Posted by NCBRC - December 4th, 2020
Declining to extend its 2002 holding in Walls, the Ninth Circuit found that a chapter 13 debtor who fully paid the creditor’s claim prior to completion of his plan was not precluded from pursuing an FDCPA claim based on the creditor’s post-discharge collection efforts. Manikan v. Peters & Freedman, L.L.P., No. 19-55393 (9th Cir. Nov. 25, 2020).
The debtor entered chapter 13 bankruptcy after receiving a notice of foreclosure from Peters & Freedman, a debt collector, based on HOA arrears. Through P&F, the HOA filed a claim in his bankruptcy, and the debtor provided for the arrears in his plan. He fully paid off the debt approximately two years prior to completion of his plan. After the debtor received his discharge, P&F hired Advanced Attorney Services (AAS) to re-serve a Notice of Default based on the debt that the debtor had paid off in his bankruptcy. AAS served the notice by breaking through a gate, entering the debtor’s backyard and banging on his windows, causing the debtor to call the police. Read More
Posted by NCBRC - December 2nd, 2020
On remand from the Supreme Court, the Ninth Circuit found that, under the Supreme Court’s objective standard, the debtor’s active post-bankruptcy litigation in state court of the terms of his separation from his business partnership established sufficient cause for his business partner creditors to have a reasonable belief that he had “returned to the fray” and that their motion for attorney’s fees would not violate the discharge injunction. Lorenzen v. Taggart, No. 16-35402 (9th Cir. Nov. 24, 2020). Read More
Posted by NCBRC - November 24th, 2020
Relying on the answer to a certified question propounded to the California Supreme Court regarding presumptions attached to marital property, the Ninth Circuit found that one of two properties owned by the individual debtor and his wife was community property despite its being designated a joint tenancy. Brace v. Speier (In re Brace), No. 17-60032 (9th Cir. Nov. 9, 2020).
The debtor and his wife acquired the San Bernardino property sometime after they married in 1972, and the Redlands property in 1977 or 1978. When the husband filed for chapter 7 bankruptcy, the trustee sought to sell both properties and distribute the proceeds to the debtor’s creditors. Even though both deeds characterized the properties as joint tenancies, the bankruptcy court found that, under the California Family Code, they were community property and could be sold to satisfy the husband’s debts. The BAP affirmed. In re Brace, 566 B.R. 13 (B.A.P. 9th Cir. 2017). Read More
Posted by NCBRC - November 20th, 2020
The shared responsibility payment under the Affordable Care Act is not an “excise tax,” within the meaning of section 507(a)(8) and, therefore, the IRS’s claim for unpaid SRP was not entitled to priority in bankruptcy. IRS v. Huenerberg, No. 18-1617 (E.D. Wisc. Oct. 22, 2020).
When the debtors filed for chapter 13 bankruptcy, the IRS submitted a claim for over $6,000 in unpaid taxes, a portion of which was attributable to the debtors’ failure to pay what they owed under the Affordable Care Act as their shared responsibility payment (SRP). The IRS sought to have the SRP treated as a priority tax debt under section 507(a). The bankruptcy court found that the SRP did not qualify as an “excise tax” under that section and denied the IRS’s motion. The IRS appealed to the district court. Read More
Posted by NCBRC - November 17th, 2020
Despite higher actual vehicle operating costs, when calculating disposable income on the means test, above-median debtors must use the exact numerical values for expenses that are specified in the IRS’s National and Local Standards. Rodriguez v. Bronitsky (In re Rodriguez), No. 20-1085 (B.A.P. 9th Cir. Oct. 16, 2020). Read More
Posted by NCBRC - November 10th, 2020
When the debtor failed to reinvest the proceeds from the sale of his exempt homestead within the period required by state homestead exemption law, the exemption vanished. McCallister v. Wells (In re Wells), No. 20-86 (D. Idaho Oct. 14, 2020).
The debtor filed for chapter 13 bankruptcy and listed the equity in his home as exempt under Idaho law. During his bankruptcy, he sold the home in order to use the proceeds to pay off one of his creditors. He did not reinvest in a new home as required by Idaho exemption law. The trustee sought to capture the proceeds of the sale for the bankruptcy estate on the basis that the debtor’s homestead exemption vanished when the debtor sold the home without reinvesting within one year. The bankruptcy court overruled the trustee’s objection to the exemption. The trustee appealed to the district court. Read More
Posted by NCBRC - November 5th, 2020
The First Circuit found that a debtor with a legitimate homestead exemption at the time of filing chapter 13 bankruptcy retains that exemption despite post-petition sale of the property, conversion to chapter 7, and failure to reinvest in a new homestead within six months as required by state homestead exemption law. Rockwell v. Hull (In re Rockwell), No. 19-2074 (1st Cir. July 30, 2020), petition for cert. filed (U.S. Oct. 13, 2020) (No. 20-499). Read More
Posted by NCBRC - October 30th, 2020
When the debtor’s mother made a direct payment to one of the debtor’s creditors from an account over which the debtor had no interest or control, the transfer was not an avoidable preferential transfer under section 547(b). Walters v. Stevens, Littman, Biddison, Tharp and Weinberg, LLC. (In re Wagenknecht), No. 19-1206 (10th Cir. Aug. 24, 2020). Read More
Posted by NCBRC - October 28th, 2020
A student loan servicing company’s failure, over the course of five years, to respond to an adversary complaint and multiple court orders, justified a finding of contempt and sanctions against the servicer requiring it to pay off the debtor’s student loans to the DOE in the amount of $354,629.62, and pay damages to the debtor in the amount of $24,000. Leary v. Great Lakes Educational Loan Services, No. 15-11583, Adv. Proc. No. 15-1295 (Bankr. S.D.N.Y. Sept. 8, 2020).
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Posted by NCBRC - October 23rd, 2020
Where a debtor makes serial filings for bankruptcy, the automatic stay is lifted after 30 days only with respect to the debtor and not with respect to property of the estate. Rose v. Select Portfolio Servicing, Inc., No. 19-50598 (5th Cir. Dec. 10, 2019).
Five years after the debtor and her then husband bought their residence, they divorced and the debtor’s husband retained the house on the condition that, if he defaulted on the mortgage, he would transfer ownership to the debtor. He defaulted. Although the house did not actually transfer to the debtor until five years after the last payment on the mortgage, the debtor became actively involved in battle with the mortgage creditor. On four occasions, the creditor set a foreclosure date and the debtor filed for bankruptcy to forestall the sale of the property. The bankruptcy cases were pending for a total of 269 days. Read More
