NCBRC News

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Fee-Only Plan Has Purpose beyond Payment of Fee

Although the debtor’s chapter 13 plan effectively paid nothing to the debtor’s single creditor, it was filed in good faith. In re Banks, No. 15-9819 (Bankr. N.D. Ill. Feb. 8, 2016).

Mr. Banks had no assets and only one debt: $5,080 in city parking tickets. His chapter 13 plan contemplated paying his entire $120 disposable income for 36 months for a total of $4,320, $4,000 of which would go to his bankruptcy attorney, and $285.12 to the bankruptcy trustee. The trustee challenged the plan as not having been filed in good faith under section 1325(a)(7). [Read more…] about Fee-Only Plan Has Purpose beyond Payment of Fee

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Eighth Circuit Takes Hard Line on Judicial Estoppel

Applying little analysis beyond recitation of bullet points, the Eighth Circuit found that bankruptcy debtors have an obligation to report lawsuits filed during the life of the chapter 13 plan and that failure to do so justifies application of judicial estoppel. Jones v. Bob Evans Farms, Inc, No. 15-2068 (8th Cir. Jan. 26, 2016). [Read more…] about Eighth Circuit Takes Hard Line on Judicial Estoppel

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Borrower Has Standing to Challenge Void Assignment

The Supreme Court of California held that a borrower on a home loan secured by a deed of trust has standing to base an action for wrongful foreclosure on allegations that defects in the purported assignment of the note and deed of trust renders the assignment void. Yvanova v. New Century Mortgage Corp., No. S218973 (Cal. Feb. 18, 2016). [Read more…] about Borrower Has Standing to Challenge Void Assignment

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Adoption Assistance Benefits Properly Excluded from CMI

The BAP for the Ninth Circuit found that Adoption Assistance payments are “benefits received under the Social Security Act” and were properly excluded from the debtor’s calculation of current monthly income. Adinolfi v. Meyer (In re Adinolfi), 2016 Bankr. LEXIS 173, No. 15-1091 (B.A.P. 9th Cir. Jan. 19, 2016).  [Read more…] about Adoption Assistance Benefits Properly Excluded from CMI

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Debtors May Recover Damages for Emotional Distress from IRS

Sovereign Immunity does not preclude emotional distress damages for violation of the automatic stay by the IRS. Hunsaker v. United States (In re Hunsaker), 2016 Bankr. LEXIS 134, No. 12-64782, Adv. Proc. 14-6218 (Bankr. D. Or. January 13, 2015). [Read more…] about Debtors May Recover Damages for Emotional Distress from IRS

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Sixth Circuit BAP to Address Impact of Caulkett in Chapter 13

United Bank has appealed to the Sixth Circuit BAP, the issue of whether Caulkett extends to lien stripping in chapter 13. The bankruptcy court held that it does not. In re Travers, No. 15-50844 (Bankr. E.D. Ky. Nov. 16, 2015) on appeal, No. 15-8051 (B.A.P. 6th Cir. filed Dec. 1, 2015). [Read more…] about Sixth Circuit BAP to Address Impact of Caulkett in Chapter 13

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Misconduct by HAMP Servicers Examined

A report to Congress by the Special Inspector General Troubled Asset Relief Program (SIGTARP) examined the reasons for the high percentage of redefaults by homeowners in HAMP. By December 31, 2015, over 500,000 homeowners who had HAMP modifications had missed three payments (“redefaulted”) on their loans. This number represents approximately one third of homeowners in the program. Concern over the high redefault rate and potential misconduct on the part of the servicers caused the Treasury, at SIGTARP’s request, to conduct compliance testing at each of HAMP’s largest servicers; Bank of America, CitiMortgage, JP Morgan Chase, Nationstar, Ocwen, Select Portfolio Servicing, and Wells Fargo. The Treasury looked at samples of 100 homeowners who had redefaulted out of HAMP at each of the targeted servicers. The study found that 6 out of 7 servicers had wrongfully terminated homeowners who were in good standing. (The only large servicer that had not been found to have erred in this way was Select Portfolio Servicing, Inc.). These six mortgage servicers account for 673,039 of the 915,699 (74%) HAMP modifications funded solely by TARP since the start of the program.

The improper servicing was so entrenched that 4 out of the 6 servicers continued to commit the termination errors even after the Treasury had repeatedly identified problems in their systems. Errors included miscounting the number of missed payments by a homeowner, misapplication of payments, and mishandling of rolling delinquencies. The report noted that servicers regularly failed to make timely and accurate reports to the Treasury thereby making monitoring difficult.

The Treasury also found that 5 out of 7 servicers failed to offer redefaulting homeowners alternative assistance available through the Making Home Affordable Program. The report concludes with the warning that the number of erroneous terminations from HAMP in the small sample tested is an indication of extensive misconduct on the part of the servicers which must be addressed by further oversight by the Treasury.

SIGTARP report re HAMP

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Who’s Watching You?

The CFPB has published its 2016 list of consumer reporting companies. These companies collect financial information and provide consumer reports to other companies. The CFPB list includes the name and contact information from the three largest nationwide consumer reporting companies—Equifax, Experian, and TransUnion—as well as dozens of specialty reporting companies that collect information for specific purposes such as employment screening, tenant screening, and bank account screening, utilities, medical, etc. The report gives guidance and contact information for obtaining your free, yearly, credit report from any of the three largest companies. It also explains what information the specialty companies collect and to whom the information is disseminated. It is important to note that with respect to the specialty companies it is possible not to discover a negative credit report until after adverse action has been taken by a potential employer, landlord, etc. The report provides tips on which specialty reports might be important for you to fact-check depending on your specific situation. Contact information for each of the reporting companies is provided in the report and, like the largest consumer reporting companies, most provide free yearly reports. As a consumer, you have the right to see what is in your reports and to dispute any inaccuracies.

CFPB 2016 Consumer Report list