Month: August 2014

M.D.N.C.: Nance v. Citimortgage- Causes of Action following Illegal Foreclosure

Summary:

Despite being provided with evidence in the form of cancelled checks and insurance policies showing that they were not delinquent in their mortgage payments, Citimortgage commenced foreclosure against the Nances.  After refinancing their house, the Nances brought suit against Citimortgage alleging, among other causes of action,  unfair and deceptive trade practices, negligent and/or intentional infliction of emotional distress, defamation and negligent and/or intentional damage to credit report.  Citimortgage moved to dismiss.

As to the unfair and deceptive trade practices claim, the district court restated the requirements to state a claim as:

(1) the obligation owed must be a debt;

(2) the one owning the obligation must be a consumer;

(3) the one trying to collect the obligation must be a debt collector;

(4) an unfair or deceptive act;

(5) in or affecting commerce; and

(6) proximately causing injury.… Read More

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31 C.F.R. § 212 – Garnishment of Accounts Containing Federal Benefits: Commingled Funds Still Exempt

Summary:

Effective February 23, 2011, federal regulations may have settled the question about whether federal benefits, including Social Security and VA benefits, that are exempt from garnishment or execution by judgment creditors and bankruptcy trustees retain that exempt status if commingled with other non-exempt funds. 31 C.F.R. § 212.3 applies to garnishment, which is defined to include “execution, levy, attachment, garnishment or other legal process” (Emphasis added), which should include actions by a bankruptcy trustee. Under this regulation, the burden of determining if a bank account is subject to garnishment falls on the financial institution holding the bank account. It must determine how much of any federal benefits in the account constitute a “protected amount”, defined as the lesser of the sum of all benefit payments posted to an account during the preceding two months, or the balance in an account when the account review is performed.… Read More

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Urban Institute Studies: Debt in America and Delinquent Debt in America

Debt in America Abstract:

Debt can be constructive, allowing people to build equity in homes or finance education, but it can also burden families into the future. Total debt is driven by mortgage debt; both are highly concentrated in high-cost housing markets, mostly along the coasts. Among Americans with a credit file, average total debt was $53,850 in 2013, but was substantially higher for people with a mortgage ($209,768) than people without a mortgage ($11,592). Non-mortgage debt, in contrast, is more spatially dispersed. It ranges from a high of $14,532 in the East South Central division to a low of $17,883 in New England.… Read More

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E.D.N.C.: Fritz v. Duke Energy- FCRA Does Not Preempt State Debt Collection Protections

Summary:

Fritz closed his account with Duke Energy when he moved, but was one week late in paying the final bill, so it was referred to a debt collector. He did pay the balance to Duke Energy, who applied the amount to the balance on his new utility bill. The debt collector was not informed of the payment and two months later, reported Fritz as delinquent to the three major credit bureaus, resulting in a 77 point decline in his credit score. Fritz brought suit against Duke Energy (as well as the debt collector under other bases) under N.C.G.S. § 75-54, alleging that Duke Energy had falsely represented to the debt collector the status of the debt.… Read More

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Bankr. E.D.N.C.: Angell v. Montague Farms- Evidence of Insolvency and Reasonably Equivalent Value

Summary:

As evidence of the insolvency of the Debtor in support of a long-running preference action, the Trustee sought to introduce Affidavits from his paralegal, from the Director of Financial Services of one of the Debtor’s largest creditors, from the Examiner appointed in the case and from himself. The bankruptcy court found that there were numerous foundational and authentification issues with these Affidavits that would need to be addressed and was sufficient to deny the Trustee’s motion for summary judgment as to the Debtor’s insolvency at the time of the transfers in question.

Further, based on questions regarding whether the Debtor received any benefit from these transfers, arising from inconsistencies in the deposition testimony of James Winslow, the owner of the Debtor, the court held that there was a genuine issue of material fact with respect to whether the Debtor received less than a reasonably equivalent value.… Read More

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W.D.N.C.: In re Meabon- Frivolous Appeal; Failure to Disclose Assets

Summary:

Prior to filing bankruptcy, the Meabons first consulted with an attorney who informed them that they would need to disclose, as an asset in his bankruptcy schedules, Richard Meabon’s interest in a trust. As a result of the first attorney’s advice, the Meabons chose to file with another attorney, to whom they did not disclose the existence of the trust. After filing Chapter 7 without disclosure of the trust either in their petition or at the §341 Meeting of Creditors, the deadline to object to discharge passed on June 1, 2010. On June 2nd or 3rd, the first attorney notified the second, who, over the objection of the Meabons, alerted the Chapter 7 Trustee, who ultimately obtained the revocation of their discharge.… Read More

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N.C. Ct. of App.: Fazzari v. Infinity Partners- No Negligent Underwriting Cause of Action for Purchase of Real Estate

Summary:

Plaintiffs brought suit against, among other, lenders that had financed mortgage loans for the development of investment properties, alleging that the appraisals conducted, which unanimously and uniformly valued real property lots, regardless of specific qualities or locations, for $500,000, the exact minimum to support the mortgage lender’s underwriting requirements, constituted both negligent underwriting and also an unfair trade practice.

Following shortly after the Dallaire opinion from the North Carolina Supreme Court (see: http://ncbankruptcyexpert.com/?p=4791 ) the Court of Appeals recited that only in exceptional circumstances would a fiduciary duty arise between a lender and borrower and even then the “borrower cannot establish a claim for negligent misrepresentation based on a loan officer’s statements .… Read More

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Bankr. M.D.N.C.: In re Abbington Partners, L.L.C.- Dismissal of Corporate Bankruptcy Case filed without Attorney Representation

Summary:

Corporate Debtor Abbington Partners, filed a Chapter 7 bankruptcy without representation by counsel. It had previously a bankruptcy in Massachusetts, which had been dismissed for lack of attorney representation. Reiterating that “[i]t has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel.” In re Tamojira, Inc., 20 F. App’x 133, 133-34 (4th Cir. 2001), the bankruptcy court here also dismissed the case , especially as “the fact and circumstances of this case [did] not warrant anything other than a strict interpretion of this requirement.”

Commentary:

A quick look at the website for Abbington Partners ( http://www.abbingtonpartners.com/our-team) shows that the CEO has not only a “ life-long interest in law” but touts his family’s long legal experience.… Read More

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Bankr. E.D.N.C.: In re Long – Iqbal/Twombley Pleading for § 727(a)(2)(A)

Summary:

Creditor, Two Olives, Inc., sought denial of the debtors’ discharge pursuant to 11 U.S.C. § 727(a)(2)(A) , asserting that“the debtor, with intent to hinder, delay, or defraud a creditor . . . has permitted to be transferred . . . property of the debtor, within one year before the date of the filing of the petition.” Prior to the filing of the Chapter 7, the Debtors had allowed three parcels of real property to be sold a t foreclosure- the Ridley property was purchased with a credit bid by the lienholder and the Male Debtor’s mother purchased the McCulloch and Anclote properties for $396,338 and $189,805.65, respectively.… Read More

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N.C. Ct. of App.: Townsend v. Watts- Partition Sale and Affect on Lienholders

Summary:

Siblings, Townsend and Simmons owned real property as tenants in common. Townsend brought suit seeking a partition sale of the property, naming Simmons the lienholder, Citimortgage and the City of Greensboro, as defendants. After the trial court found that due to the size and nature of the property actual partition of the property could not be made without injury to the parties and ordered a partition sale. The property, despite having a tax value of $160,000.00, sold at the partition sale for $2,500.00.

The Court of Appeals upheld the partition sale, finding that the clerk of court had made findings, based on the previous failed sales history, neighboring house values and condition of the property, sufficient to support the $2,500.00 value.… Read More

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