Category: Uncategorized

E.D.N.C.: Baum v.  Baum- Date of Separation and New Debts for Nondischargeability under §523(a)(15)

On appeal from the bankruptcy court decision in Baum v.  Baum, the district court reviewed whether debts between separated spouse are discharged under 11 U.S.C. §523(a)(15), which  provides, that a debtor shall not be discharged from a debt:

(15) not of the kind described in paragraph (5) [dealing with alimony, maintenance and child support] that is incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record, or a determination made in accordance with State or territorial law by a governmental unit;

First, the district court agreed with the bankruptcy court that while the parties were “informally” separated, sleeping in different rooms, at the time the debts were incurred, under North Carolina law separation requires a “cessation of cohabitation.”  Secondly, the district court also held that §523(a)(15) requires the creation of new debts. … Read More

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N.C. Court of Appeal: Nash Hospitals v. State Farm- Failure to Honor Perfected Medical Lien


Jessica Whitaker was injured in an automobile accident and incurred, with $1,515 in costs to other medical providers, $757 for treatment at Nash Hospitals. State Farm, the insurer for the driver of the other vehicle, received notice of Nash Hospital’s medical liens under N.C.G.S. §§ 44-49 and 50. After questioning the necessity of all of the medical treatment, State Farm settled with Ms. Whitaker, who was unrepresented, for a total of $1,943, providing her with a check payable to Ms. Whitaker, Nash Hospital and the other medical provider. By statute, Nash Hospital was entitled to a pro rated share of no more than 50% of the settlement.… Read More

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Bloomberg BNA: Mounting Student Debt Mobilizing Bankruptcy Courts by Diane Davis

Mounting Student Loan Debt Mobilizes Bankruptcy Courts

Mounting Student Loan Debt Mobilizing Bankruptcy Courts

A weekly news service that publishes case summaries of the most recent important bankruptcy-law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy reform in…

By Diane Davis

Wiping out student loan debt in bankruptcy is so difficult it’s rarely an option for distressed borrowers. But there are indications that bankruptcy courts are starting to play a bigger role in addressing what is widely considered a financial crisis and a drag on the U.S. economy.

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Dallas News: Free yourself from debt, without regrets

Free yourself from debt, without regrets by Liz Weston, Nerdwallet

 … Read More

Bankr. E.D.N.C.: In re Napoleon- Assigned Insurance Proceeds not an Asset of the Bankruptcy Estate


Separately, both Mr. and Ms. Napoleon signed assignments of insurance proceeds to Bio-Medical for kidney dialysis treatment Ms. Napoleon received. After litigation over the amounts owed and distribution of pre-petition insurance proceeds, the Napoleons filed Chapter 13 bankruptcy and subsequently received addition insurance checks ad amended their exemptions to claim $4,999.00 under Mr. Napoleon’s wildcard. Bio-Medical objected.

Relying largely on In re Helms, 467 B.R. 374 (Bankr. W.D.N.C. 2012), the court held that assigned insurance proceeds are not part of a Debtor’s bankruptcy estate and accordingly could not be exempted.


Insert your Battle of Waterloo jokes below.

Given that Bio-Medical’s counsel was located in Winston-Salem and the Napoleon’s live in High Point, it is not unreasonable to speculate why Bio-Medical did not seek a change of venue to the Middle District.… Read More

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The Big Story


— Sep. 10, 2014 4:17 PM EDT

WASHINGTON (AP) — Rosemary Anderson could be 81 by the time she pays off her student loans. After struggling with divorce, health problems and an underwater home mortgage, the 57-year-old anticipates there could come a day when her Social Security benefits will be docked to make the payments.Like Anderson, a growing percentage of aging Americans struggle to pay back their student debt. Tens of thousands of them even see their Social Security benefits garnished when they cannot do so.

Among Americans ages 65 to 74, 4 percent in 2010 carried federal student loan debt, up from 1 percent six years earlier, according to a Government Accountability Office report released Wednesday at a Senate Aging Committee hearing.

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Bankr. E.D.N.C.: In re Barbetta, L.L.C.- Quarterly Filing Fees for Re-opened Chapter 11


Following the confirmation of its Chapter 11 plan and closure of the bankruptcy, the Debtor was sued in state court for a pre-petition debt by a creditor that was unknown at the time of filing of the bankruptcy and unlisted in the schedules. The state court directed the Debtor to re-open the bankruptcy case for a determination of whether the debt was discharged. Facing dismissal for failure to pay quarterly fees, the Debtor argued that it should not be required to pay such fees as they were forced to reopen the case.

The court quickly rejected the argument that the Debtor, which had filed a voluntary Chapter 11, was forced to appear again.… Read More

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Bankr. E.D.N.C.: In re Skubic- No Summary Judgment on Denial of Discharge


In a case involving multiple corporations and transfers back and forth from the Debtors’ household bank accounts and corporate accounts, the Trustee and a major creditor sought a denial of discharge against the debtors under 11 U.S.C. § 727.

After reviewing and finding that the Debtors displayed several of the “badges of fraud”, see West v. Abdelaziz (In re Abdelaziz), 2012 Bankr. LEXIS 591, at *7-8 (Bankr. M.D.N.C. Feb. 1, 2012), the bankruptcy court nonetheless found that the Debtors also displayed several of the mitigating  “badges of a desperate but well-intended debtor”, including:

(1) Evidence showing that the multiple corporations were established for legitimate purposes;
(2) Attempted negotiations prior to bankruptcy with creditors;
(3) Repayment of transfers from corporate accounts, particularly from liquidation of the individual Debtors’ personal property;
(4) Preferential payments were not evidence of an intent to hinder, delay or defraud other creditors;
(5) The Debtors lack of financial sophistication; and
(6) That the Debtors might, even though in one joint bankruptcy as husband and wife, not both share the culpability.… Read More

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


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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Study- Twomey, Tara: Crossing Paths: The Intersection of Reverse Mortgages and Bankruptcy


The senior population of the United States is expected to grow rapidly over the next twenty years. Rather than enjoying their golden years, increasingly older Americans are struggling with less income, greater debt and insufficient retirement savings. The average amount of debt held by seniors has soared over the last decade. Many now rely on credit cards to cover their basic living expenses. Rising mortgage debt has compromised the use of home equity as a retirement nest egg. There are few easy solutions. Two tools available to seniors to combat financial distress are reverse mortgages and bankruptcy. Reverse mortgages allow seniors to tap their home equity to pay off outstanding debts or supplement monthly income.… Read More

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