Category: North Carolina Bankruptcy Cases

E.D.N.C.: In re Clark- In Rem Relief; Stay Pending Appeal

Summary:

The bankruptcy court granted the Motion for in rem relief sought by Wells Fargo pursuant to 11 U.S.C. § 362(d)(4), as to Mr. Clark and his wife, further barring Mr. Clark from filing any bankruptcy in the Eastern District of North Carolina for one year.

In denying the Mr. Clark’s motion for stay pending appeal and for a writ of supersedes, the district denied such finding the Mr. Clark had not made a clear showing that he had a likelihood of success in the appeal and agreeing with the bankruptcy court that Mr. Clark would not suffer irreparable harm in the absence of a stay, as he had been in default on the mortgage for 4.5 years.… Read More

Tagged with: ,

Bankr. E.D.N.C.: Mouhtadi v. Sheikh- Failure to Respond to Discovery and Summary Judgment

Summary:

After initially filing Chapter 13, Mr. Sheikh converted to Chapter 7 and Mssrs. Mouhtadi and Khalioui commenced an adversary proceeding asserting claims of common-law fraud, violations of the North Carolina Unfair and Deceptive Trade Practices Act (the “UDTPA”), N.C. Gen. Stat.
§§ 75-1.1 to 75-145, and eeking a determination that the debts related to the case were excepted from discharge pursuant to 11 U.S.C. §§ 523(a)(2) or (a)(4). Mr. Shaikh filed an answer to the complaint, but then failed to respond to numerous discovery requests, including admissions. When Mr. Shaikh still failed to comply with discovery following the entry of an order to compel, Mouhtadi and Khalioui moved for summary judgment.… Read More

Tagged with: , ,

Bankr. W.D.N.C.: In re Moe’s Rx Clinic, Inc.- Dismissal of Pharmaceutical Asset Case

Summary:

A pharmacy filed Ch. 7, with its primary asset being $40-50,000 in drug inventory. Upon the motion of the Trustee, the court found that the FDA and NC Pharmacy Board had specific procedures regarding the proper handling and disposal of prescription drugs that those entities were better able to follow than the Trustee. Accordingly, as there were no other assets, dismissal was proper to allow the Pharmacy Board to dispose of the drugs. (This case was subsequently appealed, but that was dismissed with the agreement of the debtor.)

Commentary:

It does not appear that either abandonment of these drugs by the bankruptcy estate pursuant to 11 U.S.C.… Read More

Tagged with: , , ,

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

Tagged with: , , ,

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

Tagged with: , , , , ,

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

Tagged with: , , ,

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

Tagged with: , , , ,

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

Tagged with: , , ,

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

Tagged with: , , , ,

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

Tagged with: , , , ,
Top