Month: January 2012

4th Circuit: Boosahda v. Providence Dane, LLC- Whether a debt is a “consumer debt” under the FDCPA

Summary:

Providence Dane sued Boosahda in state court for $22,000.00 on a credit card debt assigned to Providence Dane from Chase and First USA.  Boosahda counterclaimed for violations of TILA.  After testifying at trial that he did not have any recollection of using or having a Chase or Fist USA credit card, Providence Dane attempted to have a paralegal testify that Providence Dane had obtained  credit card statements showing Boosahda was liable for this debt, but such testimony was excluded as hearsay and the complaint of Providence Dane was dismissed.  Boosahda’s TILA claims were rejected by the jury.

Subsequently, Boosahda commenced a FDCPA claim against Providence Dane, who was granted  summary judgment as Boosahda failed to establish that these credit card debts (which he continued to insist he had no recollection of using) were not “consumer debts” as required by the FDCPA.… Read More

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Bank. E.D.N.C.: In re Smithville Crossings- Equity Auction requires Consummation of Chapter 11 Plan by the Highest Bidder

Summary:

Smithville Crossings’ Chapter 11 plan was confirmed wherein the Richardsons, the Debtor’s sole equity owners, agreed to grant a lien to creditor Rialto of unencumbered real estate, if the Richardsons were able to retain their ownership in Smithville Crossings.  The plan provided that the Richardsons would pay $10,000 to purchase that ownership interest and invited competing bids.  The highest bidder, however,   was neither the Richardsons nor Rialto, but a subsidiary of Rialto.

The bankruptcy court held that such an equity auction following confirmation was permitted.  The court continued that the highest bidder was then required to consummate the plan.  If the Richardsons may no longer wish to pledge their unencumbered collateral, the plan will no longer be feasible and the stay terminated.… Read More

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Bankr. E.D.N.C.: In re Brown- Delay of Voluntary Dismissal to Protect Creditor’s Rights & Dismissal for Failure to Prosecute

Summary:

After Wells Fargo commenced foreclosure, the Debtor filed an action against Wells Fargo first in North Carolina Superior Court, which was then removed to the Middle District Court.  (This series of events actually occurred twice.)  When the Debtor eventually filed bankruptcy in the Eastern District, venue in her case against Wells Fargo was transferred.

Following a Motion to dismiss the Debtor’s complaint, the Debtor sought to voluntarily dismiss her Chapter 13 case, requesting that the Complaint against Wells Fargo then be remanded to either the Eastern District Court or North Carolina Superior Court.  Because such a voluntary dismissal would adversely affect the rights of Wells Fargo while the Motion to Dismiss the complaint was pending, the bankruptcy court delayed entry of the voluntary bankruptcy dismissal.… Read More

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Bankr. E.D.N.C.: Angell v. Wells Fargo- Clerk of Court Cannot Set Aside Substitute Trustee’s Deed and Doctrine of Merger of Deed of Trust and Deed

Summary:

The Male Debtor executed a promissory note in favor of Option One Mortgage, the predecessor to Wells Fargo, and at the same time both Debtors executed a Deed of Trust.  Subsequently, the Male Debtor defaulted on the note and the property was sold at foreclosure.  A Substitute Trustee’s Deed was then recorded, conveying the property to Wells Fargo.

Later, the Clerk of Court was informed that the Notice of Sale had not been included in the foreclosure file and Clerk set aside the foreclosure sale.  Wells Fargo then transferred the property to Male Debtor (but not to the Female Debtor) by means of a quitclaim deed that purported to reinstate the Deed of Trust.… Read More

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Bankr. E.D.N.C.: In re Boyette- § 707(b)(3) following Conversion

Summary:

The Debtor filed Chapter 13 in 2009, subsequently converting to Chapter 7 on May 9, 2011.  This conversion was one day prior to a hearing to determine the status of the claim of the Debtor’s ex-wife, Ms.  Day.

Ms.  Day argued that the conversion was only done in an attempt to avoid paying her claim through the Debtor’s Chapter 13 plan, which otherwise only required $21.50 to complete.   Additionally, Ms.  Day alleged that the Debtor self-reported environmental hazards on their property, in an effort to reduce the value.  Accordingly, Ms.  Day sought to have the Debtor’s Chapter 7 dismissed pursuant to 11 U.S.C.… Read More

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Law Review: Donald S. Bernstein, Brian M. Resnick, & Hilary Dengel: The Logic and Limits of Credit Bidding by Secured Creditors Under the Bankruptcy Code

Abstract:

Outside of bankruptcy, the right of a secured creditor to “credit bid” allows the secured creditor to compete with cash bids in foreclosure to assure that the secured creditor’s collateral is not sold for less than the secured creditor thinks it is worth. In reorganization cases under chapter 11 of the Bankruptcy Code, credit bidding performs a similar function: It insulates the secured creditor from being cashed out at a time of depressed asset values and protects the secured creditor from the risk of suffering a “bankruptcy discount,” which some assert can occur in connection with chapter 11 sales. While some have argued that credit bidding “chills” bidding by third parties by permitting the secured creditor to “overbid” with currency that may be of little or no value, this criticism seems misplaced.… Read More

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Law Review: Skeel, David- Hauerwasian Christian Legal Theory (including Bankruptcy)

Abstract:

This Essay, which was written for a Law and Contemporary Problems symposium on Stanley Hauerwas, tries to develop an account of public engagement in Hauerwas’ theology. The Essay distinguishes between two kinds of public engagement, “prophetic” and “participatory.” Christian engagement is prophetic when it criticizes or condemns the state, often by urging the state to honor or alter its true principles. In participatory engagement, by contrast, the church intervenes more directly in the political process, as when it works with lawmakers or mobilizes grass roots action. Prophetic engagement is often one-off; participatory engagement is more sustained. Because they worry intensely about the integrity of the church, Hauerwasians are more comfortable with prophetic engagement than the participatory alternative, a tendency the Essay calls the “prophetic temptation.” Hauerwasians also struggle to explain what can or should participatory engagement look like.… Read More

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Law Review: Gross, Notowidigdoz and Wang- Liquidity Constraints and Consumer Bankruptcy: Evidence from Tax Rebates

Abstract:

This paper estimates the extent to which legal fees prevent liquidity-constrained households from declaring bankruptcy. To do so, it studies how the 2001 and 2008 income tax rebates affected consumer bankruptcy filings.  The authors exploit the randomized timing of the rebate checks and estimate that the rebates caused a significant, short-run increase in consumer bankruptcies in both years, with larger effects in 2008 when the rebates were more generous and more widely distributed. Using hand-collected data from individual bankruptcy petitions, the authors document that the rebates caused an increase in the total liabilities and debt-to-income ratios of filers.

Summary:

It is unlikely that many consumer bankruptcy attorneys would be surprised by a finding that the receipt of  tax refunds often increases the filings of Chapter 7 bankruptcies. … Read More

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N.C. Supreme Court: In re Vogler Realty- Review of Attorney’s Fees for Foreclosure Trustee by Clerk of Court not Authorized

Summary:

In foreclosing on a Deed of Trust, the Trustee was paid  costs and expenses consisting of a commission, pursuant to N.C.G.S. § 45-21.15(a),  of 5% of the highest bid and Trustee’s attorneys fees of 15% of the outstanding promissory note on which behalf he was acting.  This resulted in third lien-holder receiving only partial payment and the fourth lien-holder receiving nothing.  The third lien-holder filed a motion with the Clerk of Superior Court arguing that under N.C.G.S. § 32-61,  the Clerk was authorized to determine the reasonableness of a “fiduciary or trustee” fees.  The Clerk agreed, reducing the Trustee’s fees substantially.… Read More

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Law Review: Miller, Lance and Miller, Michelle- Repeat Filers Under BAPCPA: A Legal And Economic Analysis

Abstract:

On April 20, 2005, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). BAPCPA was hailed by some as a sensible overhaul of the bankruptcy code aimed towards decreasing repeat bankruptcy filing rates. In this article, the authors  consider specific changes that BAPCPA made to the Bankruptcy Code. Some of these changes were specifically targeted at the congressional view that repeat bankruptcy filings are largely the result of strategic and irresponsible behavior. This article considers whether, in actuality, BAPCPA decreased repeat filings. The authors’ statistics show that while BAPCPA did increase the time between filings, it did not change the rate of repeat filings.… Read More

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