A state court judgment for breach of contract was dischargeable in the debtor’s chapter 7 bankruptcy where the breach occurred when the debtor, acting as Power of Attorney for her mother, entered into a contract with her mother’s nursing home and, acting upon advice from her mother’s legal counsel, failed to comply with its terms. The court found the debtor was not a fiduciary with respect to the nursing home and did not act with willfulness or malice. Presbyterian Home for Central NY, Inc. v. DeFazio, No. 20-80009 (June 23, 2022). [Read more…] about Debtor Not Fiduciary to Mother’s Nursing Home
Debtors Need Not File Annual Updated Schedules
In a nice win for long-time NACBA member, Greggory Colpitts, the Bankruptcy Court for the Southern District of Oklahoma declined to place a prospective order requiring all chapter 13 debtors to submit annual tax returns and updated schedules I and J where the Code and local rules provide for annual filing of tax returns with the bankruptcy court, and section 521(f) requires debtors to file further financial information upon request by the trustee. In re Williams, No. 18-80539 (Bankr. S.D. Okla. July 5, 2022).
[Read more…] about Debtors Need Not File Annual Updated Schedules
Lender Sanctioned for Self-Inflicted Wound
The lender’s efforts to coerce the debtors to reopen their bankruptcy case to reaffirm the mortgage agreement violated the discharge injunction where post-discharge reaffirmation was legally unavailable and the court found the lender was merely attempting to collect personally against the debtors. In re Go, No. 21-12657 (Bankr. D. Nev. June 29, 2022). [Read more…] about Lender Sanctioned for Self-Inflicted Wound
Carve-Out Agreement Creates Exemptible Equity
The debtor was entitled to obtain the benefit of her homestead exemption even though, at the time she filed her petition, she had no equity in the property, where “the secured creditor’s agreement to accept less money upon a sale creates equity in the home where none existed before.” Stark v. Pryor (In re Stark), No. 20-4766 (E.D.N.Y. June 28, 2022). [Read more…] about Carve-Out Agreement Creates Exemptible Equity
Language in Divorce Order Did Not Deprive Debtor of Right to Exemption
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…] about Language in Divorce Order Did Not Deprive Debtor of Right to Exemption
Taggart Contempt Standard Applies in Chapter 13
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…] about Taggart Contempt Standard Applies in Chapter 13
Conjunction Junction Solves the Case
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…] about Conjunction Junction Solves the Case
Act Not Willful Where Debtor Suffered Acute Psychosis
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…] about Act Not Willful Where Debtor Suffered Acute Psychosis
No Exemption for IRA Created with Excessive Contribution
A retirement annuity account funded by a rolled-over IRA in the debtor’s name which was in turn funded by a contribution in excess of that allowed for tax exempt status, may not be exempted from the debtor’s bankruptcy estate. In re Farber, No. 21-12147 (Bankr. E.D. Pa. April 26, 2022).
The chapter 7 debtor sought to exempt her Allianz retirement annuity account in the amount of $27,102.57 from her bankruptcy estate. The trustee objected on the basis that the IRA was not subject to exemption under section 522(d)(12), because the debtor inherited the account from her father. [Read more…] about No Exemption for IRA Created with Excessive Contribution
Debtor May Avoid Tax Sale under 548 but Loses Equity
The debtor has standing to avoid a tax sale under section 548 but only to the extent of her exemption and allowed claims. She may not recover her equity in the property. Morawski v. Effect Lake, LLC., No. 20-1125 (Bankr. D.N.J. April 11, 2022).
On October 3, 2016, Effect Lake purchased a tax sale certificate encumbering the debtor’s home. In January, 2019, Effect Lake filed a tax sale foreclosure action in the state court and a lis pendens for the foreclosure action with the Essex County Register’s Office. The state court entered final judgment on September 30, 2019. The debtor filed her chapter 13 bankruptcy petition on February 7, 2020. Effect Lake filed a proof of claim for $141,947.88. At the time the debtor filed for bankruptcy, the redemption amount for the tax sale certificate was $90,323.88 and the property was valued at between $544,000 and $600,000.
The debtor filed an adversary proceeding seeking a finding that the tax sale was a fraudulent conveyance under section 548. The parties filed cross-motions for summary judgment. The bankruptcy court held a hearing and issued the following findings. [Read more…] about Debtor May Avoid Tax Sale under 548 but Loses Equity