Thought for the Day Archive – 2018:

Bankruptcy related insights and information

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12/31/2018

Wishing everyone a great 2019!

12/30/2018

Just a reminder: Court’s have funding through January 11, so unless you hear from me no hearings are cancelled. All payments to the trustees still must be paid on time regardless of any shutdown. Thank you, and have a great new year!

12/28/2018

A Kansas bankruptcy court recently ruled on a case where a debtor purchased gift cards prior to filing, in part to avoid a garnishment of funds in his bank account. The debtor then attempted to exempt the cards under a Kansas exemption for household goods, asserting that the cards can only be used to purchase household goods. The court denied the request, finding that the cards are in the nature of cash, which, in Kansas, had a more limited exemption.

While Florida does not separate out exemptions for cash from household goods, there still could be a risk of running afoul of 11 U.S.C. 727(a)(2)(A) which can deny the bankruptcy discharge for transferring property in an attempt to hinder or delay creditors.

Attempting to ‘plan’ for a bankruptcy without experienced, professional help can be dangerous. It is almost always safer to hire competent counsel to assist in this important procedure.

In re Parks, 2018 Bankr. LEXIS 3946, Case #18-40736-7 (Bankr. D.Kan, Dec 12, 2018).

12/25/2018

Hoping each of you can be with friends and family for the holidays. Cherish those still with us as we honor those who have passed on.

12/16/2018

It is with a very heavy heart that I have to announce the passing of DJ at 8:45 this morning. She brought a light to all our clients in a time of need. She will be sorely missed.

12/6/2018

Trustee’s are looking at getting back college tuition paid by parents before filing when parents file chapter 7 bankruptcy. Again, an issue where good counsel can make a difference. The trustees may sue the colleges and the children both on these suits. There are a couple recent cases on point. In Geltzer v Oberlin College, adv 18-1015 (Bankr. S.D.N.Y. 4 December 2018) the court ruled that the trustee could not recover any money paid while the child was a minor, under NY law until she was 21, but could recover funds after that. Another case discussed in an earlier post here: Pergament v. Brooklyn Law Sch., 2018 U.S. Dist. LEXIS 200559, Case #1:18-CV-2204, (E.D. N.Y., 27 November 2018) involved just a suit against the college, and ruled the trustee could not recover funds that were paid before the student’s registered for classes, as the student could still get a refund until then. If bankruptcy is considered, be sure to discuss any payments made toward children’s college tuition within a few years prior to filing.

11/30/2018

Fraudulent transfer re payment of school tuition for children: initial transferee vs subsequent transferee for value discussion. Lowry v. Security Pacific Business Credit, Inc. (In re Columbia Data Products, Inc.), 892 F.2d 26 (4th Cir. 1989)

11/24/2018

Discharge denied for former farmer who did not keep adequate records of loss of cattle, tobacco, and equipment liened to Farm Credit.

11/9/2018

Earmarking doctrine as a defense to preference lawsuits.

11/4/2018

Court warns against sloppy fee disclosures.

10/22/2018

Court finds purported PACA claim in farm case to be a disguised security interest.

10/19/2018

Good discussion of basis for retroactively annulling the automatic stay.

10/16/2018

Disappointing appointment today. Client represented by local counsel, facing turnover request by chapter 7 trustee. Trustee made an offer months ago that client would have accepted, but says was never notified. Now counsel just pressuring to sign stipulation to withdraw, without any negotiations with trustee. Also didn’t file change of address for debtor.

10/15/2018

Orlando bankruptcy petition preparer sanctioned well over $30,000 for violating prior injunctions. In re Harris, 2018 Bankr. LEXIS 3134 (Bankr. M.D. Fla., 11 October 2018) Case #6:17-bk-06716-CCJ

10/15/2018

Maryland bankruptcy court allows limited ‘substantial contribution’ claim to creditor in chapter 7 case.

10/14/2018

District court reverses bankruptcy court reopening case more than a year after it was closed to revoke trustee’s abandonment of home, after discovering erroneous satisfaction of mortgage; finding that since trustee sought relief under Rule 60(b)(6) rather than Rule 60(b)(3) extraordinary grounds must be shown which would not be a basis under 60(b)(1-5). Since misrepresentation would be a basis under (b)(3), it cannot be a basis under (b)(6); and (b)(3) cannot be used since it has a 1 year statute of limitations. Bank of America, N.A. v McCowan, 2018 US Dist Lexis 174497 (E.D. N.C., Oct 9 2018).

9/18/2018

Indiana court gives good analysis why interest should not be required to unsecured creditors in 100% plans paying less than all disposable income, but see Judge Delano’s decision to the contrary in In re Cheatham, 2017 WL 5614910 (Bankr. M.D. Fla 2017).

9/18/2018

Creditor counsel beware: creditor attorney sanctioned for filing motion to lift stay to foreclose on property about 30 days after creditor had sold it’s claim to a 3rd party. $5,000 sanction affirmed on appeal

IN RE DOROTHY MONIELLO, Debtor. MICHAEL ROZEA, Appellant., No. 3:17-CV-01801 (SRU), 2018 WL 4405611 (D. Conn. Sept. 17, 2018)

9/8/2018

8th Circuit panel finds bad faith or prejudice to creditors is not basis to deny exemption of assets discovered by the trustee and exempted after the meeting of creditors.

9/6/2018

Colorado district court finds that attorneys fees awarded in state court fraud judgment are dischargeable under §523(a)(2)(A).

9/5/2018

Interesting factoid from recent decision: Following the financial collapse of the Studebaker Company in 1963, more than 11,000 autoworkers lost 85 percent of their vested pension interest when the company’s retirement plan was terminated. The resulting political pressure culminated in passage of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001–1461 (ERISA), which regulates private-sector pension and health funds.

Pension Benefit Guar. Corp. v. Findlay Indus., Inc., et al., No. 17-3520, 2018 WL 4201636, at *1 (6th Cir. Sept. 4, 2018)

9/5/2018

Failure to disclose defects in sale of real property as basis to deny discharge under §523(a)(2)(A). Even if seller failed to read disclosure document.

In re Melendez, No. AP 17-00068-AMC, 2018 WL 4063378 (Bankr. E.D. Pa. Aug. 27, 2018)

8/28/2018

And on a lighter note, California district court finds that bankruptcy court did not violate debtor’s 8th Amendment right against cruel and unusual punishment for discharging chapter 13 trustee after case was dismissed for lack of prosecution.

FAREED-SEPEHRY-FARD©, Appellant, v. U.S. TRUSTEE, et. al., Appellees. Additional Party Names: Capital One, N.A., Clear Recon Corp, Countrywide Home Loans, Inc., Devin Derham-Burk, Greenpoint Mortg. Funding, Inc., Nationstar Mortg. LLC, U.S. Bank Nat’l Ass’n, No. 17-CV-06577-BLF, 2018 WL 4076283 (N.D. Cal. Aug. 27, 2018)

8/27/2018

Maine court allows exemption, ruling that ‘vanishing exemptions’ limiting exemption where proceeds are not reinvested timely are fixed as of filing chapter 13 not when converted to chapter 7.

8/22/2018

Court finds §523(a)(6) willful and malicious injury type debt nondischargeable under §1328(a)(4) when complaint filed after Rule 4007 deadlines.

8/22/2018

Venezuela currently about 82,766% interest. Putting that in perspective, if you pay $1,250 property taxes in chapter 13 plan over 60 months at 18% interest, you would pay $626 interest over the five years. At 82,766% interest you would pay $75,178 in interest over the five years on the $1,250 in taxes.

8/14/2018

5th Circuit interprets ‘costs of sales and marketing’ in §506(a)(2) to exclude delivery and setup costs on mobile home from such valuation.

8/13/2018

Rejecting the majority view, Judge Mark finds a PACA trust is not a §523(a)(4) type trust absent a separate court order requiring segregation of trust assets.

8/11/2018

Our office is now able to accept debit cards for payment, and have some appointments (including an initial appointment) via Skype for clients that have difficulty getting to the office.

8/2/2018

5th Circuit requires chapter 13 trustee to turnover non-exempt proceeds from sale of home to debtors upon dismissal of case.

7/27/2018

NY case indicating that a forced sale such as a property tax sale of property may be subject to avoidance as a fraudulent transfer, indicating that BFP v Resolution Trust does not apply to forced sales such as tax sales.
Hampton v. Ontario County, 17-6810 (W.D.N.Y. July 18, 2018)

7/23/2018

Interesting case from 6th Circuit Court of appeals: Allowing debtor to challenge mortgage foreclosure judgment based on fact mortgage had language indicating it became a lien only upon recordation, and was recorded during pendency of prior case, while Rooker Feldman precluded review of perfection of mortgage it did not preclude determination that debtor could use strong arm powers to avoid mortgage as being unperfected. Case allowed debtor to seek right to derivative standing to bring action after suit was filed.

In re Isaacs, No. 17-5815, 2018 WL 3453360 (6th Cir. July 18, 2018)

7/15/2018

NC court finds Chapter 13 debtor may utilize section 363(h) because pursuant to section 1303 a Chapter 13 debtor has the power of the Chapter 13 trustee under section 363(b) and section 363(h) specifically incorporates section 363(b) by reference.
IN RE: BRIAN JOSEPH GUY DEBTOR, No. 18-00272-5-DMW, 2018 WL 3388031, at *3 (Bankr. E.D.N.C. July 10, 2018)

7/12/2018

9th Circuit finds post-petition condo assessments are dischargeable in chapter 13, rejecting covenant running with the land argument.

7/10/2018

Spouse who believed husband’s assertions that taxes were being paid, and did not read tax notices from IRS held not to have willfully evaded tax liability.

7/6/2018

Partial discharge of student loan for debtor who did not qualify for ‘exceptional circumstances’ discharge under §523(a)(8) where facts and circumstances require intervention in the financial burden of the student loan on the debtor.
In re Modeen, No. 17-11954-7, 2018 WL 2970990 (Bankr. W.D. Wis. June 8, 2018)

6/12/2018

1st Circuit panel (with retired Justice Souter) finds IRS liable for damages for actions taken to collect debt subsequently determined to be discharged in chapter 7. Reasonable belief as to dischargeability is irrelevant to determining whether conduct is a willful violation.

6/8/2018

Met today with another dissatisfied customer of Freedom Debt Relief.

6/6/2018

Analysis of when a government overpayment may qualify as a nondischargeable domestic support obligation.

6/6/2018

W.D. Louisiana district court reverses ruling denying confirmation finding that debtor’s can contribute up the legal limit for 401(k)’s without being denied confirmation solely on that basis. Note 5th Circuit uses totality of circumstances test vs. 11th Circuit Kitchen’s standards. Miner v Johns, 2018 WL 2347095 (W.D. La., May 23 2018).

6/6/2018

Supreme Court rules that a statement respecting a single asset is a statement respecting a debtor’s financial condition, thereby excluding the cause of action from §523(a)(2)(A). Broad reading of respecting, which they indicate has the same meaning as ‘about’, ‘concerning’, ‘with reference to,’ and ‘as regards.’ possibly leading to broader interpretations of other provisions of the code. 

5/23/2018

9th Cir BAP case on property of the estate on conversion from 13 to 7. Possibly overbroad language.

5/17/2018

Ocwen caught requesting improper $400 fees for ‘plan review’ in Notice of Post-petition Fees.

5/12/2018

Where document creating master condo association and assessments was separate from document creating condominium, claim of lien does not relate back to recording of document allowing stripping of association lien even as against a 2nd mortgage.

5/12/2018

Punitive damages, as well as return of payment made by debtor after request by creditor awarded against law firm collecting prepetition debt after promise by debtor to repay such debt.

5/6/2018

Michigan Debtor’s attempt at pro-se pre-bankruptcy planning backfires when trustee is allowed to sell her home.

4/28/2018

Hope this becomes a trend.

4/24/2018

Ohio courts denies discharge for failing to produce documents at 2004 examination. Note standard may be different in Florida.

4/21/2018

Over 100,000 views of blog https://tampabankruptcy.blogspot.com/. Can get updates subscribing there or on reddit consumer bankruptcy case site https://www.reddit.com/r/BankruptcyCaselawCns/ or follow me on twitter at  https://twitter.com/MichaelBarnet19

4/18/2018

Interesting case requiring City of Chicago to return car impounded for traffic tickets in chapter 13. Might have been different result if timely objection to plan was filed.

4/17/2018

We had recently had a chapter 12 case discharged that stripped down the farm/home property with a long term amortization at a reduced interest rate. When the client first met with us, he was under a bar order requiring permission to even file a new case, given prior unsuccessful cases both with and without attorneys. We were able to get permission to refile and successfully negotiate a reduction in the mortgage to the value of the farm and land, a reduction in the interest rate, as well as agree to payment terms over 15 years.

4/16/2018

Illinois court finds fiduciary duty to clients before retainer contract, requiring disclosure of effect of early payment of fees through plan on ability to retain vehicles if case is dismissed early.

4/15/2018

Sanctions awarded against attorney who markets to clients in foreclosures, then fails to provide for mortgages in chapter 13 plans (requiring debtors to attempt pro-se modifications) and provides for surrender after objections to such plans.
In re Tabor, No. 15BK26544, 2018 WL 1768549, (Bankr. N.D. Ill. Apr. 11, 2018)

4/15/2018

If state law requires post-petition interest on domestic support obligations, then such interest must be paid through chapter 13 plans

4/7/2018

11th Circuit affirms bankruptcy court reopening case to compel surrender of homestead where chapter 13 plan indicated surrender and no statement of intent filed in converted chapter 7 case. In re Woide, No. 17-10776, 2018 WL 1633550 (11th Cir. Apr. 5, 2018)

4/3/2018

11th Circuit on KEL case that advising clients to charge attorneys fees violates debt relief agency provisions.

3/24/2018

11th Circuit: dismissal for improper service is res judicata in any future action that was or could have been raised in dismissed action.
ERIC FERRIER, Plaintiff – Appellant, v. JAMES V. ATRIA, Defendant – Appellee., No. 17-11261, 2018 WL 1433742, (11th Cir. Mar. 22, 2018)

3/24/2018

Good analysis by 7th Circuit why judges should not require automatic turnover of tax credits/refunds, especially for below median income debtors.

3/23/2018

Deadline for early bird discount at NACTT Seminar at Fontainebleau Miami Beach 4/1/18. Note their website, including ordering area, is not secure so fax or mail payment.

3/22/2018

$13,050 default judgment under Telephone Consumer Protection Act and FDPCA.

3/20/2018

Debtor and counsel beware: incarceration of Debtor and disbarment of counsel for thwarting discovery. And no interlocutory appeal. 

3/18/2018

Chapter 13 trustee’s successfully sued mortgage to determine mortgage debt to be unsecured where chapter 13 filed between date new mortgage paid off old mortgages and date new mortgage recorded deed of trust.

In re: RAY WHITE & JAMIE M. WHITE, Debtors. HELEN M. MORRIS, as Chapter 13 Tr., Plaintiff, v. MORTGAGE SOLUTIONS OF COLORADO, LLC, Defendant., No. 16-BK-1240, 2018 WL 1352680, (Bankr. N.D.W. Va. Mar. 14, 2018)

3/18/2018

Debtor sentenced to 18 months in prison, 3 years supervised release, and $21,990 restitution to the US Trustee for failing to disclose gifts to family from $55,000 personal injury settlement received 8 months prior to filing chapter 7.

UNITED STATES OF AMERICA v. SHELLEY R. CALLAHAN (01), No. 5:13-CR-00119-01, 2018 WL 1322046, (W.D. La. Mar. 14, 2018)

3/15/2018

Extensive analysis of chapter 12: aggregate debt eligibility, income analysis, feasibility and liquidation by 6th Cir. B.A.P. 

3/12/2018

MD Fla District Court rules that Service of Rule 11 motion must be by US Mail unless opposing attorney has consented in writing to electronic service.

AMBER LANCASTER, BRITTANY CRIPLIVER, BROOKE TAYLOR JOHNSON, CIELO JEAN GIBSON, CORA SKINNER, GEMMA LEE FARRELL, HEATHER RAE YOUNG, IRINA VORONINA, JESSE GOLDEN, JESSA HINTON, JOANNA KRUPA, KATARINA VAN DERHAM, MAYSA QUY, PAOLA CANAS, SANDRA VALENCIA, SARA UNDERWOOD, TIFFANY SELBY, TIFFANY TOTH, VIDA GUERRA, & KIM COZZENS, Plaintiffs, v. ANDREW HARROW, SUSAN HARROW, EYES WIDE SHUT, LLC, BYOB CLUB, INC., & THE BOTTLE CLUB, LLC, Defendants., No. 8:17-CV-634-T-33JSS, 2018 WL 1242239, (M.D. Fla. Mar. 9, 2018)

3/11/2018

Undue hardship complaint filed 6 1/2 years after chapter 7 discharge survives motion to dismiss; court may consider new hardships after discharge in meeting Brunner test.

3/8/2018

Illinois case details confirmation requirements in farm chapter 12 case.

2/28/2018

Never try to hide assets or income in bankruptcy.

2/23/2018

4th Circuit on good faith chapter 7, including $1,000/mo entertainment expenses and exempt assets sufficient to pay creditors.

2/23/2018

Court allows setoff against CD in jointly owned with Debtor’s children 

2/21/2018

Credit union slapped with debtor’s fees for filing unjustified complaint on refinancing 62 days prior to chapter 7 filing.

2/21/2018

Interest not required on 100% plans even when debtor not paying all disposable income in plan.

2/20/2018

Having a debtor arrested in a courthouse during a mediation resulted in unclean hands finding against creditor resulting in dismissal of some causes of action by creditor against debtor.

Halvorson v. Halvorson, No. 8:15-AP-01391, 2018 WL 915043 (Bankr. C.D. Cal. Feb. 14, 2018)

2/16/2018

Beware ‘boiler room’ bankruptcy firms.

2/8/2018

11th Circuit on relation back of complaints to motions, and summary judgment under 11 U.S.C 523(a)(6).

2/5/2018

Important ruling for chapter 12’s: PACA trust interest are liens.

1/30/2018

2nd Circuit finds that mere factual inquiry to clerk’s office does not violate automatic stay, even if result of inquiry is an action in violation of the stay.

1/30/2018

11th Circuit affirms dismissal of case based on pro se debtor not satisfying trustee’s statements of deficiencies prior to confirmation, without any formal objection by trustee and without separate hearing or motion to dismiss.

In re: MARTHA E. ECHEVERRY, Debtor. MARTHA E. ECHEVERRY, Plaintiff-Appellant, v. ROBIN R. WEINER, Defendant-Appellee., No. 17-12722, 2018 WL 509307, (11th Cir. Jan. 23, 2018). Possibly evidentiary issues: ie no transcript of confirmation hearing designated on appeal and did not reply to Trustee’s brief.

1/22/2018

How to choose an attorney to represent you?

1. Find an attorney who is experienced in the field of law. I have been practicing consumer bankruptcy law since 1988. Bankruptcy, and bankruptcy appeals is the only area of law I work in. I was a partner at Isaak and Barnett until 1992 when I opened my own firm.

2. Find an attorney recognized for his work in the field. I have been board certified in consumer bankruptcy law ince 1993, by the American Board of Certification. I have written an extensive analysis of the current version of the law which was linked on a national bankruptcy website, and have co-authored a book on bankruptcy appeals.

1/12/2018

Check those UCC’s

1/5/2018

New bankruptcy scheme called ‘hijacking’ where 3rd party transfers deed to debtor in bankruptcy to stop foreclosure sale, debtor may not even know about it.

In re: Elizabeth Vazquez, Debtor(s)., No. 2:16-BK-10699-NB, 2017 WL 6759067 (Bankr. C.D. Cal. Dec. 29, 2017)

1/2/2018

Debt limits may not be absolute ground for dismissal/conversion of chapter 13. Court denied trustee’s request to dismiss when primary debt was student loans.