Finding the requirement to be procedural rather than substantive, the District Court for the Northern District of California upheld the district’s General Order requiring chapter 13 bankruptcy debtors who elect to pay their mortgages directly rather than through the trustee to submit regular notifications of compliance to the bankruptcy court. Gordon v. Bronitsky (In re Gordon), No. 21-643 (N.D. Cal. July 15, 2021). [Read more…] about District Court Upholds Local Rule Requiring Statements of Compliance
Debtor Has Private Right of Action to Enforce Anti-Discrimination Provision
A debtor has a private right of action to enforce bankruptcy’s anti-discrimination provision and may recover damages under the court’s authority under section 105. Johnston v. Speedway, LLC, 2021 WL 1662725 (W.D. Va. April 28, 2021) (case no. 7:21-cv-100).
The plaintiff, Michael Johnston, worked as an assistant manager at Speedway for eight years, but fell on hard times and found himself homeless and living out of his car. He filed for chapter 13 bankruptcy. Speedway learned of the bankruptcy and fired him, citing as the reason that he was a risk for stealing from the cash register. The plaintiff filed an adversary proceeding in his bankruptcy case alleging discrimination under section 525(b), and seeking reinstatement, compensatory and punitive damages, and attorney’s fees. The case was later withdrawn from the bankruptcy court and transferred to district court. Speedway moved to dismiss. [Read more…] about Debtor Has Private Right of Action to Enforce Anti-Discrimination Provision
Debtor Loses the Battle but Wins the War
A confirmed plan binds the county tax creditor even though the plan did not provide for the interest claimed in its post-confirmation proof of claim where the county had notice of the plan and failed to object to confirmation. In re Bird, 624 B.R. 841 (Bankr. N.D. Ill., Feb. 2, 2021) (case no. 1:17-bk-2072). [Read more…] about Debtor Loses the Battle but Wins the War
TitleMax Can’t Have Its Cake and Eat it Too
TitleMax waived its right to forfeiture under a title pawn transaction when it failed to object to treatment of the loan as a secured debt prior to confirmation of the debtor’s plan. TitleMax of Alabama v. Deakle, No. 20-335 (S.D. Ala. March 31, 2021).
Prior to filing for bankruptcy, the debtor entered into a title pawn transaction with TitleMax. The pawn matured and the grace period for redemption expired before the debtor filed her chapter 13 petition. Her proposed plan provided for payments to TitleMax as a secured creditor. TitleMax raised no objection to the treatment of the loan until three months after the debtor’s plan was confirmed. At that time, TitleMax filed a motion to “confirm termination or absence of stay.” The bankruptcy court found that, by failing to object to confirmation, TitleMax had waived the forfeiture provision of Alabama’s Pawnshop Act and was bound by the terms of the confirmed plan under section 1327(a). [Read more…] about TitleMax Can’t Have Its Cake and Eat it Too
Two Vehicles Securing One Claim Must Receive Identical Treatment in Ch 13 Plan
Under section 1325(a)(5), a Chapter 13 plan cannot provide for different treatment of two vehicles that were purchased at different times with loans from the same creditor where both lending agreements included cross-collateralization clauses securing each loan by both vehicles. Barragan-Flores v. Evolve Federal Credit Union, No. 18-50420 (5th Cir. Jan 14, 2021). [Read more…] about Two Vehicles Securing One Claim Must Receive Identical Treatment in Ch 13 Plan
Texas District’s Treatment of Tax Refund In Chapter 13 Invalidated
Finding that it encroached on a below-median debtor’s substantive rights, the Fifth Circuit invalidated a local form Chapter 13 plan provision that required all debtors to turn over any tax refund in excess of $2,000. Diaz v. Viegelahn, No. 19-50982 (5th Cir. Aug. 26, 2020).
NCBRC filed an amicus brief on behalf of the NACBA membership in support of the debtor in this case. [Read more…] about Texas District’s Treatment of Tax Refund In Chapter 13 Invalidated
“Good Reason” Required to Not Revest Property in Debtor after Plan Confirmation
Finding that “[a] bankruptcy court may confirm a plan that holds property in the estate only after finding good case-specific reasons for that action,” and signaling exasperation with the whole topic, Judge Easterbrook of the Seventh Circuit reversed the bankruptcy court’s order of confirmation of the debtors’ plan in which they opted not to have their vehicles revest in themselves post-confirmation. Cherry v. City of Chicago, No. 19-1558 (7th Cir. July 6, 2020). [Read more…] about “Good Reason” Required to Not Revest Property in Debtor after Plan Confirmation
Chapter 13 Plan Need not Be of Fixed Duration
In an important win for debtors, the Ninth Circuit held that “no express provision of Chapter 13, even when viewed in the context of its broader structure, prohibits plans with estimated lengths.” In re Sisk, No. 18-17445 (9th Cir. June 22, 2020) (reported below as In re Escarcega). In an opinion in which the circuit court adopted the bulk of the debtors’ arguments, the court reversed and vacated the BAP’s holding that the Bankruptcy Code imposes an implied temporal requirement on all initial Chapter 13 plans. [Read more…] about Chapter 13 Plan Need not Be of Fixed Duration
Bankruptcy Court May Not Limit Debtor’s Right to Modify as Condition of Confirmation
The Fifth Circuit held that the bankruptcy court improperly required a Chapter 13 debtor to amend his plan to pledge 100% payment to unsecured creditors with no right to modify unless the modification likewise paid 100% or the debtor relinquished his right to discharge. Brown v. Viegelahn (In re Brown), No. 19-50177 (5th Cir. June 8, 2020). [Read more…] about Bankruptcy Court May Not Limit Debtor’s Right to Modify as Condition of Confirmation
Debtor May Pay Car Loan Outside Plan at 15% Interest Rate
The bankruptcy court did not abuse its discretion in confirming, over the trustee’s objection, a plan under which the Chapter 13 debtor would pay her car loan outside the plan at the contractual interest rate of 15%. McDonald v. Chambers (In re Chambers), No. 19-10421 (E.D. Mich. Feb. 26, 2020).
The debtor had three loans with Dort Federal Credit Union (DFCU): a car loan, a credit card balance of approximately $1,500, and a cash loan of $1,000. She and DFCU compromised the two non-car loans to $2,00,0, which she proposed to pay through her plan. In addition, DFCU consented to her proposal to pay the car loan outside the plan at the 15% contractual interest rate. The trustee objected because the interest rate exceeded the “prime plus” rate sanctioned in Till v. SCS Credit Corp., 541 U.S. 465 (2004), and would result in the car creditor receiving more than other unsecured creditors. The bankruptcy court confirmed the plan, and the trustee appealed. [Read more…] about Debtor May Pay Car Loan Outside Plan at 15% Interest Rate