Contrary to the principle that “cure and maintain” permits a residential loan debtor to return to status quo ante, the Bankruptcy Court for the Eastern District of North Carolina found that while operation of section 1322(b)(5) reverses a loan acceleration, it does not reverse other contractual consequences of default; specifically an increased interest rate. In re Anderson, No. 13-5843 (Bankr. E.D. N.C. Sept. 5, 2014). [Read more…] about Court Gets it Wrong in Cure and Maintain Case
Strained Reading of “Derived During” Boots Chapter 7 Case
The Tenth Circuit BAP interpreted the phrase “derived during” to mean that all income received during the 6-month look-back period be included in the current monthly income calculation. Based on this, the court found that the debtor was above-median and his chapter 7 case presumptively abusive under section 707(b)(2). When the debtor failed to convert to chapter 13, the bankruptcy court dismissed the case. The BAP affirmed. In re Miller, No. 14-2 (B.A.P. 10th Cir. Oct. 8, 2014). [Read more…] about Strained Reading of “Derived During” Boots Chapter 7 Case
CashCall’s Use of Tribal Arbitration under Attack
An arbitration clause is not enforceable when the specified forum is unavailable. So said the Eleventh Circuit Court of Appeals in Inetianbor v. CashCall, Inc., __ F.3d __, 2014 WL 4922225 (11th Cir. Oct. 2, 2014). [Read more…] about CashCall’s Use of Tribal Arbitration under Attack
Post-Petition Equity Goes to Debtor upon Conversion
Equity created by payments into a chapter 13 plan belongs to the debtor upon conversion to chapter 7. In re Hodges, No. 13-361 (E.D. Tenn. Sept. 29, 2014). [Read more…] about Post-Petition Equity Goes to Debtor upon Conversion
Trustee Fee Cut Where No Meaningful Distribution
In three consolidated Chapter 7 cases, the Bankruptcy Court, finding that carve-out or short sale agreements did not lead to any meaningful distribution to creditors, reduced the trustee’s fee by 50% of the requested amount. In re Scoggins, No. 12-42158 (Bankr. E.D. Cal. Sept. 8, 2014) (the court approved the fee request in a fourth, business case). [Read more…] about Trustee Fee Cut Where No Meaningful Distribution
Warning: May Cause Munchies and Preclude Bankruptcy Relief
A Colorado Bankruptcy Court found that a debtor whose only non-social security income was generated through the marijuana industry could not avail himself of bankruptcy relief. In re Arenas, — B.R. —-, 2014 WL 4288991 (Bankr. D. Colo. Aug. 28, 2014). The chapter 7 debtors’ income sources were $4,265.16 from Mr. Arenas’ marijuana growing business for which he was licensed under Colorado law, a lease with a marijuana dispensary, and $3,000.00 from his co-debtor wife’s social security disability benefits. Mr. Arenas’ marijuana-related business interests were legal under state law and illegal under the federal Controlled Substances Act. [Read more…] about Warning: May Cause Munchies and Preclude Bankruptcy Relief
Bankruptcy as Social Insurance Program
Fortune Magazine reported yesterday on the results of a recent study conducted by the National Bureau of Economic Research in which the NBER examined 500,000 U.S. bankruptcy filings to determine the overall effect on consumers. The study found that Chapter 13 bankruptcy protection “increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.” [Read more…] about Bankruptcy as Social Insurance Program
Ongoing Homeowners Association Assessments Dischargeable
Approximately a year and a half after the debtors abandoned their condominium and stopped paying their homeowners assessments, they filed for chapter 13 bankruptcy. Their plan proposed to transfer title to the secured creditor, Bank of America, and made no provision for payment of ongoing Homeowners Association assessments. Both the bank and the HOA objected to confirmation of the plan. The bankruptcy court sustained the Bank’s objection but denied the HOA’s and confirmed the plan insofar as it did not include payment of ongoing HOA assessments. In re Coonfield, No. 14-2533 (Bankr. E.D. Wash. Sept. 25, 2014). [Read more…] about Ongoing Homeowners Association Assessments Dischargeable
“Public Assistance” Exemption Revisited
In contrast with the recently reported case, In re Vazquez, the BAP for the Eighth Circuit reiterated its analysis of what constitutes “public assistance,” under Minnesota exemption laws to take into consideration whether the recipient of the assistance is “needy.” Christians v. Dmitruk (In re Dmitruk), No. 14-6023 (B.A.P. 8th Cir. Sept. 15, 2014). [Read more…] about “Public Assistance” Exemption Revisited
No En Banc Rehearing in Crawford
The Eleventh Circuit declined to revisit its decision in Crawford v. LVNV Funding, No. 13-12389 (11th Cir. July 10, 2014), where it found that a proof of claim to collect a stale debt in chapter 13 bankruptcy violates the Fair Debt Collection Practices Act. See NCBRC Blog here. On September 18th, the court denied LVNV Funding and Resurgent Capital Services’s petition for rehearing en banc.
Some commentators predicted that the court might take on the rehearing because the decision upset a body of law prohibiting such FDCPA claims. See, e.g., Inside ARM blog here, and Bankruptcy Law Blog here. Specifically, the Crawford decision conflicts with Walls v. Wells Fargo Bank, N.A., 276 F. 3d 502 (9th Cir. 2002), where the court found that the Bankruptcy Code preempts the FDCPA and that, therefore, the debtor’s remedy for violation of the discharge injunction was limited to contempt under section 105 of the Bankruptcy Code.
In Crawford, the court side-stepped the question of preemption stating: “Some circuits hold that the Bankruptcy Code displaces the FDCPA in the bankruptcy context. See Simmons v. Roundup Funding, LLC, 622 F.3d 93, 96 (2d Cir. 2010); Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 510 (9th Cir. 2002). Other circuits hold the opposite. See Simon v. FIA Card Ser., N.A., 732 F.3d 259, 271−74 (3d Cir. 2013); Randolph v. IMBS, Inc., 368 F.3d 726, 730−33 (7th Cir. 2004). In any event, we need not address this issue because LVNV argues only that its conduct does not fall under the FDCPA or, alternatively, did not offend the FDCPA’s prohibitions. LVNV does not contend that the Bankruptcy Code displaces or “preempts” §§ 1692e and 1692f of the FDCPA.”