Summary:
Following a foreclosure, appeal of the foreclosure to the North Carolin Court of Appeals (which was dismissed for failure by the homeowner to comply with deadlines), an unconsummated foreclosure bid by the homeowner's daughter, and two civil suits in state court, the Debtor eventually filed Chapter 13 (twice). Not surprisingly, Wells Fargo had lost patience with the Debtor and sought not only relief from the automatic stay as to the Debtor, but also in rem relief against the real property itself under 11 U.S.C. § 362(d)(4). Relief from stay was granted as to the Debtor.
Regarding the in rem relief, the Court found that § 362(d)(4) required that the Debtor's actions in "filing of the petition [were] part of a scheme to delay, hinder, and defraud creditors" (Emphasis added) "that involved ... multiple bankruptcy filings affecting such real property." (Emphasis again added.) The Court then recognized that while some courts have used the traditional elements of fraud, others have held that fraud "embraces all the multifarious means which human ingenuity can devise and which are resorted to by one individual to gain advantage over another . . . [I]t includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated." In re Wilke, 429 B.R. 916, 922 (Bankr. N. D. Ill. 2010).
This not withstanding, the Court found that the Debtor's behavior had not risen to the level of fraud. Her schedules were complete, fees paid and the Debtor had shown that she understood she would have to pay her mortgage as part of the plan.
The Debtor's two bankruptcy cases, especially as the first was pro se and did not understand the process of bankruptcy, "alone, in the absence of other evidence, did not illustrate a scheme to defraud." Strictly construing of the language of the Code, the Court held that while the civil filings were part of a scheme to hinder or delay, those did not count toward the "multiple bankruptcy filings" prong of § 362(d)(4). Nor would the Court adopt a rule that "multiple" meant as few as two bankruptcies.
In re Brown-In Rem Relief from the Automatic Stay.PDF
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