Month: June 2016

Bankr. W.D.N.C.: In re Crawford- Denial of Discharge

Summary:

In her Chapter 7 bankruptcy petition, Crawford listed several parcels of real property as “held” for other parties, when, in fact, these parcels (and two additional undisclosed parcels) were hers. Crawford also did not disclose in her Statement of Affairs that prior to filing her case, she had received $80,000 in insurance proceeds from a robbery, using $47,500 to pay debts to friends and family. $7500 of that amount was actually sham transaction as were other funds deposited into undisclosed bank accounts used by Crawford.

Considering the cumulative weight of these non-disclosures, the bankruptcy court denied Crawford’s discharge pursuant ton 11 U.S.C.… Read More

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Bankr. E.D.N.C.: In re Fields- Denial of Motion to Convert from Chapter 7 to Chapter 13

Summary:

In his Chapter 7 petition, Mr. Fields listed a 1987 Porsche 911 as non-operational and worth $500. The Trustee, however, obtained a on-site appraisal, which found the vehicle to be operable and worth between $12,000 and $30,000. After the Trustee declined to object, Mr. Fields did receive his discharge, but was unable to buy the vehicle from the Trustee. Instead he sought to have his discharge revoked and to convert to Chapter 13.

Relying on In re Marrama, 549 U.S. 365 (2007), the bankruptcy court held that due to both Mr. Fields’ failure to accurately value to vehicle and since he lacked income sufficient to support a feasible Chapter 13 plan, conversion was not allowed.… Read More

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Bankr. E.D.N.C.: In re Cooper – Valuation and Lien Seniority Determined as of Petition Date for Lien Strip

Summary:

The Coopers had a home equity line of credit with First Bank. They refinanced their home with AHMS, which directed First Bank to close the line of credit, but the closing attorney failed to do so. The Coopers subsequently drew the available funds from the line of credit and filed Chapter 13 bankruptcy, with First Bank owed approximately $90,000 and AHMS owed approximately $160,000 .

Extended litigation ensured between AHMS and First Bank, with a settlement ultimately providing that the lien of First Bank (at that point assigned to title insurance) would be subordinated to the AHMS lien.

The Coopers then sought to strip-off the lien of First Bank pursuant to 11 U.S.C.… Read More

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Bankr. E.D.N.C.: In re Grimes – Motion to Avoid Fixing of Judgment Liens in the Future Denied

Summary:

Grimes owns real property with her husband as tenants by the entireties. After filing bankruptcy, she sought to avoid the fixing of three judgments at any later point against that property should it later cease to be held as tenants by the entireties, for example due to divorce or her husband’s death.
The bankruptcy court, dissenting from In re Corey, 2013 WL 3788239 (Bankr. E.D.N.C. 2013), held that 11 U.S.C. § 522(f) did not allow the avoidance of a hypothetical future “fixing of a lien.” That notwithstanding, Grimes’ discharge protected her from such hypothetical future liens as “[without a debt, no lien can be created.”

Commentary:

In fact, an attempt to fix such a lien with no underlying obligation in the future would constitute a discharge violation.… Read More

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Bankr. E.D.N.C.: In re Abuharb- Fees for Dilatory Actions in Avoiding Judgment Lien

Summary:

Abuharb filed his first Chapter 13 case, receiving a discharge on January 23, 2014, including any personal liability on a claim owed to Mission Valley Shopping Center (“MVA”) for a judgment in the amount of $38,093.14. At that time, Abuharb owned his residence at 8301 Rubblestone Path, but the Chapter 13 plan provided that the property was to be surrendered. When Abuharb subsequently obtained a loan modification for the mortgage on his residence, he neither modified the plan nor sought to avoid the judgment lien of MVA. After that bankruptcy completed, Abuharb twice sought to re-open the case to avoid the judgment lien, with both motions being denied due to the lapse of time and Abuharb’s failure to both avoid the lien at that time or modify the plan.… Read More

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4th Circuit- Conteh v. Shamrock Community Association- FDCPA Violation for Overstatement of Amount Owed

Summary:

Conteh brought suit against Shamrock and its attorney for filing a writ of execution that overstated the amount owed. The actual judgment balance was $1,583.96, but the writ of execution asserted that Conteh owed $1,748.98.

Following Powell v. Palisades Acquisition, 782 F. 3d 119 (4th Cir. 2014) the Court of Appeal reiterated that Conteh’s actual response was not the relevant standard, but instead how “the least sophisticated consumer” would have understood the overstatement. While an overstatement cannot be de minimus, a 10.4% error was sufficient.

For a copy of the opinion, please see:

Conteh v. Shamrock Community Association- FDCPA Violation for Overstatement of Amount Owed Read More

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4th Circuit: RDLG, L.L.C. v. Leonard- Default Judgment as Sanction

Summary:

RDLG filed suit against Leonard alleging a pattern of fraudulent activity. Attorneys Lankford and Neyhart entered appearances for Leonard and were still attorneys-of-record when the district court set a pre-trial conference for October 3, 2012. On September 30, 2012, Lankford and Neyhart filed a motion seeking to both continue the October 3rd hearing and also to withdraw as counsel, due to both a lack of communication and payment from Leonard. Lankford had waited to file such motion because Leonard had indicated that he intended to file bankruptcy on September 28th, which would have precluded the October 3rd hearing. Lankford also indicated that she would be in Puerto Rico on October 3rd.… Read More

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Bankr. E.D.N.C.: In re Smith- Requirements of a Plan Modification

Summary:

After the sale of her home, Ms. Smith sought a plan modification to discontinue disbursements on the mortgage, which had until that point been paid as a conduit. The Chapter 13 Trustee requested that Ms. Smith provided amended Schedules I and J or other evidence of current income and expenses. This request was refused and the Trustee objected to the modification.

Starting from In re Arnold, 869 F.2d 240 (4th Cir. 1989) the bankruptcy court held that a post-confirmation required the following:

1. A showing of a “substantial and unanticipated change in circumstances”;
2. That the modification was for one of the purposes allowed under 11 U.S.C.… Read More

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Bankr.  E.D.N.C.: In re Powers- Avoidance of Judicial Lien in Jointly Owned Property

Summary:

Mr.  Powers is the owner of a 50% undivided interest in his home, which has a total value of $292,000.00.   Bank of America holds a Deed of Trust against the entire property with a mortgage balance of $180,972.92.  Mr.  Powers also had three judgment liens against his interest, held, in order of seniority, by John Deere for $14,952.50, Evergreen for $4,617.48, and Farrar for $29,346.44.  Upon filing of a Chapter 13 bankruptcy, Mr.  Powers sought to avoid all three judgment liens as impairing his homestead exemption of $35,000.00.

11 U.S.C. §  522(f)(2)(A) sets forth the following methodology for determining the extent to which a judicial lien impairs an exemption:

[A] lien shall be considered to impair an exemption to the extent that the sum of –

(i) the lien;

(ii) all other liens on the property; and

(iii) the amount of the exemption that the debtor could claim if there were no liens on the property;

exceeds the value that the debtor’s interest in the property would have in the absence of any liens.… Read More

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