SCOTUS: UST v. John Q. Hammons- Remedy for Violation of the Bankruptcy Uniformity Clause Ed Boltz Tue, 06/18/2024 - 19:05 Summary: In the follow up to Siegel v. Fitzgerald, 596 U. S. 464,  where the Supreme Court found that  the disparity in bankruptcy fees between Chapter 11 debtors in U.S. Trustee districts and those in Bankruptcy Administrator districts violated the Bankruptcy Clause's uniformity requirement.,  here the Supreme Court addressed the remedy for that violation. The appropriate remedy was to require equal fees for all Chapter 11 debtors going forward (prospective parity), aligning with congressional intent and correcting the constitutional issue and that a refund (estimated $326 million burden on taxpayers)  was not due to those Chapter 11 debtors. Justice Gorsuch, joined by Justices Thomas and Barrett, dissented,  criticizing the majority for focusing on what Congress might have done to fix the issue prospectively, rather than addressing the past harm., and  contending that the majority's approach left the injured parties without adequate relief. Commentary: It would be  interesting to consider how these opinions might be shuffled  if,  instead of a constitutional  violation of the requirement of "uniform Laws on the subject of Bankruptcies"  this was a case of constitutional violations of the "equal protection"  clause of the 14th Amendment. Perhaps the majority could distinguish sufficiency of merely  prospective relief  based on whether the violation was  a "short-lived and small disparity",  but it would seem that Justice Gorsuch's  dissent could be used as a strong argument for reparations as an appropriate and even necessary remedy for any constitutional violation. But nobody else reads SCOTUS bankruptcy opinions anyways.   To read a copy of the transcript, please see: Blog comments Attachment Document ust_v._john_q._hammons.pdf (231.77 KB) Category Law Reviews & Studies

The real non mortgage expenses of home ownership are nothing like the means test allowances provided. Bankruptcy lawyers need to rise to the challenge of aligning the means test with today’s economic and legal realities. The success of bankruptcy cases may turn on it. What the means test allows The means test provision for non-rent/mortgage […] The post Re-examining The Means Test Cost of Home Ownership appeared first on Bankruptcy Mastery.

MDNC BK: In re Beverly- Reopening of a Case to Avoid Judgment Lien Ed Boltz Thu, 06/13/2024 - 16:26 Summary: Michael Vincent Beverley filed for Chapter 7 bankruptcy on May 24, 2019,   disclosing In his petition his ownership of  real property located at 6680 Ridge Bluff Drive, Rural Hall, North Carolina, valued at $208,000, encumbered by a deed of trust and several judgment liens, including to BMO Harris Bank..  Mr.  Beverley  received a discharge on August 29, 2019, and the case was closed on September 9, 2019, but without filing motions to avoid judicial liens. Subsequently,  BMO Harris Bank assigned the judgment to Guaranty Solutions Recovery Fund 1, LLC in July 2023, which pursued collection on the judgment against Mr. Beverley's  homestead,  including sending Mr.  Beverley a Notice of Right to Have Exemptions Designated. In response,  Mr. Beverley sought to have his original attorney  reopen the case to avoid this judgment lien,  but as that lawyer was retiring,  Mr.  Beverley hobtain new representation and filed that motion on on January 4, 2024.    Guaranty Solutions Recovery Fund 1  objected, citing unfair prejudice due to the time elapsed and expenses incurred. First the bankruptcy court held that reopening a case under 11 U.S.C. § 350(b) is discretionary and requires cause, such as avoiding judicial liens, which can provide relief to the Debtor. Then that the late avoidance of judicial liens "incorporates an equitable defense akin to laches" which  would prohibit the avoidance  if the creditor can show both a: Lack of diligence by the party against whom the defense is asserted; and  Prejudice to the party asserting the defense.”  Miller v. Hooks, 749 Fed. Appx. 154, 161 (4th Cir. 2018). Here the bankruptcy court found that  the delay substantial but not insurmountable, as the prejudice caused was monetary and curable by requiring Mr.  Beverley to  reimburse  Guaranty Solutions Recovery Fund 1  for its reasonable attorney’s fees and costs incurred due to the delay.  Further,  if Guaranty Solutions Recovery Fund 1 desired a retrospective appraisal  of the property to determine the value of the real property as of 2019,  when the case was filed,  Mr. Beverley would bear those costs as well. Commentary: This  decision does strike a fair balance in allowing debtors to avoid judgment liens,  which often go unnoticed especially as the three major credit reporting agencies no long list those.  (Although debtors attorneys should be getting judgment searches elsewhere- whether WestLaw,  Castle Branch or some other source). The balance is that the debtor is liable for any reasonable costs incurred by the judgment creditor in the time since discharge,  including  for a retroactive appraisal. To read a copy of the transcript, please see: Blog comments Attachment Document beverley_19-50528_-_order_reopening_case.pdf (589.19 KB) Category Middle District

4th Cir.: Todman v. Baltimore- Abandonment of Personal Property Following Eviction Ed Boltz Wed, 06/12/2024 - 22:21 Summary: Marshall and Tiffany Todman, tenants in Baltimore, were evicted and lost their belongings under Baltimore’s Abandonment Ordinance, which deems any property left behind at eviction as abandoned. The Todmans sued the City of Baltimore, alleging violations of their Fourteenth Amendment rights to due process,  asserting that they were deprived of their property without adequate notice and opportunity to be heard. The Court of Appeals,  relying primarily  on the SCOTUS bankruptcy decision in Tyler v. Hennepin County, 598 U.S. 631 (2023),  held that "when operation of a confiscatory statute is triggered by something other than long periods of nonuse, it starts to look less like abandonment and more like a government-induced forfeiture."   The Abandonment Ordinance, as applied, failed to provide sufficient notice or opportunity to contest the abandonment, was confusing, buried among other information, and did not clearly inform the Todmans of the risk of abandonment.  Further, the lack of a reclamation period further deprived the Todmans of a meaningful opportunity to reclaim their property. This resulted in the court affirming the district court’s finding that Baltimore was responsible for the due process violation since  the Abandonment Ordinance, a municipal policy, directly caused the deprivation of the Todmans’ property.  That Baltimore  did not control the eviction process was not relevant as the ordinance directly made Baltimore  responsible for ensuring the ordinance complied with constitutional requirements.  These violations,  accordingly,  subjected Baltimore to damages under § 1983. Commentary: Not only is this an expansion of a bankruptcy decision from the SCOTUS  into non-bankruptcy areas,  it points out the breadth and scope that  Tyler v. Hennepin County has.  This raises further possibilities that the disposition of personal property following a foreclosure by  government sponsored entities (GS Es)  such as Fannie Mae or Freddie Mac must also comply with due process or risk similar § 1983 being asserted.  That a property owner has rights following the loss of possession of a residence,  whether rented or owned,  now seems to require notice and disclosure of those rights in clear language,  separate from the actions,  whether eviction or foreclosure,  to take possession of the residence. Blog comments Category 4th Circuit Court of Appeals

Many clients have contacted us recently regarding Asset Protection Planning. This post discusses Asset Protection Planning and the strategies used in it. What is Asset Protection Planning? Asset protection planning refers to the legal techniques and strategies employed to protect an individual's assets from creditors or liabilities. Is Asset Protection Planning legal? Yes, provided that the strategies used are not fraudulent conveyances or made with the intent to defraud creditors. In counseling clients who request Asset Protection Planning, we review the property they own, their existing and future liabilities, and their budget. In counseling clients who request Asset Protection Planning, we review the property owned by the client, their existing liabilities, future liabilities, and their budget. For example, if a client is married and owns a house, is the house held as tenancy by entirety with their spouse? If a client owns a house, are they living in it so they can claim the NYS homestead exemption? If they have a pension plan (such as IRA, SEP, or 401(k)), are those plans fully funded? Other opportunities may exist as well. However, if a client is subject to a pending lawsuit or claim, the Asset Protection Planning opportunities are limited. Those clients with questions about Asset Protection Planning should contact Jim Shenwick, Esq. Jim Shenwick, Esq. 917-363-3391  jshenwick@gmail.com   Please click the link to schedule a telephone call with me: https://calendly.com/james-shenwick/15min   We help individuals and businesses with too much debt!  

Buying a home can be a very exciting moment in someone’s life. Foreclosure can feel like the worst. If you are afraid you might be edging closer toward foreclosure, talk to our legal team about what you can do. Foreclosure is not always an unstoppable force. An attorney can review your financial situation and help you determine if there are ways to prevent foreclosure. For example, your attorney might help you negotiate with creditors to make payments more affordable or delay foreclosure. You might instead sell the home and downsize. Still, you can file for bankruptcy. Bankruptcy often has a bad reputation, but it might actually be the solution you are looking for. You can take advantage of the automatic stay imposed by the court to buy yourself more time. Your lawyer can help you decide which bankruptcy chapter is best for your situation. In some cases, bankruptcy helps people avoid foreclosure and might even allow them to keep their homes. Our Philadelphia mortgage foreclosure defense lawyers can be reached at Young, Marr, Mallis & Associates for a free case review by calling (215) 701-6519. How to Avoid a Home Foreclosure in Philadelphia There might be more than one way to fight foreclosure. To find the method that works best for you and your financial situation, you should speak to an attorney. Our Pennsylvania mortgage foreclosure defense lawyers can review your case and determine the best way to fight the foreclosure process. Contact a Lawyer Your first step should be to contact an attorney. Foreclosure proceedings tend to be rather complicated, and you need a lawyer to guide you through every step along the way. Remember, your creditor, perhaps the bank, likely has its own legal department to handle these kinds of things. You should also be legally represented to level the playing field. Your attorney can sit down with you and comb through your finances, bank records, and records about your home and mortgage. If you do not have the funds to catch up on your missed payments, your lawyer might identify other legal channels to go through. Negotiate with Lenders and Creditors One method many people facing foreclosure tend to overlook is negotiating with creditors. People are often surprised to learn that just because the bank is legally permitted to foreclose, it does not necessarily have to do so. Many creditors were willing to work with borrowers so that foreclosure does not have to occur. For example, maybe you are behind on mortgage payments, but you recently started a new job with a better salary, and you are expecting more income in the coming months to catch up on missed mortgage payments. Your creditor might be willing to hold off on foreclosure to give you time to start your new job and repay your debt. Remember, creditors usually would rather get paid what they are owed than foreclose on your home. Sell the Home Another option is to sell your home before you go into foreclosure. While this option does not allow you to keep your home, it does help you get around foreclosure, which might save your credit. By selling your home, you can get some quick cash to pay back whatever you owe on the house. If you have any funds left over from the sale, they can be put toward a different, more affordable home. This downsizing method can help you avoid the negative toll that foreclosure takes on your credit. As such, you might have an easier time securing a loan for a new home later when you are more financially stable. File for Bankruptcy While people often shudder to think of filing for bankruptcy, it might be just the solution you are looking for. Depending on how you file for bankruptcy, you might be able to hang on to your home and avoid foreclosure. As described in more detail below, there are different ways in which a homeowner can file for bankruptcy, and each method has different pros and cons you should discuss with a lawyer. How Bankruptcy Might Help You Prevent a Home Foreclosure in Philadelphia Filing for bankruptcy is not a punishment, contrary to what some might believe. Instead, bankruptcy is meant to be a solution for people facing insurmountable debt. Discuss bankruptcy options with your lawyer. Depending on how things go, you might be able to avoid foreclosure and keep your home. Automatic Stay The court may order an automatic stay when a person files for bankruptcy. According to 11 U.S.C. § 362(a), an automatic stay is a court order that prevents creditors and lenders from initiating legal action against you for debts. If legal action is already pending against you, such as foreclosure, the legal action must halt immediately. For some, this provides extra time to reassess their finances and possibly catch up on missed mortgage payments. Chapter 7 One of the more commonly filed forms of bankruptcy is Chapter 7 bankruptcy. This is often called liquidation bankruptcy because, according to 11 U.S.C. § 726(a), it focuses on liquidating your assets and using the money to pay outstanding debts. Whether Chapter 7 allows you to avoid foreclosure and keep your home depends on your circumstances. For some, their home ends up being sold, and the money is used to pay back the mortgage., While this might not be a perfect solution, it does help you avoid foreclosure. Another possibility is that you can claim a federal homestead exemption under 11 U.S.C. § 522(d)(1). Under this law, you may exempt up to $27,900 in equity in your home from the bankruptcy process. Whether this is enough to save your home depends on your situation. Chapter 13 Another common choice among those filing for bankruptcy is Chapter 13. Petitioners would not have to liquidate their assets, including their homes. Instead, they and their attorney may devise a payment plan to help them catch up on their mortgage and other debts, according to 11 U.S.C. § 1322(a). The plan should be aggressive yet financially feasible. People who file for Chapter 13 bankruptcy are often on payment plans for several years before their case is complete. While this might be a long time to live under a strict payment plan, it might be worth it if it allows you to keep your home and avoid foreclosure. Contact Our Philadelphia Mortgage Foreclosure Defense Lawyers Now Our Morrisville, PA mortgage foreclosure defense lawyers can be reached at Young, Marr, Mallis & Associates for a free case review by calling (215) 701-6519.

SCOTUS: Truck Insurance Service v. Kaiser Gypsum- Definition of Party in Interest in Bankruptcy Ed Boltz Thu, 06/06/2024 - 18:25 Summary: Truck Insurance Exchange, the primary insurer for companies facing asbestos-related lawsuits, objected to the reorganization plan proposed by Kaiser Gypsum Co. and Hanson Permanente Cement, which had filed for Chapter 11 bankruptcy. The plan created an Asbestos Personal Injury Trust under 11 U.S.C. §524(g) to handle all asbestos-related claims. Truck, responsible for defending and indemnifying up to $500,000 per claim, argued that the plan exposed it to fraudulent claims due to inadequate disclosure requirements for insured claims. The District Court confirmed the plan, deeming it "insurance neutral" and finding Truck had limited standing to object as it was not a party in interest. The Fourth Circuit affirmed, holding that Truck was not a  party in interest  because under the Doctrine of Insurance Neutrality the plan did not alter its prepetition obligations.  The Supreme Court reversed the Fourth Circuit, holding that an insurer with financial responsibility for bankruptcy claims is a  party in interest   under §1109(b) and may be heard on any issue in Chapter 11 proceedings. The Supreme Court gave a very broad Definition of a party in interest, including any  entities potentially concerned with or affected by the reorganization proceedings, not limited to those whose pre-petition obligations are altered,  citing the 3rd Circuit in holding that: Where a proposed plan “allows a party to put its hands into other people’s pockets, the ones with the pockets are entitled to be fully heard and to have their legitimate objections addressed.” In re Global Indus. Technologies, Inc., 645 F. 3d 201, 204 (CA3 2011). This included insurers like Truck, who bear significant financial responsibility for claims, and have a direct interest in the reorganization process.   The Court criticized the Doctrine of Insurance Neutrality for conflating the merits of an objection with the threshold inquiry of party in interest status,  holding that being a party in interest grants  allows insurers to voice objections but does not grant them a vote or veto in the proceedings. Commentary: The allowance in 11 U.S.C.  §1109(b) of a party in interest  "may raise and may appear and be heard on any issue" (emphasis added)  in a Chapter 11 case, with the more limited allowance in 11 U.S.C. §1324(a)  that a party in interest "may object to confirmation of the plan" in Chapter 13.  Similarly,  under §1307(c) a Chapter 13 case can be converted or dismissed "on request of a party in interest".    Elsewhere,  however,  pursuant to §1329(a),  only "the debtor, the trustee or holder of an allowed unsecured claim"  can seek a modification of a confirmed plan.  Narrower than the party in interest,  that would exclude secured creditors,  the U.S.  Trustee,  or more hypothetical or attenuated parties,  such as Truck Insurance Service. This might,  however,  mean that homeowner,  car or other insurers for consumers have the right to object to Chapter 13 cases,  requiring that they be notified of the bankruptcy filing and served with the proposed plan. I'm sure GEICO will be ecstatic about the flood of these pleadings. As is usual for bankruptcy matters from the Supreme Court,  this was a unanimous opinion, with the exception of Justice Alito who recused himself, probably because his wife's flags are made out of asbestos in order to keep them from being burned by their unpatriotic neighbors. To read a copy of the transcript, please see: Blog comments Attachment Document truck_insurance_v_kaiser_gypsum.pdf (135.47 KB) Category Law Reviews & Studies

N.C. Ct. of App.: In re White Oak Missionary Baptist Church- No Appointment of Receiver Ed Boltz Tue, 06/04/2024 - 17:52 Summary: An internal conflict within the White Oak Missionary Baptist Church arose over financial affairs and administrative authority, leading to a division among church leaders and membership. In 2018, disputes escalated when church leaders implemented accountability measures that were opposed by other leaders. An audit revealed untraceable spending of a significant donation fund. The church filed a petition for receivership in 2021, claiming substantial debts and mismanagement. The trial court denied the motion for a receiver, citing insufficient evidence of insolvency. The church appealed, arguing that the ongoing internal conflict and evidence of financial mismanagement warranted a receiver's appointment. The North Carolina Court of Appeals reviewed the case, noting that such appeals are typically interlocutory but permissible if substantial rights are affected. The Court of Appeals held that the following criteria were to be evaluated in determining whether to appoint a receiver: Whether the debtor is insolvent; Whether the debtor is not paying its debts, unless those debts are the subject of a bona fide dispute; Whether the debtor is unable to pay its debts as they become due; or  Whether the debtor is in imminent danger of insolvency. N.C. Gen. Stat. § 1-507.24(e).  The Court of Appeals found no abuse of discretion in the trial court's decision, as evidence indicated the church was not in imminent danger of insolvency. The court also addressed the church's objection to an untimely affidavit but concluded there was no prejudice as the church had been given time to respond. The trial court's decision to deny the appointment of a receiver and consider the affidavit was affirmed. Commentary: Another receivership instead of a bankruptcy.   See, for example, my post about Live Oak v. Mafic in March 2023.  The recent article in the ABI Journal,  Why State Court Receiverships Are Becoming the Norm for Smaller Companies,  begins the discussion of why this is happening,  but it would be helpful,  both on this specific topic and for the general health of the NC Bar Association Bankruptcy Section,  if some of the attorneys  making these choices would buck  the restraints  that their Tall Building Law firms seem to have against commenting or even participating in these communities. The absence of any conversation,  even in response to my most obnoxious and flawed posts,  is leading to a serious decline in the section. To read a copy of the transcript, please see: Blog comments Attachment Document in_re_white_oak_missionary_baptist_church.pdf (98.1 KB) Category NC Court of Appeals

Bankruptcy courts handle over one million cases yearly ranging from simple consumer cases to complex multi-billion dollar business cases.  Thousands of parties appear before bankruptcy courts in various capacities raising an infinite array of issues.  The courts are both needed and expected to administer these cases fairly and efficiently.   To do so, bankruptcy courts, which are courts of equity, utilize a variety of tools to manage their dockets, however, one obvious tool remains outside of their reach – the use of special masters.  Efforts are currently underway to change this. Attached is my article exploring this topic and efforts to amend Bankruptcy Rule 9031. 2024.06 - ABI Journal - 9031 Article (with reprint permission) The post It is Time to Enhance Judicial Efficiency by Amending Bankruptcy Rule 9031 appeared first on Sylvia Mayer Law.

Book Reviews Stafford Patterson Mon, 06/03/2024 - 18:36