The Royals sought to modify their Chapter 13 plan to surrender a 15-year old motor vehicle that was increasingly expensive to maintain due to mechanical problems. The court denied this modification, first finding that the Royals had provided not evidence of a substantial and unanticipated change in financial circumstances beyond these mechanical problems. Following Chrysler Financial Corp. v. Nolan (In re Nolan), 232 F.2d 528, 532-33 (6th Cir. 2000), the court held that that 11 U.S.C. § 1329(a) allows for a reduction in the payment of claims but not for a reduction or modification of the claim itself.
AS the Royal opinion notes, following In re Miller, 2002 WL 31115656 (Bankr.… Read More
Debtors sought authority to quitclaim their previous residence in Florida to the SBA, which held a mortgage against the property but had declined to foreclose.
The bankruptcy court first held that 11 U.S.C. § 1325(a), while property may be “surrendered”, the Bankruptcy Code does not define that term but it has “has been described as the relinquishment of all rights in property, including the right to possess the collateral.” IRS v. White (In re White), 487 F.3d 199, 205 (4th Cir. 2007); 8 Collier on Bankruptcy ¶ 1325.06 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. 2005). This relinquishment of rights by the debtor does not, however have a “corresponding requirement that the lender to do anything with the property” and that a creditor has the right to control its remedies.… Read More
The Debtor’s Chapter 13 plan proposed the surrender of an ATV, but she nonetheless took a deduction, pursuant to 11 U.S.C. § 707(b)(2)(A)(iii), for the payments due on this secured obligation. Finding that the Supreme Court’s reasoning in Hamilton v. Lanning, 130 S. Ct. 2464 (2010), allows a bankruptcy court to “ account for changes in the debtor’s income or expenses that are known or virtually certain at the time of confirmation.” Id. at 2478 (Emphasis added), the 4th Circuit disallowed the deduction from the Debtor’s “projected disposable income” under 11 U.S.C. § 1325(b).
The result of this is that Debtors with borderline “projected disposable income” should not surrender property as they end up paying the same amount, whether they keep the property or not.… Read More