An IRS 1099-A Form sent post-foreclosure by the mortgagee and misstating that the debtors were personally liable on the mortgage debt was not an attempt to collect a debt in violation of the discharge injunction. Bates v. CitiMortgage, Inc.,– F.3d – , 2016 WL 7229754 (1st Cir. Dec. 14, 2016). [Read more…] about Incorrect 1099-A Form Not Objectively Coercive
Goudelock v. Sixty-01 Assoc. of Apt. Owners, No. 16-35384 (9th Cir.)
Type: Amicus
Date: October 21, 2016
Description: Dischargeability of postpetition HOA dues and assessments in chapter 13.
Result: Reversed and remanded, July 10, 2018.
Discharge Injunction Does Not Apply to Domestic Support Obligation
The Missouri Department of Social Services did not violate the discharge injunction by collecting on a debt that the bankruptcy court had deemed fully satisfied through the debtors’ successful completion of their chapter 13 plan. Missouri Dept. of Soc’l Serv. v. Spencer, No. 15-6030 (B.A.P. 8th Cir. June 13, 2016).
Michael and Patricia Spencer filed a Chapter 13 bankruptcy petition in which they listed a domestic and child support debt owed by Mr. Spencer to his ex-spouse. The Missouri Division of Child Support Enforcement (Division) filed a proof of claim on behalf of Mr. Spencer’s ex-spouse for approximately $36,000.00. Upon discovering that it had miscalculated the domestic support debt, the Division amended the proof of claim to over $88,000.00. When the Spencers objected to the amended proof of claim, the bankruptcy court held a hearing and found that the original proof of claim was the one that should be allowed. The Division did not appeal this decision or object to confirmation of the plan providing for repayment of the original claim, nor did it object to discharge upon the debtors’ successful completion of their plan. After the discharge order was entered, the Division filed a withholding order with Mr. Spencer’s employer to collect past-due domestic support. Mr. Spencer moved the bankruptcy court for an order of contempt and sanctions. The bankruptcy court, the Division willfully violated the discharge order and awarded sanctions and attorneys’ fees. [Read more…] about Discharge Injunction Does Not Apply to Domestic Support Obligation
Misapplication of Plan Payments Violates Discharge Injunction
The secured creditor violated the discharge injunction when it misapplied plan payments and then claimed default and late charges post-discharge. Scott v. Caliber Home Loans, 2015 WL 9986691, No. 09-11123, Adv. Proc. No. 14-1040 (Bankr. N.D. Okla. July 28, 2015).
When Patricia J. and Michael A. Scott filed their chapter 13 petition, the predecessor to Caliber Home Loans filed a claim for $180,527.66 with an arrearage of $19,073.96 and ongoing monthly payments of $1,414.19. The Scotts’ plan included paying off their mortgage arrears and maintaining their mortgage payments to Caliber. They made all their plan payments and prior to discharge, Caliber filed a Notice of Post-Petition Mortgage Fee, Expenses, and Charges of $2,061.82. The Scotts paid that amount through the plan. One month before discharge Caliber filed its Statement in Response to Notice of Final Cure Payment stating the debtors had cured the mortgage arrears and were current on their mortgage payments. The debtors received their discharge in March, 2014, and the trustee sent his Notice of Final Cure on April 21, 2014. On May 1, 2014, Caliber mailed a statement to the Scotts stating that they were delinquent in the amount of $3,139.97 for past due monthly payments and uncollected “Late Charges.” Caliber sent a notification that the Scotts were in default and that it had the right to undertake collection action including foreclosure. [Read more…] about Misapplication of Plan Payments Violates Discharge Injunction
Estate Property Encompasses Post-Discharge Consent Decree
A post-discharge settlement based on a consent decree relating to the lender’s misconduct at the time it entered into a lending agreement with the chapter 7 debtors was property of the estate. In re Porrett, No. 09-3881 (Bankr. D. Idaho March 10, 2016).
Gary Allen and Jennifer Sue Porrett had a mortgage through Wells Fargo. They filed chapter 7 bankruptcy and Wells Fargo obtained relief from stay and foreclosed on the property. The Porretts were discharged in 2009. Two years later, Wells Fargo entered into a consent decree with federal regulators based upon Wells Fargo’s practice of pressing borrowers to take sub-prime mortgages even though they were eligible for more favorable prime loans during the period that the Porretts obtained their mortgage. Upon hearing of the consent decree the trustee moved to reopen the Porretts’ bankruptcy to compromise the claim and accept Wells Fargo’s offer of a $8,120.23 settlement. The Porretts argued that because the consent decree was entered into post-bankruptcy it was not property of the estate. The court disagreed.
[Read more…] about Estate Property Encompasses Post-Discharge Consent Decree
Obligations Under Condo Declaration Run with the Land
Obligations under a Condominium Association Declaration agreement run with the land and a condominium association may rent properties surrendered in bankruptcy and apply rent monies to pre-petition assessments without violating the discharge injunction. In re Montalvo, No. 10-8338 (Bankr. M.D. Fla. Feb. 25, 2016). [Read more…] about Obligations Under Condo Declaration Run with the Land
Pay-to-Stay Debt Dischargeable
A debt owed to the county under a pay-to-stay incarceration cost recoupment program was held to be dischargeable under Section 523(a)(7). County of Dakota v. Milan, No. 15-3034 (Bankr. D. Minn. March 1, 2016). [Read more…] about Pay-to-Stay Debt Dischargeable
Discharge Injunction Claim Subject to Arbitration – Overturned on Reconsideration
Discharge of the credit card debts did not render the arbitration clause of the credit card agreement unenforceable and, where the clause was valid and not in conflict with the Code, the credit card companies’ motion to compel should have been granted. Belton v. GE Capital Consumer Lending Inc., No. 15-1934, consolidated with In re Bruce, No.15-3311 (S.D. N.Y. Oct. 14, 2015). [Read more…] about Discharge Injunction Claim Subject to Arbitration – Overturned on Reconsideration
Cautionary Tale: Pro Se Debtor Stuck with Reaffirmation Agreement
The court was powerless to permit the pro se debtor to rescind her reaffirmation agreement with her car creditor where she failed to rescind the agreement within the sixty-day time limit outlined in section 524(c)(4). In re Galloway-O’Connor, 2015 Bankr. LEXIS 3283, No. 15-70981 (Bankr. E.D. N.Y. September 29, 2015). [Read more…] about Cautionary Tale: Pro Se Debtor Stuck with Reaffirmation Agreement
Pernicious Scam Targets Bankruptcy Filers
A new scam targeting bankruptcy filers has emerged in several states under which con artists, posing as the intended victim’s bankruptcy attorney or a staff member, are calling and telling the consumer to wire money immediately to satisfy a debt. The callers may threaten the consumer with dismissal of their ongoing bankruptcy case, discharge revocation, or even arrest. Callers tend to be sophisticated and well-informed with knowledge of details about the case, perhaps through access to PACER, including the judge’s name and case status.
One bankruptcy attorney reported the following scenario. His client received a call during non-business hours using “spoofing” technology to make it appear on Caller ID that the call was coming from the bankruptcy attorney’s office. The caller identified himself as an associate of the intended victim’s attorney and explained that a creditor was opposing discharge and that, to prevent the unraveling of the case, the attorney had negotiated a settlement outside bankruptcy under which the debtor must immediately wire money directly to the creditor. Failure to do so was likely to result in dismissal or discharge revocation. Fortunately, the client suspected a scam and hung up.
In light of this and other scams, it would be wise for bankruptcy attorneys to explain to all clients the specific method of communication they employ when contacting clients. Clients should be warned that under no circumstances would a bankruptcy attorney or staff member telephone and ask for a wire transfer immediately to satisfy a debt. Nor would the bankruptcy attorney or staff member ever threaten arrest if a debt is not paid. Clients should be advised that the best thing to do upon receipt of one of these calls is to hang up without giving out any personal or account information and contact their bankruptcy attorney as soon as possible. Recipients of these calls should also contact their state Attorney General’s Consumer Assistance Program.