bankruptcy

by on

Post-Discharge Settlement Not Estate Property

A post-discharge settlement based on a medical device implanted in and removed from the debtor pre-petition was not part of the bankruptcy estate. In re Ross, No. 08-04-87445 (Bankr. E.D. N.Y. April 14, 2016)

At the time Barbara Ross filed her bankruptcy petition, there was no reason to believe the medical device was problematic and, in fact, at the time of the settlement, six years post-discharge, the debtor had suffered no injury as a result of the device. The settlement was provided out of surplus funds relating to the settlement of a class action lawsuit concerning a slightly different medical device. The trustee sought to reopen Ms. Ross’s Chapter 7 bankruptcy under Section 350, to administer the settlement as property of the estate under Section 541. [Read more…] about Post-Discharge Settlement Not Estate Property

by on

Tax Scammers Arrested in Miami

Five Cuban nationals were arrested in Miami in connection with an ongoing tax scam. See Washington Post. The sophisticated scam involves scammers calling victims on the telephone, often using Voice Over Internet Protocol that makes the caller ID appear to be the IRS, falsely identifying themselves as IRS agents, and demanding money for taxes owed. The callers insist that money be wired immediately, recently demanding that the victims pay using iTunes gift cards, or the victim will be subject to arrest. When they call, they claim to have the victim’s tax return and they seek further personal information.

The suspects are accused of tricking 1,500 victims into paying a total of $2 million. This is the “largest and most pervasive” scam the IRS has faced in 30 years and is thought to have taken in approximately 6,400 victims overall and netted criminals $36.5 million.

The scammers were tracked down following a tip that came into the Senate Aging Committee’s fraud hotline last year. The call led fraud investigators to uncover the identity of some of the suspects through Walmart surveillance tapes. Christian Science Monitor. The suspects have been charged with wire fraud and conspiracy to commit wire fraud.

The IRS advises victims receiving such calls to hang up immediately. For more information, call the IRS information line at 1.800.829.1040. To report scams contact TIGTA at 1.800.366.4484 or visit the “IRS Impersonation Scam Reporting” form on their website.

by on

No Conflict Between FDCPA and Code

“The Bankruptcy Code does not preclude an FDCPA claim in the context of a Chapter 13 bankruptcy when a debt collector files a proof of claim it knows to be time-barred.” Johnson v. Midland Funding, LLC, No. 15-11240 (11th Cir. May 24, 2016). In two separate cases, Alieda Johnson and Judy N. Brock sued debt collectors for violation of the FDCPA alleging that they used “false, deceptive, or misleading representation or means in connection with the collection of any debt” (15 U.S.C. § 1692e) when they filed proofs of claim in the plaintiffs’ bankruptcy cases for debts they knew to be time-barred. The district courts granted the debt collectors’ motions to dismiss finding that the Bankruptcy Code permits a creditor to file a proof of claim for which it has a “right to payment,” and that the FDCPA and the Code are irreconcilable. The cases were consolidated on appeal to the Eleventh Circuit. [Read more…] about No Conflict Between FDCPA and Code

by on

Nondischargeability Based on Collateral Estoppel

Issue preclusion provided a short-cut to finding that the debtor’s liability for the costs and penalties incurred under state consumer protection laws was nondischargeable in bankruptcy under Section 523(a)(6). O’Rorke v. Porcaro (In re Porcaro), No. 15-26 (B.A.P. 1st Cir. Feb. 3, 2016). [Read more…] about Nondischargeability Based on Collateral Estoppel

by on

Estate Property Encompasses Post-Discharge Consent Decree

A post-discharge settlement based on a consent decree relating to the lender’s misconduct at the time it entered into a lending agreement with the chapter 7 debtors was property of the estate. In re Porrett, No. 09-3881 (Bankr. D. Idaho March 10, 2016).

Gary Allen and Jennifer Sue Porrett had a mortgage through Wells Fargo. They filed chapter 7 bankruptcy and Wells Fargo obtained relief from stay and foreclosed on the property. The Porretts were discharged in 2009. Two years later, Wells Fargo entered into a consent decree with federal regulators based upon Wells Fargo’s practice of pressing borrowers to take sub-prime mortgages even though they were eligible for more favorable prime loans during the period that the Porretts obtained their mortgage. Upon hearing of the consent decree the trustee moved to reopen the Porretts’ bankruptcy to compromise the claim and accept Wells Fargo’s offer of a $8,120.23 settlement. The Porretts argued that because the consent decree was entered into post-bankruptcy it was not property of the estate. The court disagreed.

[Read more…] about Estate Property Encompasses Post-Discharge Consent Decree

by on

Debtor Benefits from 108(b)’s Extension of Time to Redeem

Section 108(b) extends the right of a debtor to redeem property sold in a tax sale. Bryant v. Hamilton Cty, No. 15-12367, Adv. Proc. No. 15-1120 (Bankr. E.D. Tenn. April 5, 2016). [Read more…] about Debtor Benefits from 108(b)’s Extension of Time to Redeem

by on

Bleak House Comes to the Bankruptcy Court

In a scenario worthy of Dickens, a once-thriving family business, Ainsworth Feed Yards (AFY), was liquidated and distributed to creditors while the family members engaged in six years of legal battles with each other. In the Matter of Sears, 2016 Bankr. LEXIS 926, No. 10-40275 (Bankr. D. Neb. March 23, 2016). [Read more…] about Bleak House Comes to the Bankruptcy Court

by on

Section 707(b) applies to Converted Case

In a succinct opinion acknowledging a split in the courts, the district court for the Southern District of Florida found that Section 707(b)(1) applies to cases that are converted from Chapter 13 to chapter 7. Pollitzer v. Gebhardt (In re Pollitzer), No. 15-20376 (S.D. Fla. March 23, 2016).

[Read more…] about Section 707(b) applies to Converted Case