A debtor may amend his schedules as a matter of right “without limitation of whether the case is open or reopened after closing.” Mendoza v. Montoya, No. 18-19, Dollman v. Montoya, No. 18-30 (B.A.P. 10th Cir. Feb. 5, 2019). Read More
Posted by NCBRC - March 12th, 2019
A debtor may amend his schedules as a matter of right “without limitation of whether the case is open or reopened after closing.” Mendoza v. Montoya, No. 18-19, Dollman v. Montoya, No. 18-30 (B.A.P. 10th Cir. Feb. 5, 2019). Read More
Posted by NCBRC - March 8th, 2019
The Eighth Circuit found no clear error in the bankruptcy court’s finding that, under Iowa common law, the chapter 13 debtors’ manufactured home was personal property and therefore the debt it secured was not subject to section 1322(b)’s anti-modification provision. The Paddock, LLC v. Bennett, No. 18-2098 (Feb. 28, 2019).
Benjamin and Teresia Bennett purchased a manufactured home from Paddock, and placed it on a lot owned by Paddock under a 990-year lease. In their chapter 13 bankruptcy, the Bennetts proposed to bifurcate the debt secured by the manufactured home into secured and unsecured portions under section 506(a)(1). Paddock objected arguing that the home was real property and the interest was subject to the anti-modification provision of section 1322(b). The bankruptcy court found that, under Iowa law, the home was personal property and confirmed the plan. In re Bennett, 2017 WL 1417221 (Bankr. N.D. Iowa Apr. 20, 2017). The Bankruptcy Appellate Panel affirmed. In re Bennett, 584 B.R. 15 (B.A.P. 8th Cir. 2018). Read More
Posted by NCBRC - March 6th, 2019
The District Court for the Eastern District of Louisiana determined that the tax assessment for failure to maintain health insurance under the Affordable Care Act is a nondischargeable priority tax debt under section 507(a)(8)(A)(iii), rather than a penalty dischargeable in bankruptcy under section 523(a)(7) and 1328(a). United States v. Chesteen, No. 18-2077 (E.D. La. Feb. 25, 2019).
As the chapter 13 debtor, John Chesteen, pointed out on appeal, the shared responsibility payment at issue is described numerous times in the ACA as a penalty and is collected the same way other tax penalties are collected. The district court noted, however, that statutory descriptions, while informative, are not dispositive of whether a payment is a tax or a penalty. Rather, courts rely on the underlying purpose of the payment. A “tax” is a burden placed on the taxpayer for the financial support of the government, and a “penalty” is a punishment of an unlawful act. Read More
Posted by NCBRC - March 2nd, 2019
Federal law defines a lien more broadly than Missouri law, and for that reason, the debtor was able to avoid a judgment lien as impairing the exemption he claimed on his residence, which he owned as a tenancy in the entireties with his wife, even though state law did not recognize the creation of the lien. CRP Holdings A-1, LLC v. O’Sullivan, No. 17-3226 (8th Cir. Feb. 1, 2019).
Chapter 7 debtor, Casey O’Sullivan, and his wife acquired their residence as tenants in the entirety. CRP obtained a foreign judgment in the amount of $765,151.18 against the debtor and registered the judgment in the debtor’s resident county in an effort to obtain a judicial lien against the property. When Mr. O’Sullivan filed for bankruptcy, he claimed an exemption for the property and sought to avoid CRP’s judicial lien under section 522(f)(1) as impairing that exemption. The bankruptcy court found that the judgment lien, even though unenforceable, placed a “cloud” on the debtor’s title and could therefore be avoided as impairing his bankruptcy exemption. The BAP affirmed. Read More
Posted by NCBRC - February 26th, 2019
In a terse opinion, the Fifth Circuit balanced the evidence relied on by the bankruptcy court against various additional factors and concluded that the bankruptcy court abused its discretion when it denied the debtors’ chapter 13 plan for lack of good faith under section 1325(a)(3). Booker v. Johns (In re Booker), No. 18-30526 (5th Cir. Feb. 11, 2019) (unpublished).
In holding that the debtors’ plan was proposed in bad faith, the bankruptcy court relied on the fact that the debtors proposed to pay unsecured creditors at 4% while retaining their 1998 fishing boat, motor and trailer. The debtors proposed a new plan that was less favorable to them which the bankruptcy court confirmed. The debtors appealed, and the district court affirmed. Read More
Posted by NCBRC - February 22nd, 2019
The Bankruptcy Court for the District of Nebraska recently reviewed the reasonableness of the fees and charges claimed by a mortgage creditor on an over-secured loan. Prior to filing for protection under Chapter 13 of the Bankruptcy Code, the Debtor owned two properties, one residential and the other business, and pledged them as collateral for an SBA loan through the creditor. He subsequently fell behind on payments and was not able to pay the balloon amount. The properties are collectively valued at $220,000.00 and the principal and interest balance at filing was less than $70,000.00. The creditor’s claim also included $13,592.20 for late charges and $41,365.85 for expenses for appraisals, assessments and other fees. The Debtor objected to the reasonableness of the charges and expenses.
To read more and access the opinion click here.
Posted by NCBRC - February 21st, 2019
A bankruptcy court recently ruled on several issues of importance to all potential debtors. First, the court examined the effect of a prior dismissal order (for failure to timely file certain schedules, statements or other documents) on a subsequent bankruptcy petition. Specifically, the court examined the small slice of cases where the automatic stay does not apply in a second case when the Debtor is not an “eligible Debtor” under 11 U.S.C. § 109(g). The court also examined the split in authority on who bears the burden of proof of proving eligibility.
Further the court examined whether a creditor, who unknowingly completed a foreclosure sale during the second case, violated the automatic stay by not promptly undoing the sale upon notification of the bankruptcy. Further the court extensively discussed the different non-traditional methods that creditors can receive binding notice of a bankruptcy and their responsibility thereafter. The court also examined whether a technical violation can turn into a willful violation and whether a creditor has an affirmative duty to correct a technical violation.
To read more click here.
Posted by NCBRC - February 21st, 2019
The Bankruptcy Court for the District of Maryland recently ruled whether several claims based on an open-ended credit card agreements could be disallowed for failure to provide the Debtors documents supporting the claim. The Debtors’ counsel had requested the creditors to deliver copies of the writings on which each of the claims was based and other documents including copies of all monthly statements to copies of all notices of transfer of the account. When the creditors failed to supply the information, the Debtors objected to those claims and asked that they be disallowed.
To read more and access the opinion click here.
Posted by NCBRC - February 21st, 2019
The district court found that the chapter 7 trustee’s legal representative was deprived of due process when the bankruptcy court reduced a portion of its fees without providing notice and an opportunity to be heard. Arnall, Golden, Gregory, LLP, v. Stroud, No. 18-3755 (N.D. Ga. Jan. 28, 2019).
Appellant, Arnall, Golden, Gregory, LLP, sought $13,607.09 in attorney fees for services performed for the chapter 7 trustee in connection with the debtor/appellee’s motion to reconvert her case to chapter 13. After a fee hearing, the court found that $3,575.50 of the appellant’s fees were for services constituting trustee duties, and that $3,000 of the $6,000 in fees claimed for work on litigation of the conversion motion, were not reasonable and necessary. The court thus reduced the fees to $7,000.00. Read More
Posted by NCBRC - February 18th, 2019
An agreement establishing a tuition payment deadline was not a lending agreement and therefore, the debt created by the debtor’s failure to pay her summer tuition did not constitute a non-dischargeable student loan under section 523(a)(8). Hazelton v. UW-Stout, No. 18-159 (W.D. Wisc. Feb. 1, 2019).
In order to attend classes at UW-Stout, Kelly Hazelton signed an “Email Authorization/Payment Plan Agreement” which provided that she pay for summer classes in full by the end of the first week of class. Ms. Hazelton failed to pay for her 2015 summer classes but finished all the course work necessary to satisfy the requirements for her degree. She and her husband filed for chapter 7 bankruptcy and received a discharge, but despite knowing of the bankruptcy, UW-Stout refused to issue her degree. It also garnished her 2016 tax refund. The Hazeltons filed an adversary complaint seeking sanctions for violation of the discharge injunction, but the bankruptcy court found the debt was a student loan that was excepted from discharge under section 523(a)(8). Read More
 
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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.
Thank you to the following organizations without whose support our work would not be possible.
American College of Bankruptcy
The American College of Bankruptcy is an honorary public service association of bankruptcy and insolvency professionals who are invited to join as Fellows based on a proven record of the highest standards of professionalism plus service to the profession and their communities. Together with its affiliated Foundation, the College is the largest financial supporter of bankruptcy and insolvency-related pro bono legal service programs in the United States.
NACBA
The only national organization dedicated to serving the needs of consumer bankruptcy attorneys and protecting the rights of consumer debtors in bankruptcy. Formed in 1992, NACBA has more than 3,000 members located in all 50 states and Puerto Rico.
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The O. Max Gardner Foundation, Inc. provides financial support to institutions devoted to charitable, scientific, literary or educational purposes. NCBRC has been a recipient of grant awards from the foundation.