Type: Amicus
Date: April 6, 2017
Description: Denial of Chapter 7 trustee compensation for attempting to sell over-encumbered homestead.
Result: Judgment affirmed, November 30, 2017.
Jahn v. Burke, No. 16-6603 (6th Cir.)
Type: Amicus
Date: February 14, 2017
Description: Whether a debtor, as a party-in-interest, can compel the trustee to abandon property of inconsequential value.
Result: Affirmed, debtor won. July 14, 2017.
Debtor Benefits from 108(b)’s Extension of Time to Redeem
Section 108(b) extends the right of a debtor to redeem property sold in a tax sale. Bryant v. Hamilton Cty, No. 15-12367, Adv. Proc. No. 15-1120 (Bankr. E.D. Tenn. April 5, 2016). [Read more…] about Debtor Benefits from 108(b)’s Extension of Time to Redeem
Bleak House Comes to the Bankruptcy Court
In a scenario worthy of Dickens, a once-thriving family business, Ainsworth Feed Yards (AFY), was liquidated and distributed to creditors while the family members engaged in six years of legal battles with each other. In the Matter of Sears, 2016 Bankr. LEXIS 926, No. 10-40275 (Bankr. D. Neb. March 23, 2016). [Read more…] about Bleak House Comes to the Bankruptcy Court
Chapter 7 Trustee Suspended
The Director of the Executive Office of the United States Trustee upheld the one-year suspension of a Chapter 7 bankruptcy trustee for conduct in three separate 341 meetings that was egregiously aggressive, discourteous, and unprofessional. The trustee was also ordered to undergo diversity and sensitivity training. Final Agency Action 2015-0001 (March 4, 2016). [All identifying information was redacted from the decision.] The case was before the Director on appeal of a decision by the Regional United States Trustee issued September 10, 2014. [Read more…] about Chapter 7 Trustee Suspended
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 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
Trustee Steps into Shoes of Lienholder upon Avoidance of Lien
NCBRC filed an amicus brief on behalf of the NACBA membership in the case of In re Traverse, 13-9002 (1st Cir. July 10, 2013). In that case, when the chapter 7 debtor entered into bankruptcy, she sought to exempt her home from the estate and continue making her mortgage payments. It was undisputed that the debtor was not in default on her mortgages. The trustee, however, successfully avoided one of the liens as unperfected and sought to sell the debtor’s residence for the benefit of creditors. The lower courts found that, having avoided the lien, the trustee stood in the shoes of the debtor and had the power to sell the property.
In its amicus brief before the First Circuit, NACBA argues that application of Bankruptcy Code sections 704, 541(a), 551, and 544, demonstrates that upon avoidance and preservation of a lien the trustee stands in the shoes of the former lienholder, not the debtor. Therefore, the trustee did not gain the power to sell the property except to the extent that the lienholder would have had that power. See In re Trout, 609 F.3d 1106, 1110 (10th Cir. 2010) (“under § 551 the trustee steps into the shoes of the former lienholder, with the same rights in the collateralized property that the original lienholder enjoyed.”). Because the debtor was current on her payments, under state law, there was no default to trigger the right to foreclose.
Thanks to Ray DiGuiseppe for authoring NACBA’s brief.
Traverse v. DeGiacomo, No. 13-9002 (1st Cir.)
Type: Amicus
Date: July 10, 2013
Description: Whether trustee steps into shoes of debtor upon avoidance of lien and can sell debtor’s residential property.
Result: Judgment reversed and remanded, May 23, 2014
In re Reeves, No. 12-2127 (4th Cir.)
Type: Amicus
Date: January 21, 2013
Description: Whether chapter 7 trustee has power to sell fully encumbered residential property under section 724(b) to satisfy “carve-out” agreement with tax creditor.
Result: Judgment affirmed, November 20, 2013
Trustee Must Return Funds upon Conversion
The Third Circuit in In re Michael, 2012 U.S. App. LEXIS 22244 (3d Cir. Oct. 26, 2012), ruled for the debtor on the issue of whether the Chapter 13 trustee had to turn over to the debtor funds that the trustee was holding when the debtor converted from Chapter 13 to Chapter 7 after confirmation of the plan. Rejecting the trustee’s position, which was supported by an amicus brief filed by all the chapter 13 trustees in the circuit, the court held that the trustee could not distribute the funds to creditors. The court reasoned that the conversion ended the Chapter 13 trustee’s services and vacated the order confirming the plan. It also found that the legislative history of Section 348(f) supported the conclusion that Congress did not intend for the debtor to have the disincentive to filing chapter 13 that would be caused by the risk that filing a chapter 13 case could cause the loss of postpetition property if the debtor later had to convert to Chapter 7. NACBA’s brief was written by Irv Ackelsberg, who was also permitted to argue on NACBA’s behalf in the court of appeals.