 8th, 2022
The below-median debtor was entitled to confirmation of his chapter 13 plan where he proposed his plan in good faith and committed all of his disposable income to it despite the fact that he was in the middle of a divorce and his income and expenses were in a state of flux. In re Szafraniec, No. 21-10216 (Bankr. N.D. Ill. May 27, 2022). Read More
Posted by NCBRC - June 3rd, 2022
A fee arrangement bifurcating the chapter 7 bankruptcy attorney’s representation into separate pre-petition and post-petition agreements violated sections 526 and 528 and was void. In re Siegle, No. 21-42321 (Bankr. D. Minn. May 19, 2022).
The chapter 7 debtor’s counsel used a bifurcated fee system under which he offered a pre-petition fee agreement which obligated him only to file the bankruptcy petition. After that, the agreement specified that the debtor had three options: “(1) complete the case pro se; (2) hire another bankruptcy attorney; or (3) execute the Post-Petition Agreement.” The agreement came to the court’s attention when the debtor entered into the post-petition agreement and her attorney filed for court approval. Read More
Posted by NCBRC - June 1st, 2022
A “bankruptcy court’s traditional power to impose contempt sanctions carries with it the authority to award damages and attorneys’ fees – including appellate attorneys’ fees.” Law Offices of Francis J. O’Reilly, Esq. v. Selene Finance L.P. (In re DiBattista), No. 20-4067 (2d Cir. May 17, 2022).
After the debtor received his chapter 7 discharge, his mortgagee, Selene, continued to hound him for mortgage payments. The debtor’s bankruptcy attorney, O’Reilly, moved to reopen the debtor’s bankruptcy in order to seek contempt sanctions against Selene for violation of the discharge injunction. The bankruptcy court granted the motions and sanctioned Selene in the amount of $9,046.60 in legal fees and expenses, and $17,500.00 in damages. Selene appealed to the district court which affirmed but noted discrepancies in the bankruptcy court’s description of the damage award. Read More
Posted by NCBRC - May 26th, 2022
Plaintiff’s attorneys were liable for monetary contempt sanctions for violating the automatic stay due to their failure to investigate the plaintiff’s bankruptcy petition which was filed decades earlier to determine whether he had disclosed his interest in mineral rights in land that was the subject of a current state lawsuit. In re McConathy, No. 90-13449 (Bankr. W.D. La. May 20, 2022).
In 1990, the debtor and his wife filed a chapter 7 bankruptcy petition for which they received a discharge. On two occasions they reopened their bankruptcy to disclose previously undisclosed assets and in both cases the assets were addressed and the case closed. However, unbeknownst to the bankruptcy court and chapter 7 trustee, at the time he filed his petition, the debtor owned mineral rights on land in Kansas. Read More