When a state law that precludes the application of the debtor’s state-created homestead exemption conflicts with federal bankruptcy law, state law must yield. In re Smither, No. 14-40607 (Bankr. D. Mass. Nov. 30, 2015). [Read more…] about Code Preempts State Exemption Exception
Debtor Equitably Estopped from Claiming Homestead Exemption
The debtor’s unfair manipulation of her state homestead exemption claim justified the denial of the claim under the principles of equitable estoppel. Lua v. Miller (In re Lua), No. 15-04026 (C.D. Cal. Nov. 10, 2015). [Read more…] about Debtor Equitably Estopped from Claiming Homestead Exemption
Debtors Denied Discharge for Failure to Make Mortgage Payments Outside Plan
Debtors whose Chapter 13 plan included a provision for curing mortgage arrears through the plan with regular mortgage payments paid outside the plan are not entitled to discharge when they fail to keep up with the mortgage payments. Kessler v. Wilson (In re Kessler), No. 15-40 (N.D. Tex. Nov. 19, 2015). [Read more…] about Debtors Denied Discharge for Failure to Make Mortgage Payments Outside Plan
Bankruptcy Court Takes Dewsnup to Task
In an opinion succinctly pointing out the primary faults of the much-maligned Dewsnup decision, Bankruptcy Judge Magner narrowly interpreted and distinguished Dewsnup to find that a wholly unsecured, nonconsensual judicial lien may be stripped in chapter 7. In re Mayer, 2015 WL 7424327, No. 2:13-bk-13220 (Bankr. E.D. La. Nov. 20, 2015). [Read more…] about Bankruptcy Court Takes Dewsnup to Task
Elimination of Statute of Limitations Is Not Due Process Violation
The abrogation of the six-year statute of limitations on government actions to collect student loan debts paid by a loan guaranty agency was not a due process violation. United States v. Falcon, No. 13-16588 (9th Cir. Nov. 9, 2015) (per curiam). [Read more…] about Elimination of Statute of Limitations Is Not Due Process Violation
CFPB Sues over Deceptive Pension Advances
The Consumer Federal Protection Bureau and the New York Department of Financial Services are seeking to enjoin deceptive lending practices by two pension advance companies. CFPB v. Pension Funding LLC, No. 8:15-cv-01329 (C.D. Cal.). On August 20, 2015, the agencies filed suit against Pension Funding LLC and Pension Income LLC and managing members, Steven Covey, Edwin Lichtig, and Rex Hofelter, alleging that the individuals and companies were in “violation of federal and New York law through the offering of pension advance products that came with hidden fees and interest charges that were not properly disclosed to consumers.” Specifically, the complaint alleges that the companies engaged in a scheme under which elderly consumers would send them eight years’ worth of pension payments in exchange for a lump sum. Though the consumers would be promised little to no fees or interest, in fact, the transactions included a hidden effective interest rate of more than 28 percent and were in violation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and New York usury laws.
The agencies moved for preliminary injunction and the companies responded that the transactions at issue were sales rather than loans and, therefore, the companies and individuals were not “lenders” over which the CFPB and DFS could exercise jurisdiction.
The agencies responded that “the facts establish that Defendants’ pension-advance transactions constituted loans under the CFPA, as consumers incurred debt and were granted the right to defer its payment, in this case typically over a period of eight years. That pension payments the consumers were entitled to receive were expected to be used to repay the debt does not change the fundamental character of the transaction, and Defendants’ arguments to the contrary are unavailing.”
A hearing on the motion for preliminary injunction is scheduled for December 18, 2015.
Undisclosed Debt Discharged In No-Asset Chapter 7
Where an undisclosed debt was automatically discharged in the debtor’s chapter 7 bankruptcy, the court declined to reopen to permit the debtor to add the debt to her schedules. In re Mohammed, No. 13-73191 (Bankr. E.D. N.Y. Sept. 4, 2015). [Read more…] about Undisclosed Debt Discharged In No-Asset Chapter 7
Separate Treatment of Student Loan Must Not Unfairly Discriminate
A debtor who seeks to treat her student loan differently under section 1322(b)(5) must demonstrate that such treatment does not unfairly discriminate between unsecured creditors under section 1322(b)(1). Jordahl v. Burrell (In re Jordahl), No. 15-6009 (B.A.P. 8th Cir. Nov. 2, 2015). [Read more…] about Separate Treatment of Student Loan Must Not Unfairly Discriminate
Creditor’s Motion to Reopen Is Too Late
The doctrine of laches applied a fatal blow to the creditor’s motion to reopen to compel surrender. In re Kourogenis, 2015 Bankr. LEXIS 3400, No. 09-32936 (Bankr. S.D. Fla. Oct. 7, 2015). Five years after discharge, a creditor, Green Tree Servicing, sought to reopen Ms. Kourogenis’s Chapter 7 bankruptcy to compel the surrender of real property which Ms. Kourogenis had opted to surrender in her Statement of Intentions. The court denied the motion. [Read more…] about Creditor’s Motion to Reopen Is Too Late
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