Category: Middle District

Bankr. M.D.N.C.: In re Calloway- Domestic Support Obligations and Good Faith in Chapter 13

Summary:

Ms. Calloway divorced Mr. Bowles and shortly before a final judgment was entered in their equitable distribution proceeding, she filed Chapter 13. Just prior to Ms. Calloway’s bankruptcy filing, the state court judge circulated a preliminary ruling to the parties via email, stating that he believed an unequal distribution of the marital assets in favor of Mr. Bowles would be equitable and that Ms. Calloway would be required was to pay a total of $50,514 by means of monthly payments of $300, due to the her liquidation of two retirement accounts, which had a total value of roughly $31,000. Additionally, since their separation, Ms.… Read More

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Bankr.  M.D.N.C.: In re Price- Separate Classification of Student Loans in Chapter 13Bankr.  M.D.N.C.: In re Price- Separate Classification of Student Loans in Chapter 13

Summary:

The Prices, who are above median income debtors, but nonetheless have negative projected disposable monthly and no non-exempt assets, proposed an estimated 15% dividend to the class of dischargeable general unsecured creditors, which totaled $11,728.38.  They also proposed to separately classify the  $10,463.48 claim by Navient for non-dischargeable student loans.  The Chapter 13 Trustee supported confirmation, but the Bankruptcy Administrator filed a limited objection to such treatment.
The bankruptcy court first addressed whether the prohibition in  §1322(b)(1) against “unfair discrimination” in favor of one class of unsecured creditors was applicable as  §1322(b)(5) allows the a plan to cure and maintain payments on “any unsecured claim … on which the last payment is due after the date on which the final payment under the plan is due.”  While recognizing a split in opinions on this question, the court held that since §1322(b)(5) specifically applies despite the limitations in §1322(b)(2), it does not similarly explicitly override the “unfair discrimination” restrictions in §1322(b)(1). … Read More

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Bankr. M.D.N.C.: In re Macy- Reaffirmation Is Voluntary for Both Debtor and Creditor

Summary:

Following receipt of an Reaffirmation Agreement from World Omni, the Macys completed and signed the statutorily prescribed form and both returned the documents to World Omni and filed a copy with the bankruptcy court.

The bankruptcy court sua sponte held that the filing of the Reaffirmation “absent a signature of an authorized representative” of World Omni was improper and of no binding effect, despite that it may be necessary for a debtor to establish that the requirements of 11 U.S.C. § 521(a)(2) were met, since only partially executed “creates uncertainty with the vital and powerful discharge injuction….” The court did allow, however, that debtor’s counsel can file a certificate of service reflecting compliance with the requirements of 11 U.S.C.… Read More

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Bankr. M.D.N.C.: In re Washabaugh- Revocation of Discharge

Summary:

Before filing a voluntary Chapter 7 bankruptcy, Ms. Washabaugh was employed by Wake Forest Baptist Health/N.C. Baptist Hospital, where she made personal purchases using her employer’s credit card without reimbursement, also using that credit card and gift cards to make purchases from her own Thirty-One handbag business for gifts for volunteers and other employees. Ms. Washabaugh was terminated for these purchases, with the hospital filing an employee dishonesty claim with National Union Fire Insurance for $1,009,347.00. When Ms. Washabaugh filed her bankruptcy, she did list the hospital as a creditor, but only for minor medical bills, disclosing neither the potential claim related to the purchases nor her pending criminal prosecution.… Read More

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Bankr. M.D.N.C.: In re Griffin- Attorney Certification of Reaffirmation

Summary:

The bankruptcy court issued a show cause order to the Debtor’s attorney for signing a certification that a reaffirmation would not be an undue hardship for the Debtor. The court held that in regards to a reaffirmation the debtor’s attorney must file an Affidavit stating that the Reaffirmation:

1. Represents a fully informed and voluntary agreement by the debtor;
2. Does not impose an undue hardship on the debtor or a dependent of the debtor;
3. That the attorney fully advised the debtor of the legal effect and consequences of the agreement and any default under such an agreement, as well as other options available instead of reaffirmation.… Read More

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Bankr. M.D.N.C.: In re Carter- Standing in Involuntary Bankruptcy; Good Faith in Filing Involuntary Bankruptcy

Summary:

The Debtor caused a fatal motor vehicle accident while under the influence and was subsequently pleaded guilty to felony death by motor vehicle. At the time of the collision, the Debtor was covered by his own insurance with State Farm and the Allstate insurance policy held by the owner of the car the Debtor was driving. The decedent’s estate settled with both Allstate, but after being unable to reach terms with State Farm, ultimately obtained a wrongful death verdict for approximately $2.8 million. When collection efforts failed, the Estate commenced an involuntary Chapter 7, with the Trustee employing special counsel to pursue automobile liability claims against State Farm and Allstate.… Read More

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M.D.N.C.: In re Washabaugh- Denial of Interlocutory Appeal

Summary:

Following the re-opening of Ms. Washabaugh’s Chapter 7, the Bankruptcy Administrator sought revocation of her discharge. Ms. ’s motion to dismiss that complaint, alleging that the Bankruptcy Administrator lacked standing for such action, was denied by the bankruptcy court and Ms. Washabaugh sought leave to bring an interlocutory appeal to the district court.

The district court began with 28 U.S.C. § 158, which allows “with leave from the court” appeal of interlocutory orders based on the following factors:

(1) the appeal involves a controlling question of pure law, the resolution of which will completely determine the outcome of the litigation;
(2) as to which there is a substantial ground for difference of opinion between courts; and
(3) the resolution of the question as a whole would materially advance the termination of the litigation.… Read More

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Bankr. M.D.N.C.: Daniel v. Jones Family Holdings – § 548 Avoidance of Foreclosure for Less than Reasonably Equivalent Value

Summary:

Mr. Daniel, together with the Chapter 13 Trustee subsequently added as a necessary Plaintiff, sought to avoid a pre-petition foreclosure by his homeowner’s association of his residence (in which the upset period had elapsed prior to filing of the bankruptcy) pursuant to 11 U.S.C. § 548(a)(1), as it had occurred within two years prior to the filing of the bankruptcy, had made the Debtor insolvent and provided less than “reasonably equivalent value” in exchange for the transfer. Jones Family Holdings (“JFH”), the highest bidder and purchaser of the property, moved to dismiss for failing to adequately state a claim, as it is a good faith, third party purchaser protected by state law, and that the Rooker-Feldman doctrine, res judicata, and collateral estoppel prevent the Daniel from bringing a claim.… Read More

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Bankr. M.D.N.C.: Lanik v. Smith (In re Cox Motor Express) – Valuation for Determination of Insolvency

Summary:

The Trustee sought to recover a transfer made by the Debtor to James Smith, the principal of the Debtor, pursuant to 11 U.S.C. §§ 547 and 550(a). At issue was whether the Debtor was insolvent at the time of the transfer. The Trustee argued that based on the Debtor’s tax returns and the presumption of insolvency during the 90 days preceding the filing of bankruptcy, that the Debtor was insolvent, whereas Smith asserted that based on the scheduled value of assets and amount of liabilities, the Debtor was solvent.

Pursuant to 11 U.S.C. § 101(32)(A), insolvency is defined as a “financial condition such that the sum of such entity’s debts is greater than all of such entity’s property, at a fair valuation….” Following In re Heilig-Meyers Co. Read More

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Bankr. M.D.N.C.: In re NC & VA Warranty-Informal Proof of Claims

Summary:

This is the latest of a line of decisions resulting from a complicated set of commercial transactions (which this consumer bankruptcy blog will leave for others to explicate).

It does, nonetheless, have few nuggett of use in consumer cases, specifically in Footnote 1 which recognizes that “it is possible that the Counterclaim constitutes a claim filed against the estate.” Cf. Carroll v. Farooqi, 486 B.R. 718, 722-23 (Bankr. N.D. Tex. 2013). As such an objection/answer to the counterclaim may, pursuant to Rule 3006, preclude such claim being withdrawn “except on order of the court after hearing and notice….”

For a copy of the opinion, please see:

NC & VA Warranty-Informal Proof of Claims Read More

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