CFPB Knocks Out Another Scam Yesterday, the Consumer Finance Protection Bureau put another credit repair outfit out of business. This was National Credit Advisors.  These folks claimed that you can use them to “free yourself from bad credit.” According to the Consumer Finance Protection Bureau, they collected $20 million from 50,000 consumers over a three […] The post Consumer Finance Protection Bureau Knocks Out A Scam by Robert Weed appeared first on Robert Weed.

Upright Law on trial in Roanoke Bankruptcy court Trial is set on September 25, 2017, for Upright Law, at the bankruptcy courthouse in Roanoke VA. The US Justice Department, through the Office of the United States Trustee, is asking that Upright be banned from accepting cases in Virginia. They are also asking for refunds for […]The post Upright Law on trial in Roanoke Bankruptcy court by Robert Weed appeared first on Robert Weed.

Upright Law on trial in Roanoke Bankruptcy court Trial is set on September 25, 2017, for Upright Law, at the bankruptcy courthouse in Roanoke VA. The US Justice Department, through the Office of the United States Trustee, is asking that Upright be banned from accepting cases in Virginia. They are also asking for refunds for […] The post Upright Law on trial in Roanoke Bankruptcy court by Robert Weed appeared first on Robert Weed.

  A district court reversed a lower court decision requiring debtor to pay 1/2 of the monies he held from a lump sum retroactive social security benefit in In re: CARL MANZO Debtor/Appellant., No. 16 C 7218, 2017 WL 3675809 (N.D. Ill. Aug. 25, 2017).  The chapter 13 debtor claimed the funds, sitting in a bank account as of the petition date, as exempt under 42 U.S.C. §407, and the bankruptcy court overruled the objection to the exemption.  However, the creditor objected to confirmation that the case was filed in bad faith because the debtor was only paying $30/month to creditors while the debtor held $7,500 in the bank as proceeds from such lump sum benefit.  The bankruptcy court sustained the objection and required the debtor to pay in 1/2 of such sum as a condition of confirmation.  The debtor sought an interlocutory appeal, which was granted..     The district court first looked at the standards of allowing an interlocutory appeal.  The requirements to allow these are 1) the appeal involves a controlling issue of law; 2) over which there is substantial ground for difference of opinion, 3) and an immediate appeal of the decision may materially advance termination of the litigation.  28 U.S.C. 1292(b).  The court found all three conditions were met.  The court then examined the good faith requirement for chapter 13.  §1325(a)(3) provides that a court may only confirm a plan if it is filed in good faith.  While good faith is not defined in the statute, the court summarized the analysis as to whether the debtor is attempting to pay creditors to the reasonable limit of his ability, or is he trying to thwart them. In re Schaitz, 913 F.2d 452, 453 (7th Cir. 1990).  Factors examined in making a determination of good faith include 1) does the plan state the secured and unsecured debts accurately; 2) does it state the debtor's expenses accurately, and 3) is the percentage repayment to unsecured creditors accurate; 4) if there are any deficiencies in the plan, do these inaccuracies reflect an attempt to mislead the court; and 5) do the proposed payments indicate a fundamental fairness in dealing with one's creditors.  Matter of Smith, 848 F.2d 813, 817 (7th Cir. 1988).  Courts may also consider how the debts arose, and whether the debts would be dischargeable in chapter 7, as well as other factors related to the debtor's honesty and fairness to creditors.    While 11 U.S.C. 541(a)(1) brings into the estate all legal and equitable interests of the debtor as of the filing of the case, 42 U.S.C. 407 provides that No other provision of law, enacted before, on, or after April 20, 1983, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.  This provision has the effect of preventing social security benefits from ever entering the bankruptcy estate.   Charnetsky v. Buenviaje (In re Buenviaje), No. 2:16-BK-15191-VZ, 2016 WL 8467650, at *4 (B.A.P. 9th Cir. Mar. 10, 2016)(unpublished/nonprecedential) (citing In re Franklin, 506 B.R. 765, 776 (Bankr. C.D. Ill. 2014)); see Carpenter v. Ries (In re Carpenter), 614 F.3d 930, 936 (8th Cir. 2010).    The issue is whether this policy can be extended to prohibit courts from requiring debtors to contribute funds excluded from the estate toward the plan as a condition of good faith.  On a related issue, the Ninth, Fifth, and Tenth Circuits have determined that a Chapter 13 debtor's refusal to include in a chapter 13 plan the surplus income from social security benefits may not properly impact the good faith determination. See Drummond v. Welsh (In re Welsh), 711 F.3d 1120, 1132-33 (9th Cir. 2013) (Ripple, J., sitting by designation); Beaulieu v. Ragos (In re Ragos), 700 F.3d 220, 227 (5th Cir. 2012), Anderson v. Cranmer (In re Cranmer), 697 F.3d 1314, 1319 (10th Cir. 2012).  In Welch the 9th Circuit found that the rigid means test requirements under BAPCPA to compute a debtor's disposable income reflected a departure from previous case law allowing courts to include social security income in deciding whether to confirm chapter 13 plans.  The 9th Circuit rejected the trustee's argument that failure to include such funds reflected a lack of good faith.  We cannot conclude...that a plan prepared completely in accordance with the very detailed calculations that Congress set forth is not proposed in good faith. To hold otherwise would be to allow the bankruptcy court to substitute its judgment of how much and what kind of income should be dedicated to the payment of unsecured creditors for the judgment of Congress. Such an approach would not only flout the express language of Congress, but also one of Congress's purposes in enacting the BAPCPA, namely to “reduce[ ] the amount of discretion that bankruptcy courts previously had over the calculation of an above-median debtor's income and expenses.” Coop v. Frederickson (In re Frederickson), 545 F.3d 652, 658 (8th Cir. 2008).   The district court is MANZO followed this reasoning in reversing the bankruptcy court's decision.  Even if 42 U.S.C. 407 is not sufficient clear on its own to exclude social security benefits from consideration in bankruptcy proceedings, the structure of chapter 13 and the means test excluding such benefits reflects Congressional intent that such benefits should be beyond the reach of creditors.  The bad faith cases in the 7th Circuit deal with debtors attempting to discharge debts not dischargeable in chapter 7 with a minimal distribution in chapter 13.  Michael Barnett www.tampabankruptcy.com

Here at Shenwick & Associates, we’ve been paying close attention to developments concerning the plummeting values of New York City taxicab medallions.  A client we’ve been working with sent us this AP story last month that describes how the taxicab medallion crash isn’t just affecting owners of medallions and cab drivers, but has spread to lending companies. According to the article, three credit unions that specialized in loans collateralized by taxicab medallions have been placed into conservatorship with the National Credit Union Administration (NCUA), including LOMTO Federal Credit Union and Melrose Credit Union .  The article also alleges that the NCUA is aggressively attempting to collect from borrowers, even those who are current on their loan payments, by demanding payment of the loan in full and threatening foreclosure on the assets pledged as collateral against the loan (which may include not just the medallion, but also motor vehicles and real estate). In a April 2014 supervisory letter regarding taxi medallion lending , the NCUA advised field staff to “[c]onfirm that a credit union that places more emphasis on the collateral value than on standard cash flow qualifications supports the market premium with other committed sources of repayment to the loan and additional collateral.”  Based on this guidance, we can expect that that the management teams hired by the NCUA to administer these credit unions will demand additional collateral to further secure these loans, and if they’re unsuccessful, to commence foreclosure actions against the current collateral. As we’ve detailed in our initial e-mail on the topic , there are many possible options to consider to address “underwater” taxi medallions, including a workout and several bankruptcy scenarios, but a detailed financial analysis is necessary.  Our firm specializes in debtor/creditor relations and bankruptcy, so if you need help with your taxi medallion debt, please contact Jim Shenwick.

   There may be a disagreement among the Judges in Florida on how to value property when a case is converted from chapter 13 to 7.  Most cases reject the argument that since property vested in the debtors upon confirmation, no further analysis is required upon conversion.  The issue seems to be whether you use the value of the property as of the date the chapter 13 was filed, less any payments on the secured claims post-petition; and less any payments to unsecured and priority creditors in the chapter 13; or whether you simply take the value of the property as of the date the case is converted.        A couple of decisions take the former position, giving credit to the debtor in the 7 for payments made to unsecured and priority creditors in the chapter 13 case.    Judge Glenn, in In re Sparks, 379 B.R. 178 (Bankr. M.D. Fla. 2006) involved a case converted a bit over a year after it was filed, in which the chapter 13 trustee had paid $3,989.06 to unsecured creditors.  The debtor had a car valued at $5,000 when the chapter 13 had been filed.  When the chapter 7 trustee filed a request for turnover the debtor answered asserting that he already paid unsecured creditors nearly the entire non-exempt amount of equity.        Judge Glenn started with 11 U.S.C. §348(f)(1)(A), that property of the estate in a converted case consists of property of the estate, as of the filing of the petition, which remains in the possession of or is under the control of the debtor on the date of the conversion.  §1325(a)(4) requires that in order for a chapter 13 plan to be confirmed, the plan must provide to pay unsecured creditors at least as much as they would have received in a chapter 7 case.   The Court also noted cases finding that when property appreciates during the chapter 13, it is the value as of filing the chapter 13 that controls in the converted chapter 7 (though there is conflicting case law on this point).   The legislative intent of the Bankruptcy Reform Act of 1994, which enacted §348(f) was to encourage debtors to reorganize their affairs through chapter 13 rather than immediately liquidate under chapter 7.   Ultimately Judge Glenn determined that equity compelled that the debtor should be given credit for payments made to unsecured and priority creditors in determining the value of property in the converted chapter 7 estate.   Judge Jennemann appeared to follow the same theory in In re Curtis, 2015 WL 4065260 (Bankr. M.D. Fla. 2015).   In this case the Judge rejected the debtor's argument that since the property vested in the debtors upon confirmation, the trustee had no right to turnover of the property.  The Court again cited §348(f), and found that the property subject to turnover met the two conditions required therein: that the property was property of the estate when the chapter 13 was filed, and that it remained in the possession or control of the debtor upon conversion.  When the case converts to chapter 7 it is no longer a chapter 13 case and thus the vesting language no longer applies.  In a footnote to that decision (fn 7) the court did give credit to the debtor for payments made in the chapter 13 to unsecured and priority creditors.  The contrary position is reflected in Judge Killian's decision in In re John, 352 B.R. 895 (2006).  Here the debtors had $3,660 worth of unencumbered, nonexempt personal property scheduled in the chapter 13 case, and had paid over $42,000 to unsecured creditors in the chapter 13.  In response to the trustee's request for turnover, the debtor's made the argument enunciated in Sparks that they should be given credit for the payments to unsecured creditors in the chapter 13.  Judge Killian found no support for that position in the language of the bankruptcy code.  The cases noting that appreciation of property during the chapter 13 do not benefit the chapter 7 estate were inapplicable, since this property did not appreciate.  Payments to unsecured creditors in the chapter 13 do not transform the property into property acquired post-petition.       The Court declined debtors' offer to use §105(a) to prevent unfairness in requiring them to pay more in after already covering the liquidation value of the estate.  Instead the Court pointed to the hardship discharge provisions of §1328(b) where the debtor's inability to complete a plan are due to circumstances which were beyond the debtor's control.  The Court examined the nature of the chapter arrangement: a court supervised bargain wherein in exchange for giving up their right to future earnings debtors obtain benefits including a 'superdischarge', retention of all property of the estate, the right to modify secured claims, and to cure and reinstate mortgages.   When a debtor failes to make the required payments, they are not entitled to keep what as bargained for.    The Debtors also argued that they effectively redeemed the property from the estate by paying the nonexempt value to unsecured creditors in the chapter 13.  This argument was rejected in that 1) there is no support for the notion that the trustee has a lien on property, and 2) redemption requires use of the debtor's own funds that are not part of the chapter 7 estate; whereas post-petition wages in chapter 13 are property of the estate.   The last argument by the Debtors was that the result was contrary to congressional intent to encourage chapter 13 filings, and should not be penalized for for attempting and failing a chapter 13 case.  Again the court cited the hardship discharge provisions as a way to avoid such penalty.   In the final paragraph of the decision the Court clarifies that the value of any property that is subject to turnover shall be determined according to its present value, since that is all the trustee could realize from its liquidation today.   Judge Kimball agreed with this result in In re Loycano, 2015 WL 8526634 (Bankr. S.D. Fl 2015).  This involved a request for turnover of a 2004 Lexus suv with a scheduled value (as of the filing of the chapter 13) of $19,650 subject to a $2,458 lien and $1,000 exemption for a net $15,542 value as of filing.  The debtor was in chapter 13 for over 4 years.  At the time of conversion he valued the Lexus at $8,300 subject to exemptions of $3,968 and no liens.  The debtor argued that turnover is inappropriate because he paid more than the liquidation value to unsecured creditors, which should offset the nonexempt portion of the vehicle.    Judge Kimball, like Judge Killian, found no support for this argument in the language of the code. Under §348(f) the Lexus was property of the estate upon the filing of the chapter 13, and remained property in the possession and control of the debtor upon conversion.   Judge Kimball also noted the 'breach of the chapter 13 agreement' argument as expressed by Judge Killian in In re John.   The effect of the result in Lovcano, where the vehicle was sold and the exempt portion of the proceeds turned over to the trustee, conforms with the legal theory that the valuation is reexamined upon the conversion, rather than using values as of the filing of the chapter which are no longer applicable, and no longer obtainable by the trustee in the event of a sale of the property.Michael Barnett www.hillsboroughbankruptcy.com     

Whether you are only considering bankruptcy, or currently in the middle of one, you are probably already looking ahead to the future. Life after bankruptcy may seem scary, but it is actually pretty great! The feelings of stress and anxiety you felt while drowning in debt will have melted away, and you can begin to focus on planning and preparing for your new life. The primary concern for many people coming out of a bankruptcy is rebuilding and repairing credit. If you are wondering how to begin improving your credit score, this post may provide some insight on establishing a solid credit history post bankruptcy. The post Rebuilding Credit After Bankruptcy appeared first on Tucson Bankruptcy Attorney.

This quarter's cases involve numerous cases on home loans, several cases related to doctors and hospitals and interesting cases on judicial estoppel and Rooker-Feldman.  Ocwen Loan Servicing v. Berry, 852 F.3d 469 (5th Cir. 3/29/17)  In this case, the Fifth Circuit followed authority from the Texas Supreme Court over its own prior decisions.   While one panel of the Fifth Circuit may not overrule another, the Court can take notice of changes in state law which supersede its prior decisions.   Here, the Fifth Circuit followed the Texas Supreme Court to find that a quiet title action based upon an invalid home equity loan was not subject to any statute of limitations.   Alcala v. Deutsche Bank Nat’l Trust, 2017 U.S. App. LEXIS 5966 (5th Cir. 4/6/17)(unpublished) This case also dealt with the statute of limitations on a deed of trust.   In this case, the bank sent a notice of acceleration in 2009.   However, it sent a subsequent notice of default in 2012.   Because the notice of default allowed the homeowner to cure the default, it abandoned the prior acceleration and reset the statute of limitations.Lefoldt v. Rentfro, 853 F.3d 750 (5th Cir. 4/6/17)Public, not for profit hospital filed chapter 9.   A liquidation trust was created and trustee sought to sue officers and directors of hospital for breach of fiduciary duty.    The District Court dismissed the action finding that the suit was barred by the Mississippi Tort Claims Act ("MTCA").   The MTCA protects employees of a governmental entity from being held personally liable for acts or omissions that occur within the course and scope of their employment.     The Trustee argued that this statute should not apply against the governmental entity.   Finding that there was no controlling precedent from the Mississippi Supreme Court, the Fifth Circuit certified the question to the state supreme court.Neiman v. Bulmahn, 854 F.3d 741 (5th Cir. 4/21/17)Shareholders of ATP Oil & Gas Corporation brought a securities fraud claim against certain officers and directors of the company after it collapsed into bankruptcy.   District Court dismissed second amended complaint with prejudice for failure to state a cause of action.Investors claimed that ATP's CFO committed securities fraud when he stated that a new well was producing according to original expectations on two occasions.   The Court found that pleading did not allege scienter since accurate production figures were reported shortly thereafter and there was no allegation that CFO knew about actual production figures which were lower.Scienter was also not present with regard to officers' statements that company had sufficient capital to meet its liquidity needs where ATP continuously disclosed its worsening cash position.Hernandez v. Select Portfolio Servicing, Inc., 2017 U.S. App. LEXIS 7207 (5th Cir. 4/24/17)(unpublished)This is another case where the Court found that the lender abandoned its prior acceleration thus resetting the statute of limitations. Caldwell-Blow v. Wells Fargo Bank, N.A. (In re Caldwell-Blow), 2017 U.S. App. LEXIS 7241 (5th Cir. 4/25/17)(unpublished)Debtor defaulted upon loan.   Loan servicer accelerated the debt on three occasions in 2007 and 2008.    In October 2009, servicer sent a notice stating that the first two notices of acceleration were rescinded.   Servicer then sent notices of acceleration in June and August 2012.    Servicer also filed a motion for summary judgment in state court that was granted by the court.   However, debtor filed chapter 11 before order could be entered.Debtor filed adversary proceeding in bankruptcy court asserting that lien was barred by the statute of limitations.   Bankruptcy Court granted summary judgment finding that prior notices of acceleration had been abandoned.Court found that a lender abandons a notice of acceleration when it demands payment for less than the full amount owed.   When servicer rescinded the first two notices of acceleration, it stated that borrower could resume making regular payments.   This was sufficient to abandon the notices of acceleration, including the one that was not specifically mentioned in the letter. Janvey v. Dillon Gage, Inc., 856 F.3d 377 (5th Cir. 5/5/17)This was a fraudulent transfer action arising from the Stanford Ponzi scheme.  It shows the danger of trying a fraudulent transfer suit to a jury.  The Receiver sued Dillon Gage, which was a wholesale supplier of metals, bullion and coins to Stanford Coins & Bullion.   Dillon Gage provided a line of credit to Stanford Coins which grew to $2.3 million.   Dillon Gage stopped fulfilling orders to Stanford Coins.   Between January 23, 2009 to February 13, 2009, Stanford Coins paid approximately $5 million to Dillon Gage, leaving a credit balance of about $1 million.The Trustee sued to recover the $5 million in payments under the Texas Uniform Fraudulent Transfer Act.    Following trial, the jury found that the payments were not fraudulent.   The Receiver moved for judgment as a matter of law but the motion was denied.   Dillon Gage moved for payment of its fees which was denied.   Both parties appealed.The Receiver argued that he had proven fraudulent intent as a matter of law because Stanford Coins had used funds advanced from one customer to pay antecedent debts.   However, the Court found that there was sufficient evidence in the record to show that Stanford Coins could have believed that it would be able to honor the new customer's order if it had not been shut down.   The Court also rejected the argument that the Receiver had shown two badges of fraud as a matter of law.   The Court concluded that the jury could have properly found that Stanford Coins was generally paying its debts as they came due.   Finally, the Court rejected arguments that the jury charge contained improper provisions.   The Court found that a jury charge stating that "mere intention" to prefer one creditor over another did not constitute fraudulent intent accurately stated Texas law.   (There were three other arguments rejected that I have not discussed because I didn't find them to be interesting).The District Court denied attorneys' fees to Dillon Gage on the basis that the Receiver's claims were not frivolous unreasonable or without foundation and that an award of attorneys' fees would not be equitable and just.    Selenberg v. Bates (In re Selenberg), 856 F.3d 393 (5th Cir. 5/8/17)This case was a tragedy of errors.   A client hired an attorney to bring a malpractice action against another attorney.   However, the attorney allowed the prescriptive period to expire.   Thus, the malpractice attorney committed malpractice.   The second attorney gave the client a note for $275,000 in consideration for the client's agreement not to file suit for malpractice or file a grievance.   The attorney then filed bankruptcy.The Court found that the note was an extension of credit which would invoke section 523(a)(2)(A).   The attorney failed to advise the client to seek independent counsel before she accepted the note.   This was required under the Louisiana State Bar rules.  The Court found that the attorney committed fraud by failing to inform the client about the desirability of obtaining independent counsel. ASARCO, LLC v. Montana Resources, Inc., 858 F.3d 949 (5th Cir. 6/2/17)Res judicata, collateral estoppel and judicial estoppel are frequently invoked to derail pesky claims.  However, this is a case in which some of these doctrines were unsuccessful.    ASARCO was a partner in a copper mine with Montanta Resources, Inc.  (MRI)  When it could not meet cash calls, MRI made them for it.  This had the effect of reducing ASARCO's partnership interest from 49% to 0%.   Eight years later, ASARCO sought to invoke the reinstatement clause under the partnership agreement by tendering the missed payments plus interest.   Interestingly, the partnership agreement did not have a deadline for making this demand.     MRI invoked res judicata based on an adversary proceeding in the bankruptcy court.    ASARCO brought a declaratory judgment action asserting that it could invoke the reinstatement clause but dismissed it without prejudice.   Discussing a prior decision, the Court stated "when it comes to claim preclusion, a request for declaratory relief neither giveth nor taketh away."   Because the request for declaratory relief was more narrow than the subsequent suit, it could not give rise to res judicata.   Further, the claim brought by ASARCO in the present case was still contingent at the time of the declaratory judgment action.   Because MRI had not rejected ASARCO's request for reinstatement, ASARCO did not yet have a claim for breach of contract.   The earlier action could not be res judicata on a claim that had not yet accrued.    ASARCO made conflicting disclosures in its schedules and statement of financial affairs.   It did not disclose the partnership interest or right to reinstatement as an asset, but did disclose the partnership interest as an executory contract.  It also listed the partnership as "dissolved" in the Statement of Financial Affairs.   However, the Court ruled that this non-disclosure did not matter because creditors were paid in full.The district court disagreed. It emphasized that the purpose of the disclosure requirement is to protect creditors, as it maximizes the value of the estate to ensure that creditors are paid as fully as possible. To that end, the district court noted that all creditors were paid in full, and the trustee was undoubtedly aware of the partnership contract because it filed the adversary proceeding with claims derived from the partnership agreement. Ultimately, it found that the disclosure of the interest, though scant, was sufficient. The district court's decision to not apply judicial estoppel was within the discretion we afford it in this fact-intensive area.This opinion arguably contradicts another recent Fifth Circuit opinion regarding a Chapter 13 plan which  paid unsecured creditors in full but without interest and which did not pay disallowed claims.   (When does a plan ever pay disallowed claims?).   United States ex rel. Long v. GSDM Idea City, LLC, 798 F.3d 265 (5th Cir. 2015).   The only difference between the two cases is that in one case the district court invoked its discretion to apply judicial estoppel while in the other one it did not.  Novoa v. Minjarez (In re Novoa),  2017 U.S. App. LEXIS 9947 (5th Cir. 6/5/17)(unpublished)A doctor facing malpractice suits filed chapter 7.    The patients moved for relief from the automatic stay to proceed against insurance.   An agreed order was entered between the patients and the chapter 7 trustee which allowed the insurance companies to settle without the consent of the doctor.   The doctor moved to set aside the order and then appealed the denial of that motion.   The district court dismissed his appeal for lack of standing.   Nearly a year later, the debtor moved to reopen the case on the theory that the agreed order was void for lack of jurisdiction.     The bankruptcy court denied the motion and the district court affirmed.The Fifth Circuit explained that normally denial of a Rule 60(b) motion is reviewed based on an abuse of discretion standard.   However, when the motion is filed under Rule 60(b)(4), there is no discretion.  Either the judgment is void or is not.   Relying on Espinosa, the Court stated that allegedly failing to follow the law did not render the judgment void.    Kreit v. Quinn (In re Cleveland Imaging & Surgical Hospital, LLC), 2017 U.S. App. LEXIS 10473 (5th Cir. 6/13/17)(unpublished)A state court appointed a receiver over a hospital.  The receiver placed the hospital into chapter 11 and obtained an order for sale free and clear of liens.    A disgruntled doctor sent numerous letters alleging improprieties to the U.S. Trustee, the U.S. Attorney and state regulators.  After a three day trial, the Court found that the doctor had violated the automatic stay by attempting to exercise control over an asset of the estate.    On appeal, the doctor claimed that the order appointing the receiver was void and that therefore the bankruptcy was not authorized and that the automatic stay did not come into effect.   The receiver argued the Rooker-Feldman doctrine.   However, the doctor claimed that Rooker-Feldman did not apply that a state court judgment that was void ab initio.   The Fifth Circuit acknowledged that there was a split of authority over whether Rooker-Feldman would apply to a void judgment.   However, the Court held that where the state court had jurisdiction over the parties and had authority to approve a receivership, the argument that the particular type of receivership was not allowed by Texas law did not render the judgment void.   As a result, the Court did not have to resolve the split in authority and the opinion remained unpublished.Feuerbacher v. Wells Fargo Bank, N.A., 2017 U.S. App. LEXIS 11141 (5th Cir. 6/22/17)(unpublished)Borrower filed bankruptcy in 2009.   In her schedules, she acknowledged secured mortgage claim and did not list any contingent or unliquidated claims.   In 2015, Borrower sued Mortgage holder for Texas Home Equity violations.     The District Court granted summary judgment based on judicial estoppel.The Fifth Circuit rejected argument that a lien cannot be "estopped" into existence because it was not raised below.   It also rejected the argument that the claim had not accrued at the time of the bankruptcy.   Because the home equity loan violations occurred when the loan was made, the borrower had a cause of action even if she was not aware of it.This is a harsh result for the borrower.

Chapter 7 According to the U.S. Bankruptcy Code, Chapter 7 bankruptcy will, in most cases, discharge an individual’s debt. In fact, it is estimated that a discharge of debt is received in 99 percent of Chapter 7 bankruptcy cases. This form of bankruptcy is often referred to as “straight bankruptcy” or a “fresh start.” A Chapter 7 bankruptcy case begins when you file a petition in bankruptcy court where you live. Within this petition and associated forms, you will be asked to provide a list of all creditors and the amount and nature of their claims; the source, amount and frequency of the your income; a list of all of your property; and a detailed list of your monthly expenses. Filing this petition automatically stops most collection actions against the individual and his or her property. Not all debts are eligible for discharge. Some of the debts that can’t be discharged in a Chapter 7 bankruptcy case include child support or alimony, certain taxes, educational benefits such as government-issued student loans and debts due to personal injury or wrongful death claims against the debtor. Chapter 7 bankruptcy is a good option for those with unsecured debts such as credit card debts or medical bills. Troy, Ohio Bankruptcy Attorney, Chris Wesner, has heard many locals state that they don’t feel that they have the right to file for bankruptcy. Bankruptcy is your right, however, set forth in the Constitution. While it is certainly not an action to be taken lightly, you can file for bankruptcy discreetly and in order to have a fresh start just as many, many other people — including famous athletes and corporations have done. For more information on whether Chapter 7 is right for you, contact us. Crushed by debt The post Troy, Ohio Bankruptcy Attorney Explains Chapter 7 appeared first on Chris Wesner Law Office.

 In In re Hoover, No. 14-40478-CJP, 2017 WL 3044313 (Bankr. D. Mass. July 17, 2017) the chapter 7 debtor initially valued a personal injury claim at $0.  The Debtor had hired state court counsel prior to filing, who was employed by the chapter 7 trustee and who filed a complaint in state court post-petition.      Two years after the case was filed (initially as a chapter 11, converted to chapter 7) the trustee filed a motion to compromise the claim allowing the estate $15,500 in exchange for a general release.  The Debtor objected to the settlement stating the amount was insufficient and noting he was never contacted regarding the case or his injuries.  Upon the filing of the motion by the trustee, the debtor sought to amend the schedule of exemptions to switch from state to federal exemptions and claim a $22,975 exemption in the proceeds.    Debtor also sought to amend schedule B to show the value of the claim at $100,000.  He asserted that he based the original value of the state court's counsel pessimism as to the claim, which it now appears was misplaced.  The trustee countered with prepetition correspondence from counsel to debtor of offers of $9,000 and $12,000, asserting that the debtor's allegations of counsel's view of the case was an attempt to mislead the court.    The court initially found that Rule 1009(a) provides that a schedule may be amended by the debtor at any time before the case is closed.  While the 1st Circuit cases had limited the right to amend exemptions, these limits may no longer apply in light of the Supreme Court's decision in Law v. Siegel, 134 S. Ct. 1188, 1192, 188 L. Ed. 2d 146 (2014).  In Siegel, the Supreme Court stated in dicta that a debtor is vested with the discretion to invoke an exemption and, once invoked, “the court may not refuse to honor the exemption absent a valid statutory basis for doing so.” Siegel, 134 S. Ct. at 1196.  The Supreme Court rejected a trustee's request to surcharge exempt assets to pay an administrative expense caused by the debtor's misconduct in misrepresenting a lien and resulting equity asserted to be exempt.    While the Siegel decision was limited to §522(k) it's comments on the powers of bankruptcy courts to use §105 to remedy debtor fraud has affected a sea-change in lower courts facing this issue.   The Supreme Court closely scrutinized § 522 and concluded that section “sets forth a number of carefully calibrated exceptions and limitations, some of which relate to the debtor's misconduct” and that the section's “meticulous—not to say mind-numbingly detailed—enumeration of exemptions and exceptions to those exemptions confirms that courts are not authorized to create additional exceptions.” Siegel, 134 S. Ct. at 1196. While the statements are in dicta in the decision, lower courts are bound by such dicta.  The bankruptcy court also rejected the trustee's arguments under Rule 4003(b)(2), which allows a trustee to file an objection to an exemption at any time up to one year after the closing of the case if the debtor fraudulently asserted the claim of exemption.  The court found that this rule simply expands the strict 30 day period for objections to exemptions.   While a minority of courts distinguish Siegel where there is an objection to exemptions as opposed to an attempt to surcharge the exemptions, e.g.  In re Woolner, No. 13–57269, 2014 WL 7184042 (Bankr. E.D. Mich. Dec. 15, 2014), it appears no subsequent decisions have followed Woolner and the 6th Circuit court that has appellate jurisdiction over the Woolner court has determined that an objection based on bad faith or concealment of property can no longer be sustained absent specific statutory authorization.  In re Baker, 791 F.3d 677, 682 (6th Cir. 2015).   The trustee also objected in that since the bankruptcy case had been closed, §1009(a) would not allow amendment of the schedules in a reopened case.  The appellate court determined that this argument had been waived as it was not included in the initial objection to the amended claim of exemptions.   Michael Barnett.  www.tampabankruptcy.com