The creditor’s attorney fees attributable to its repeated motions to continue foreclosure proceedings during the debtor’s pending bankruptcy cases were unnecessary given that the automatic stay was in place, and the bankruptcy court deducted those fees from the allowed claim. In re Peta, 2021 WL 608233 (Bankr. E.D. Pa., Feb. 10, 2021) (case no. 2:19-bk-13264). Read More
Tag Archive: automatic stay
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Attorney Fees Intended To Pressure Debtor Unnecessary
Posted by NCBRC - May 27th, 2021
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Smattering of Automatic Stay Violations by HOA
Posted by NCBRC - April 2nd, 2021
Citing six separate stay violations by the homeowner’s association, the district court awarded the debtor damages for emotional distress and property interference. It also upheld the bankruptcy court’s award of punitive damages and attorney’s fees. The court remanded, however, for a determination of whether the damages for property interference should have extended beyond the end of the automatic stay. In re Parker, No. 19-2588 (N.D. Cal. March 22, 2021). Read More
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Ex-Wife’s Interest In Marital Residence Does Not Enter Debtor’s Estate
Posted by NCBRC - March 17th, 2021
The debtor’s ex-wife’s interest in the marital residence did not enter the bankruptcy estate even though the property was titled to the debtor, where their dissolution agreement gave her half interest and the debtor was prohibited from unilaterally disposing of the property. But the debtor’s ex-wife did not show that his failure to comply with the dissolution agreement generally, was an indication that he undertook the debts created by the agreement by fraud where the evidence did not support her contention that he never intended to comply. Williams v. Williams, No. 18-1197 (Bankr. D. Colo. Jan. 8, 2021). Read More
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Tribe Has Sovereign Immunity from Stay Violation Suit
Posted by NCBRC - February 16th, 2021
Payday lenders belonging to a Native American Tribe enjoy sovereign immunity from suit under section 362 for violation of the automatic stay. In re Coughlin, No. 19-14142 (Bankr. D. Mass. Oct. 19, 2020).
The chapter 13 debtor filed a motion seeking a finding that a group of payday lenders violated the automatic stay when they continued to dun him for payments after he filed his bankruptcy petition. The creditors, all members of a Native American Tribe, moved to dismiss the complaint, arguing that they were entitled to sovereign immunity for their conduct. Read More
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SCOTUS Finds Retention of Property Is Not Exercise of Control
Posted by NCBRC - January 18th, 2021
In an unhappy start to the new year, the Supreme Court resolved a long-festering issue in favor of creditors when it found that “mere retention of property does not violate §362(a)(3).” City of Chicago v. Fulton, 592 U.S. ___, No. 19-357 (S.Ct. Jan. 14, 2021).
Here, a number of chapter 13 debtors entered bankruptcy after the City of Chicago impounded their vehicles for failure to pay traffic fines. In their separate cases, the debtors sought return of the vehicles arguing that once they filed for bankruptcy, the City’s retention of the vehicles violated the automatic stay. The bankruptcy courts in each case agreed with the debtors. In a consolidated opinion, the Seventh Circuit found that retention of the vehicles constituted an exercise of control over property of the estate within the meaning of section 362(a)(3). It affirmed. In re Fulton, 926 F. 3d 916 (7th Cir. 2019). Read More
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Sixth Circuit Discusses Appellate Jurisdiction
Posted by NCBRC - December 29th, 2020
Where the BAP remanded to the bankruptcy court for a finding on whether the creditor violated the automatic stay by failing to prevent the continuation of a contempt hearing against the debtor, the Sixth Circuit relied on precedent to conclude that the BAP’s order was not final and appealable. Wohleber v. Skurko (In re Wohleber), No. 19-3223/3225 (6th Cir. Nov. 18, 2020) (unpublished). In her concurring opinion, Judge Batchelder argued that the precedent relied on by the majority was erroneous and advocated for adopting a rule that “we have appellate jurisdiction if either the bankruptcy court’s judgment or the intermediate appellate judgment is final.” Read More
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Lifting the Stay only for Debtor in Serial Filings
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
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$67,000 in Fees and Costs Reasonable for Stay Litigation
Posted by NCBRC - June 13th, 2020
The debtors’ attorney was entitled to approximately $67,000.00 in attorney’s fees and expert witness fees and costs for his representation of the debtors in their action against the creditor for violation of the automatic stay. In re Moon, No. 13-12466 (Bankr. D. Nev. May 29, 2020).
After they had obtained their discharge, the debtors reopened their bankruptcy with new counsel, Christopher Burke, in order to file a motion to hold Rushmore Loan Management Services, LLC, in contempt for violation of the automatic stay and the discharge injunction. After an evidentiary hearing, the bankruptcy court found Rushmore in violation of the automatic stay, but because the date Rushmore learned of the discharge was not established, the court did not find it in violation of the discharge injunction. The bankruptcy court awarded the debtors over $100,000 in actual damages, $200,000 in punitive damages, and attorney’s fees and costs under section 362(k)(1).
Mr. Burke then submitted his fee application seeking $56,150 in fees based on 112.3 hours of work at $500.00/hour, $1,950.30 in costs, and $8,907.64 in witness fees for the expert testimony of John Rao. He further sought an order enhancing his fees by a multiplier of 1.5. Rushmore objected to the fee application generally, arguing that because he did not have a written fee agreement with the debtors, Mr. Burke did not comply with ethics requirements. Rushmore further argued that Mr. Burke’s hourly rate and the expert witness fee were excessive. Finally, Rushmore argued that Mr. Burke was not entitled to a fee enhancement. Read More
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Creditor Had Affirmative Duty to Stop State Contempt Action
Posted by NCBRC - May 29th, 2020
“A creditor, who has put a collection effort into motion must affirmatively act to stop, stay, or hold the collection effort in abeyance or risk incurring liability once a bankruptcy commences.” Valentine v. Valentine, No. 19-40593, Adv. Proc. No. 19-4022 (E.D. Mo. Jan. 27, 2020).
Before he filed for chapter 7 relief, the debtor and the creditor were divorced. The divorce agreement obligated the debtor pay his ex-spouse domestic support. At some point after their divorce the debtor fell behind on his payments and sought to modify the support agreement. His efforts were unsuccessful and, in a state court contempt action, he was ordered to sell his residence to pay the domestic support debt. He failed to do so and continued to reside in the property. He filed for bankruptcy on February 1, 2019. Within days of filing his petition, on February 4, 2019, the state court held a second hearing for contempt due to his failure to sell his residence. Though his ex-spouse’s divorce counsel knew of the bankruptcy filing, he did not attempt to stop the contempt hearing. At the conclusion of the hearing, the state court found the debtor had filed for bankruptcy in order to remove the residence from the grasp of the creditor. The court issued an Order & Confinement holding in part: “[Debtor] to remain confined until he pays the sums due and owing in principal sum of $64,003.73 as of 1-22-18 or otherwise purges himself of contempt.” Pursuant to this order, the debtor was jailed for four days. On appeal, the state appellate court vacated the Order & Confinement finding that the debtor had no avenue for purging the contempt. Read More
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First Circuit BAP Applies “Gavel Rule” to Foreclosure Sale
Posted by NCBRC - February 18th, 2020
A panel for the First Circuit BAP found that the debtor could not cure and maintain her mortgage in bankruptcy because she had no interest in the property which was sold in a foreclosure sale prior to her bankruptcy petition, despite the fact that the mortgagee failed to record the deed of sale in accordance with state foreclosure law. U.S. Bank Nat’l Assoc. v. Vertullo, Nos. 18-56, 18-63 (B.A.P. 1st Cir. Jan. 10, 2020).
After the debtor defaulted on her mortgage, the mortgagee, U.S. Bank, sold the property to a third party through a foreclosure sale. The foreclosure deed was not recorded. When Ms. Vertullo filed for chapter 13 bankruptcy, the Bank sought to lift the automatic stay in order to evict Ms. Vertullo from the property. Ms. Vertullo countered that, because the foreclosure sale was not recorded within the time required by state law, she retained an interest in the property and could cure and maintain the mortgage through her plan. The bankruptcy court agreed. It denied the Bank’s motion for relief from stay and, in a separate order, confirmed the debtor’s plan. In re Vertullo, 593 B.R. 92, 94 (Bankr. D.N.H. 2018). The Bank appealed both orders to the Bankruptcy Appellate Panel for the First Circuit. Read More
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HAVEN Act Guide
The Honoring American Veterans in Extreme Need Act of 2019 (“HAVEN Act”) excludes certain benefits paid to veterans or their family members from the definition of current monthly income (“CMI”) found in the Bankruptcy Code. The HAVEN Act amends § 101(10A) of the Bankruptcy Code and supplements the 2005 amendments to the Code that excluded other government benefits, such as social security income.
This Guide provides an overview of the HAVEN Act identifies benefits that are excluded, and answers frequently asked questions.
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