Year: 2014

4th Cir. : Kingston at Wakefield Homeowner’s Association, Inc. V. Castell (In re Castell)- Homeowner’s dues are unsecured unless Claim of Lien is filed.

Summary:

Homeowner’s association filed a Proof of Claim in the Debtor’s Chapter 13 case asserting that it was secured by a lien against the Debtor’s residence. The Debtor objected to the secured status as the HOA had not filed a Claim of Lien with the County Clerk of Court pursuant to the Planned Community Act (“PCA”) at N.C.G.S. § 47F-3-116(a). The HOA argued that its recorded Declaration of Covenants, Conditions, and Restrictions was sufficient under common law to hold a secured claim without the filing of a Claim of Lien. The bankruptcy court and district court sustained the Debtor’s objection.

The Court of Appeal held that even if the PCA is not the exclusive vehicle by which a homeowners’ association in North Carolina can enforce a lien for unpaid assessments on a homeowner’s property, the HOA’s common law argument failed as the Declaration required recordation of a Notice of Claim of Lien with the County Clerk of Court.… Read More

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THE BIG STORY: SENIOR AMERICANS BURDENED WITH STUDENT DEBT

The Big Story

SENIOR AMERICANS BURDENED WITH STUDENT DEBT

— Sep. 10, 2014 4:17 PM EDT

WASHINGTON (AP) — Rosemary Anderson could be 81 by the time she pays off her student loans. After struggling with divorce, health problems and an underwater home mortgage, the 57-year-old anticipates there could come a day when her Social Security benefits will be docked to make the payments.Like Anderson, a growing percentage of aging Americans struggle to pay back their student debt. Tens of thousands of them even see their Social Security benefits garnished when they cannot do so.

Among Americans ages 65 to 74, 4 percent in 2010 carried federal student loan debt, up from 1 percent six years earlier, according to a Government Accountability Office report released Wednesday at a Senate Aging Committee hearing.

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U.S. News and World Reports: Student Loan Debt Lasts a Lifetime

http://www.usnews.com/opinion/blogs/letters-to-the-editor/2014/08/26/federal-bankruptcy-law-almost-never-forgives-student-loan-debt… Read More

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N.C. S. Ct.: RL Regi v. Lighthouse Cove- Waiver of Statutory Rights Enforceable

RL Regi v. Lighthouse Cove- Waiver of Statutory Rights EnforceableSummary:

Regions Bank, the predecessor to RL Regi, providing commercial financing for real estate development for Lighthouse Cove, which was guaranteed by the individual business partners and their spouses, including Lionel L. Yow and his wife, defendant Connie S. Yow. After Lighthouse Cove defaulted, Connie Yow, among others, signed a forbearance agreement that included a waiver of claims against the lender. When the loan again went into default RL Regi sued and Connie Yow alleged violations of the Equal Credit Opportunity Act (“ECOA”) as a defense.

The North Carolina Supreme Court held that “the agreement expressly releases the lender from ‘any and all claims, defenses and causes of action.” Reversing the North Carolina Court of Appeals, the opinion continued that while “ a contract which on its face involves illegal conduct will not be enforced”, there was nothing “facially illegal about this loan relationship in which a lender provided a loan upon certain conditions; moreover, parties routinely forego claims in settlement agreements.”

Commentary:

This opinion does recognizes that Connie Yow “acknowledged that she freely and voluntarily entered into the agreement ‘after an adequate opportunity and sufficient period of time to review, analyze, and discuss .… Read More

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N.C. Ct. of Appeals: Bank of America v. Charlotte Property Investments- Incorrect Legal Description Insufficient to Defeat Deed of Trust

Summary:

Gathings granted a Deed of Trust to Countrywide, later succeeded by Bank of America. The Deed of Trust included the correct Property Identification Number and physical address, but had an incorrect legal description. The property was subsequently sold at a foreclosure sale for homeowners dues to CPI, which did not discover the Deed of Trust in favor of Bank of America. Bank of America subsequently brought action to quiet title.

Although “[a] deed of trust containing a defective description of the subject property is a defective deed of trust and provides no notice, actual or constructive, under our recordation statutes.” Fifth Third Mortg.… Read More

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Bankr. W.D.N.C.: In re Owens- Rule 3002.1 Applies to Mortgage Fees even if Collection is Not Currently Attempted

Summary:

PHH Mortgage assessed $472.25 in post-petition fees against the Debtor’s loan, but did not file and serve a notice pursuant to Rule 3002.1(c) of these fees within 180 days, asserting that these fees were not presently recoverable against the Debtor or their residence and will not be collectible unless the Debtors’ Chapter 13 case was dismissed or converted. PHH asserted that it was required by N.C.G.S. § 45-91 to send notice to the Debtors of these fees, even if not currently intended to be collected.

The bankruptcy court rejected this argument, finding that Rule 3002.1 applied to these fees as “[a]sserting a fee has been charged and then making a conditional promise to waive the fee if certain conditions are met is still an assertion of a fee as recoverable.” Further, as both the Supremacy Clause and N.C.G.S.… Read More

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Bankr.  W.D.N.C.: In re Rose- Coerced Foreclosure on Real Property

Summary:

Debtors sought authority to quitclaim their previous residence in Florida to the SBA, which held a mortgage against the property but had declined to foreclose.

The bankruptcy court first held that 11 U.S.C. § 1325(a), while property may be “surrendered”, the Bankruptcy Code does not define that term but it has “has been described as the relinquishment of all rights in property, including the right to possess the collateral.” IRS v. White (In re White), 487 F.3d 199, 205 (4th Cir. 2007); 8 Collier on Bankruptcy ¶ 1325.06[4] (Alan N. Resnick & Henry J. Sommer eds., 15th ed. 2005).  This relinquishment of rights by the debtor does not, however have a “corresponding requirement that the lender to do anything with the property” and that a creditor has the right to control its remedies.… Read More

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Bankr. E.D.N.C.: Angell v. Morris (In re Tanglewood Farms)- Reasonably Equivalent Value

Summary:

More reasonably equivalent value discussions in the Tanglewood Farms case.

Commentary:

Not every order granting avoidance of a judgment lien or for relief from the stay on a car are treated as a written opinion,  but maybe since these  reasonably equivalent value cases are becoming nearly as common, they will stop being treated as such.

For a copy of the opinion, please see:

Angell v. Morris (In re Tanglewood Farms)- Reasonably Equivalent Value

See also:

http://ncbankruptcyexpert.com/?p=4751

http://ncbankruptcyexpert.com/?p=4709

http://ncbankruptcyexpert.com/?p=4829 Read More

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Bankr. E.D.N.C.: In re Barbetta, L.L.C.- Quarterly Filing Fees for Re-opened Chapter 11

Summary:

Following the confirmation of its Chapter 11 plan and closure of the bankruptcy, the Debtor was sued in state court for a pre-petition debt by a creditor that was unknown at the time of filing of the bankruptcy and unlisted in the schedules. The state court directed the Debtor to re-open the bankruptcy case for a determination of whether the debt was discharged. Facing dismissal for failure to pay quarterly fees, the Debtor argued that it should not be required to pay such fees as they were forced to reopen the case.

The court quickly rejected the argument that the Debtor, which had filed a voluntary Chapter 11, was forced to appear again.… Read More

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Bankr. E.D.N.C.: In re Smith- Widow’s Exemption and Tenancy by the Entireties

Summary:

The Debtor, 71 years old, was married until her husband died in 1999. At the time of his death, he was the sole owner of a house and land, purchased in 1962, with a mortgage signed by both the Debtor and her husband, and which the Debtor later inherited, pursuant to his will. Upon filing bankruptcy, the Debtor sought to claim the increased “widow’s” exemption of $60,000 in the property, based on N.C.G.S. § 1C-1601(a)(1), which in addition to the regular $35,000 homestead exemption, which provides that heightened amount “so long as the property was previously owned by the debtor as a tenant by the entireties or as a joint tenant with rights of survivorship and the former co-owner of the property is deceased.” The Trustee objected as there was no evidence that the Debtor was an owner of the real property prior to her husband’s death.… Read More

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