Bankruptcy’s co-debtor stay was intended to prevent indirect pressure created by creditors attempting to collect against a co-signatory on a debt belonging to the bankruptcy debtor. Therefore, it does not apply to a debt solely belonging to the bankruptcy debtor’s spouse even though state law provides for collection of that debt through marital property. Smith v. Capital One Bank, No. 16‐1422 & 16‐1423 (7th Cir. Dec. 22, 2016). [Read more…] about Seventh Circuit Discusses Application of Co-Debtor Stay
Incompetence Does Not Excuse Stay Violation
A mortgage creditor violated the automatic stay by mistakenly filing a claim to which it had no rights and by failing to immediately return payments on that claim it had received by the trustee. In re Mocella, 552 B.R. 706, No. 10-42287 (Bankr. N.D. Ohio 2016).
Joseph J. and Kimberly A. Mocella filed Chapter 13 bankruptcy in June 2010, and listed a debt to GMAC of approximately $10,000.00, secured by their car. GMAC filed a proof of claim (claim 2) for the secured debt. Nationstar Mortgage filed a proof of claim for over $76,000.00 secured by the Mocellas’ residence. On December 4, 2014, Nationstar filed a Transfer of Claim in which it stated that GMAC had transferred claim 2 to Nationstar. In fact, Nationstar intended to file the Transfer of Claim for a bulk servicing transfer from Ocwen Loan Servicing relating to an unsecured HomeSaver Loan that Nationstar had given the Mocellas. [Read more…] about Incompetence Does Not Excuse Stay Violation
State Court Application of Automatic Stay Is Res Judicata
A state court’s final ruling as to the application of the automatic stay to a case before it was res judicata and could not be overruled by the bankruptcy court. Bank of North Georgia v. Vanbrocklin, 2016 Bankr. LEXIS 2176, No. 15-11761 (Bankr. N.D. Ga. May 15, 2016).
Bank of North Georgia (BNG) filed a state court lawsuit against several parties, including several entities as principals on four notes and against James P. Vanbrocklin as guarantor on the notes. When Mr. Vanbrocklin filed for Chapter 7 bankruptcy, he listed BNG as holding a contingent, unliquidated claim for approximately $1.2 million. BNG responded with an adversary complaint asserting that its claim was nondischargeable because Mr. Vanbrocklin, as a member and manager of Axiom Labs, a principal on the loans, had sold Axiom property, misappropriated proceeds, and wrongfully transferred property to a company called USA Labs. In the state case, BNG issued subpoenas and sought discovery as to transfers of property from either Mr. Vanbrocklin or USA Labs.
Mr. Vanbrocklin filed an emergency motion in the state court arguing that the discovery sought by BNG was in furtherance of its adversary proceeding in the bankruptcy court and requesting that the state court enforce the automatic stay by precluding such discovery. The state court granted the motion and stayed all proceedings in the state court as to Mr. Vanbrocklin. [Read more…] about State Court Application of Automatic Stay Is Res Judicata
Obligations Under Condo Declaration Run with the Land
Obligations under a Condominium Association Declaration agreement run with the land and a condominium association may rent properties surrendered in bankruptcy and apply rent monies to pre-petition assessments without violating the discharge injunction. In re Montalvo, No. 10-8338 (Bankr. M.D. Fla. Feb. 25, 2016). [Read more…] about Obligations Under Condo Declaration Run with the Land
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
Mere Physical Possession Not Legally Cognizable Property Interest
The Ninth Circuit found that mere possession of property whose title had been fully adjudicated against the debtor in a state unlawful detainer action was not a property interest protected by the automatic stay. Eden Place v. Perl, No. 14-60049 (9th Cir. Jan. 8, 2016). [Read more…] about Mere Physical Possession Not Legally Cognizable Property Interest
Attorney Fees Are Actual Damages for Stay Violation
Under the plain language of section 362(k)(1), costs and attorney fees are “actual damages” for violation of the automatic stay. Parker v. Credit Central South, Inc., No. 15-11204 (11th Cir. Dec. 17, 2015). [Read more…] about Attorney Fees Are Actual Damages for Stay Violation
Devious Device Disables Debtors’ Car
Use of a device that renders a vehicle inoperable in the event of failure to make a payment on the car loan violates the automatic stay. In re Horace, No. 14-30103 (Bankr. N.D. Ohio Aug. 28, 2015). [Read more…] about Devious Device Disables Debtors’ Car
Debtors’ Failure to Mitigate Dooms Contempt Action
Debtors’ failure to prove actual damages, in addition to an apparently deliberate failure to mitigate damages deprived them of an award of sanctions without regard to whether Solutions Finance willfully violated the stay. In re Phillips, No. 15-30632 (Bankr. E.D. Tenn. July 13, 2015). [Read more…] about Debtors’ Failure to Mitigate Dooms Contempt Action
District Court Has Original Jurisdiction over 362(k) Claim
A district court has subject matter jurisdiction over a claim under section 362(k) without regard to a standing order referring all bankruptcy-related cases to the bankruptcy courts, and dismissal under FRCP 12(b)(6) is inappropriate where the allegations in the complaint present a plausible explanation for the defendant’s conduct. Houck v. Substitute Trustee Services, No. 13-2326 (4th Cir. July 1, 2015). [Read more…] about District Court Has Original Jurisdiction over 362(k) Claim