Category: Eastern District

E.D.N.C.: Myrick v.  Equifax- Duty to Investigate Credit Report Dispute and Bankruptcy Discharge

Summary:
Mr.  Myrick brought suit against Equifax under the FCRA for willfully failing to verify the discharge of a debt in his Chapter 7 bankruptcy.   In light of Daughterty v.  Ocwen Loan Servicing, the district court reconsidered its previous grant of summary judgment and instead found that Equifax had in its possession “records that would have enabled it to confirm the status of the … account through an identified source, i.e., PACER.”   Instead, there was a factual issue of “whether Equifax conducted a reasonable investigation by limiting its efforts to confirming the disputed information” with the creditor and not checking PACER or elsewhere.… Read More

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Bankr. E.D.N.C.: In re Hamilton-Conversano- Nonfiling Spouse Income; § 707(b)(3) Smell Test

Summary:

Ms. Hamilton-Conversano filed Chapter 7 without her husband. Other than the couple’s secured debts, Mr. Conversano had no debts of his own and Mrs. Hamilton-Conversano had one American Express card, with a balance of $46,669.52, which they had jointly used to pay for all household expenses.

In completing her Means Test, Ms. Hamilton-Conversant took a “marital adjustment” to her husband’s contribution to her Current Monthly Income including $417.86, for the full monthly cost of their child’s private school. The Bankruptcy Administrator argued in that the private school contribution, even though made by the non-filing spouse, was capped by statute at $160.42.… Read More

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Bankr. E.D.N.C.: In re Hector- Accounting for Income, Expenses and Household Size under 11 U.S.C. § 707(b) with Domestic Partner

Summary:

Ms. Hector, a realtor with income subject to fluctuation dependent on sales, filed Chapter 7, but did not include her Domestic Partner in her household size nor any income contribution, as their finances and expenses were neither commingled nor shared. Ms. Hector did not assist her Domestic Partner with housing expenses, but did pay all for all groceries and cleaning supplies for both. As such, Ms. Hector claimed deductions for housing and utility expenses on the Means Test. The Bankruptcy Administrator sought to dismiss the case, arguing that those were inapplicable and left sufficient disposable income to pay unsecured creditors.… Read More

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Bankr.  E.D.N.C.: In re Matusak- Timeliness of Motion to Modify; Judicial Estoppel and Unanticipated Changes in Circumstances; Extension of Plan LengthBankr.  E.D.N.C.: In re Matusak- Timeliness of Motion to Modify; Judicial Estoppel and Unanticipated Changes in Circumstances; Extension of Plan Length

Summary:

Mr.  Matusak’s plan provided, obviously among things, that he was required to produce  verified updated Schedules of income and expenses during the 36 months Applicable Commitment Period of his plan whenever such were requested by the Chapter 13 Trustee or Ms.  Brown,  his ex-wife and a creditor.  Based on that financial information, Ms.  Brown filed a motion to modify Mr.  Matusak’s plan in November 2016, seeking both an increase in the monthly payment and an extension of the plan from 36 to 60 months.

Prior to the hearing on the Motion to Modify in April 2017, Mr.  Matusak made the 36th payment under the original confirmed plan and argued that, the bankruptcy court no longer had authority to modify his plan as 11 U.S.C.… Read More

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Bankr. E.D.N.C.: McInnis v. Phillips- Determination of Whether Debts are Primarily Consumer; Creditor Does Not Have Standing to Bring Avoidance Actions

Summary:

In determining whether 11 U.S.C. § 707(b) was applicable, the bankruptcy court held that despite the debtors having thirteen consumer debts totaling $296,775.43 and eight business debts totaling $294,595.56, “[b]ecause of how easily a mortgage can skew the claims in favor of consumer debt” the debt secured by real property should be excluded from this consideration. In re Jones, 2009 WL 102442, *1 (Bankr. E.D.N.C. Jan. 12, 2009) (citing In re Booth, 858 F.2d 1051, 1054 (5th Cir. 1998)). After this adjustment, the debtors had primarily non-consumer debts and 11 U.S.C. § 707(b) did not apply.

Additionally, the bankruptcy court held that only a Trustee and not a creditor had authority to bring avoidance actions under 11 U.S.C.… Read More

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Bankr. E.D.N.C.: In re Price – True Lease or Disguised PMSI; Rule 60(b) Reconsideration

Summary:

On March 23, 2017, the bankruptcy lifted the automatic stay for Peak Leasing with regard to one of four trailers Mr. Price had obtain from Peak and took under advisement whether the remaining claims were “true leases” or disguised PMSIs. To determine such the bankruptcy court applied the UCC “Bright-Line” Test, which provides as follows:

A transaction in the form of a lease creates a security interest if the consideration that the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease and is not subject to termination by the lessee, and:

(1) The original term of the lease is equal to or greater than the remaining economic life of the goods;

(2) The lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods;

(3) The lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement; or

(4) The lessee has an option to become the owner of the goods for no additional consideration or for nominal additional consideration upon compliance with the lease agreement.… Read More

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E.D.N.C.: U.S. v. Cox- In rem Jurisdiction for Judicial Foreclosure

Summary:

Mr. And Mrs. Cox, through their then attorney, entered into a settlement agreement in a civil forfeiture action brought for the collection of taxes, wherein they agreed to pay the government more than $3 million and granted Deeds of Trust against thirty-five tracts of land located throughout Alabama and North Carolina. After entering into this settlement, the government then initiated criminal prosecution of both of the Coxes and they subsequently pleaded guilty, with Mr. Cox being sentence to 33 months imprisonment, Mrs. Cox to 3 years probation, and each being fined $50,000. The when the Coxes failed to pay the agreed amount (perhaps in part because they were in prison), the government sought to judicially foreclose on the properties.… Read More

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E.D.N.C.: Collins v. First Financial Services- Sanctions for Failure to Comply with Discovery Orders

Summary:

Ms. Collins, representing herself pro se, in an action alleging multiple claims arising from a mortgage lending scheme by the defendants failed to comply with multiple orders regarding discovery. Upon the motions of the defendants, the district court (lamenting that no attorneys from the Pro Bono Panel had stepped up to assist Ms. Collins) applied the four-part test from Belk v. Charlotte-Mecklenburg Bd. of Educ., 269 F.3d 305, 348 (4th Cir. 2001) to determine what sanctions to impose:

1) whether the non-complying party acted in bad faith;
(2) the amount of prejudice that noncompliance caused the adversary;
(3) the need for deterrence of the particular sort of non-compliance; and
(4) whether less drastic sanctions would have been effective.… Read More

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Bankr. E.D.N.C.: In re Alomia – Denial of Motion to Incur Debt

Summary:

The bankruptcy court denied Mr. Alomia’s motion to incur student loan debt to attend the Texas Southern University in Houston, Texas as he was delinquent on his plan, which was not yet confirmed.

Commentary:

While delinquency on plan payments would indicate that a debtor would be unable to presently carry a greater debt burden, federal student loans as sought here would not become repayable for 6 months following the borrower’s completion of school, so it is not clear how these loans would impair his ability to perform under the plan.

Further, Mr. Alomia appears to have relocated to Houston and one might suspect that the recent Hurricane Harvey may have impeded is ability to both make his most recent plan payment and also participate in the confirmation of his plan.… Read More

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Bankr. E.D.N.C.: In re Hutton- Perfection of Judgment Lien against Motor Vehicle Following Levy

Summary:

Mr. Hutton’s vehicles were seized in a levy by the Onslow County Sheriff’s Department in executing on a judgment obtained by Principis. After filing bankruptcy, Mr. Hutton sought turnover of the vehicle and asserted that the possessory lien held by Principii had not been perfected by recordation with the North Carolina DMV.

In narrowly construing and distinguishing several decisions from the North Carolina Supreme Court and Court of Appeals, the bankruptcy court rejected the argument by Principis that recordation is required to perfect a lien under N.C.G.S. § 20-58 only if there is a “security interest” as defined in N.C.G.S.… Read More

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