Season 3, Episode 10

DIRECT PAYMENT MEANS NO DISCHARGE?

Unintended consequences at work: Eleventh Circuit says debt paid directly to creditor by Chapter 13 debtor is not “provided for” by the plan and is not discharged.

In re Dukes, No. 16-16513, 2018 WL 6367176 (11th Cir. Dec. 6, 2018) (Pryor, Carnes, Conway).

Lundin on Chapter 13 / Ch13online Bulletin

FOURTH CIRCUIT CORRECTS A
TWENTY-TWO-YEAR-OLD MISTAKE

Abandoning Witt v. United Cos. Lending Corp. (In re Witt), 113 F.3d 508 (4th Cir. 1997), the en banc Fourth Circuit holds that § 1322(c)(2) empowers Chapter 13 debtors to modify, bifurcate and cram down “short-term” mortgages.

Hurlburt v. Black, No. 17-2449, 2019 WL 2237966 (4th Cir. May 24, 2019) (en banc).

Season 3, Episode 9

VESTING OF PROPERTY AT CONFIRMATION

Good Chapter 13 practice includes delaying the vesting effect of confirmation in § 1327(b), notwithstanding a recent Seventh Circuit decision to the contrary.

In re Steenes, Nos. 17-3630, 17-3663 & 17-3664, 2019 WL 1198901 (7th Cir. Mar. 14, 2019) (Easterbrook, Rovner, Hamilton).

In re Heath, 115 F.3d 521 (7th Cir. 1997).

Lundin on Chapter 13 / Ch13online Bulletin

SURPRISE: FIFTH CIRCUIT ALLOWS REIMBURSEMENT OF
EXPENSES AS COMPENSATION, MAYBE

A creative reading of “compensation” in § 330(a)(4)(B) grants bankruptcy courts discretion to reimburse filing fees and other expenses advanced by debtors’ counsel.

McBride v. Riley (In re Riley), No. 18-30535, 2019 WL 2082949 (5th Cir. May 13, 2019) (Reavley, Elrod, Willett).

Season 3, Episode 8

THE PAWNBROKERS HAVE WON, SORTA

Pawnbrokers may be winning the battle to nullify the powers of debtors in reorganization cases — with chilling implications.

Title Max v. Northingon (In re Northington), 876 F.3d 1302 (11th Cir. 2017) (Wilson, Newsom, Moreno).

In re Sorensen, 2018 WL 3032973 (BAP 9th Cir. June 15, 2018) (Faris, Brand, Taylor).

Season 3, Episode 7

MUCH ADO ABOUT TAX REFUNDS

The courts continue to disagree about how to account for tax expenses and tax refunds in Chapter 13 cases. The Code supports the approach recently approved by the United States Court of Appeals for the Seventh Circuit.

Marshall v. Blake (In re Blake), 885 F.3d 1065 (7th Cir. 2018) (Bauer, Flaum, Manion).

In re Orozco, 2018 WL 2425971 (Bankr. W.D. Tex. May 10, 2018) (Gargotta).

Season 3, Episode 6

HOA EPILOGUE FROM THE 9TH CIRCUIT

United States Court of Appeals for the Ninth Circuit holds that postpetition HOA fees and assessments are dischargeable at completion of payments in a Chapter 13 case.

Goudelock v. Sixty-01 Association of Apartment Owners (In re Goudelock), 2018 WL 3352883 (9th Cir. July 10, 2018) (Smith, Murguia, Robreno).

Lundin on Chapter 13 / Ch13online Bulletin

FIRST CIRCUIT: ENTIRE STAY TERMINATES UNDER § 362(C)(3)(A)

The United States Court of Appeals for the First Circuit is first court of appeals to say that § 362(c)(3)(A) terminates the entire automatic stay 30-days after second petition within a year – as to actions against the debtor, property of the debtor and property of the estate.

Smith v. Maine Bureau of Rev. Servs. (In re Smith), No. 18-1573, 2018 WL 6520887 (1st Cir. Dec. 12, 2018) (Lynch, Stahl, Barron).

Lundin on Chapter 13 / Ch13online Bulletin

DIRECT PAYMENT OF DEBT MANGLED BY ELEVENTH CIRCUIT

Misunderstanding the history and structure of Chapter 13, the United States Court of Appeals for the Eleventh Circuit holds that a plan provision for the payment of a long-term mortgage directly by the debtor means the mortgage is “outside” the plan and is not “provided for” for purposes of discharge under § 1328(a). In an alternative holding, discharge of mortgage paid directly by debtor would violate protection from modification in § 1322(b)(2).

Dukes v. Suncoast Credit Union (In re Dukes), No. 16-16513, 2018 WL 6367176 (11th Cir. Dec. 6, 2018) (Pryor, Carnes, Conway).

Season 3, Episode 5

WHAT TO DO ABOUT HOAs: PART 3

In Part 3 of this three-part series, CK tries to clean up the messy history of problems with management of HOA fees and assessments in Chapter 13 cases.

River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833 (4th Cir. 1994).

In re Peterson, 2018 WL 793685 (Bankr. D. Md. Feb. 7, 2018) (Rice).

In re Wiley, 2018 WL 604401 (Bankr. D. Md. Jan. 26, 2018) (Rice).

Season 3, Episode 4

WHAT TO DO ABOUT HOAs: PART 2

In Part 2 of this three-part series, two cases from the same court illustrate many problems with management of post-petition HOA fees and assessments in Chapter 13 cases.

In re Peterson, 2018 WL 793685 (Bankr. D. Md. Feb. 7, 2018) (Rice).

In re Wiley, 2018 WL 604401 (Bankr. D. Md. Jan. 26, 2018) (Rice).

Season 3, Episode 3

WHAT TO DO ABOUT HOAs: PART 1

Homeowners’ association fees and assessments – both pre- and post-petition – are a complex problem in Chapter 13 practice, made more so by conflicting bankruptcy and state law considerations.

River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833 (4th Cir. 1994).

In re Rosteck, 899 F.2d 694 (7th Cir. 1990).

Season 3, Episode 2

NO SEAL, NO DEAL? NO WAY!

Confidential settlements have become all too common in bankruptcy practice; the Code, rules and caselaw don’t support “No Seal, No Deal.”

In re Thomas, 2018 WL 1162523 (Bankr. E.D. Ky. March 1, 2018) (Wise).

Season 3, Episode 1

BANKRUPTCY RULE 3002.1: A ROADMAP

Bankruptcy Rule 3002.1: How it is supposed to work, with emphasis on burdens of proof and the importance of state law.

In re Ochab, 2018 WL 1614164 (Bankr. M.D. Ala. March 30, 2018) (Sawyer).

Lundin on Chapter 13 / Ch13online Bulletin

FOURTH CIRCUIT: PROOF OF CLAIM IS NOT
PREREQUISITE TO STRIP-OFF OF WHOLLY UNSECURED LIEN

Chapter 13 plan can strip off wholly unsecured junior mortgage lien using §§ 1322(b)(2) and 506(a) without regard to whether creditor has filed a proof of claim.

Burkhart v. Grigsby , No. 16-1971, 2018 WL 1526628 (4th Cir. Mar. 29, 2018) (King, Diaz, Shedd).

Lundin on Chapter 13 / Ch13online Bulletin

ELEVENTH CIRCUIT: STATE PAWNBROKER STATUTE TRUMPS BANKRUPTCY CODE

Distinguishing (poorly) United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (2010), pawnbroker is not bound by confirmation of plan that paid its title pawn in full with interest as a secured claim because pawnbroker filed a preconfirmation motion for stay relief; pawned car “dropped out” of Chapter 13 estate “automatically” when state law redemption period expired postpetition, nullifying the power to modify in § 1322(b)(2).

Title Max v. Northington (In re Northington) , Nos. 16-17467 & 16-17468, 2017 WL 6276001 (11th Cir. Dec. 11, 2017) (Wilson, Newsom, Moreno).

Lundin on Chapter 13 / Ch13online Bulletin

“SUBSTANTIAL CONTRIBUTION” RECOVERY IN CHAPTER 13 CASES?

District court applies Mediofactoring v. McDermott (In re Connolly North America, LLC), 802 F.3d 810 (6th Cir. Sept. 21, 2015), to Chapter 13. Creditor can recover attorney fees and costs as administrative expenses under 11 U.S.C. § 503(b)(3)(D) for a “substantial contribution” — here, successfully objecting to exemptions — in a Chapter 13 case.

Sharkey v. Stevenson & Bullock, PLC (In re Sharkey), No. 17-11237, 2017 WL 5476486 (E.D. Mich. Nov. 15, 2017) (Borman).

Season 2, Special Episode

(ALMOST) Banned in Las Vegas

Director’s Cut of Marijuana and Bankruptcy video banned by National Conference of Bankruptcy Judges

Lundin on Chapter 13 / Ch13online Bulletin

FINALLY!   EN BANC ELEVENTH CIRCUIT FIXES JUDICIAL ESTOPPEL MESS

Overruling parts of Barger v. City of Cartersville, 348 F.3d 1289 (11th Cir. 2003), and Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002), when a debtor fails to disclose a cause of action, “to determine whether . . . inconsistent statements were calculated to make a mockery of the judicial system, a court should look to all the facts and circumstances of the particular case. . . . We overrule the portions of Burnes and Barger that permitted the inference that a plaintiff intended to make a mockery of the judicial system simply because he failed to disclose a civil claim.”

Slater v. United States Steel Corp., No. 12-15548, 2017 WL 4110047 (11th Cir. Sept. 18, 2017) (en banc).

Season 2, Episode 3

Up in Smoke

The Executive Office of the United States Trustee has inappropriately instructed Chapter 13 and Chapter 7 Trustees that they cannot administer marijuana assets in bankruptcy cases.

Season 2, Episode 2

The Lien is Void

The lien securing a disallowed arrearage claim filed by a mortgage servicer is voided by § 506(d).

In re Mason, 2017 WL 394344 (Bankr. S.D. Miss. Jan. 27, 2017) (Ellington).

Bankruptcy Workshop Special Edition

NACTT Meets Rachel Jackson

Don’t miss the NACTT Annual Meeting in Seattle, July 12–15, 2017. CK says: Consider bidding on the Hermitage Box to benefit the NACTT Foundation.

Season 2, Episode 1

Blowing the Whistle
on the U.S. Trustee Budget

The proposed Trump budget doubles bankruptcy filing fees to fund the U.S. Trustee Program. Does this make sense when bankruptcy filings are half of what they were?

Season 1, Episode 12

Sewer Sponte III: When is Silence Acceptance?

Dicta in Espinosa creates impossible quandary: When does creditor silence relieve bankruptcy judges of “obligation” to correct defects in Chapter 13 plans?

In re Bea, 533 B.R. 283 (B.A.P. 9th Cir. 2015) (Dunn, Kirscher and Taylor).

In re Brown, 2016 WL 6440364 (Bankr. N.D. Ind. Aug. 2, 2016) (Grant).

In re Smiley, 2016 WL 6440365 (Bankr. N.D. Ind. Aug. 10, 2016) (Grant).

Season 1, Episode 11

Sewer Sponte II: The Dark Side of Espinosa

Dicta in Espinosa has inspired some bankruptcy judges to deny confirmation of Chapter 13 plans when no creditor objects.

United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L.Ed.2d 158 (2010).

Season 1, Episode 10

SEWER SPONTE EPIDEMIC

Recent cases reveal a new generation of bankruptcy judges inclined to raise issues sewer sponte in Chapter 13 cases.

In re Sierra, No. 15-70603, 2016 WL 6304620 (Bankr. S.D. Tex. Oct. 27, 2016) (Rodriguez).

In re Waring, No. 16-12624-TBM, 2016 WL 4440378 (Bankr. D. Col. Aug. 22, 2016) (McNamara).

Season 1, Episode 9

MORTGAGE SERVICERS: CLEAN YOUR HOUSE, OR WE WILL

The mortgage servicing industry is broken. The results show up in Chapter 13 cases. The bankruptcy community has reached the end of its patience.

In re Gravel, No. 11-10112, 2016 WL 4765773 (Bankr. D. Vt. Sept. 12, 2016) (Brown).

Season 1, Episode 8

POSTPETITION INHERITANCE: TIP OF ICEBERG?

What are the entitlements of creditors when a Chapter 13 debtor receives an inheritance more than 180 days after the petition? Is this just an issue at modification or is something bigger hidden here?

In re Portell, No. 12-44058-13, 2016 WL 4734321 (Bankr. W.D. Mo. Sept. 9, 2016)(Federman).

Season 1, Episode 7

BALLOON DANCE

Balloon payment of secured debt is alive and well notwithstanding “equal payments” requirement in § 1325(a)(5)(B)(iii)(II).

In re Cochran, No. 15-52314-AEC, 2016 WL 4575557 (Bankr. M.D. Ga. Sept. 1, 2016)(Carter).

Season 1, Episode 6

SLEEPING MONSTER: MODIFICATION AFTER CONFIRMATION

Seventh Circuit broadly empowers bankruptcy courts to modify plans after confirmation to increase payments to creditors when circumstances improve.

In re Powers, No. 14-CV-03128, 2016 WL 3443342 (7th Cir. June 23, 2016) (Bauer, Williams, Adelman).

Season 1, Episode 5

NO CLAIM? NO STRIP?

Can an underwater lienholder escape lienstripping in a Chapter 13 case by not filing a proof of claim? Hopefully, the Fourth Circuit won’t buy that outcome.

In re Burkhart, et al., Civ. No. PJM 14-315 (D. Md. July 26, 2016).

Season 1, Episode 4

NO PROOF OF SECURED CLAIM?
WHAT HAPPENS NEXT?

There is good news and bad news about what happens when a car lender or a home mortgage holder fails or chooses not to file a proof of claim.

In re Jones, No. 15-11460, Decision on Motion for Relief from Stay (Bankr. N.D. Ind. Aug. 5, 2016) (Grant).

In re Brown, No 16-10216, Decision and Order Denying Confirmation (Bankr. N.D. Ind. Aug. 2, 2016) (Grant).

In re Pajian, 785 F.3d 1161 (7th Cir. 2015).

Season 1, Episode 3

DEAD DEBT TRIFECTA

Claims for stale debts continue to bedevil the circuit courts. Here are three FDCPA decisions from the 11th Circuit getting it right contrasted with wrong turns by the 7th and 8th Circuits:

Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014).

Johnson v. Midland Funding, LLC, 823 F.3d 1334 (11th Cir. 2016).

Bazemore v. Jefferson Capital Systems, LLC, 2016 WL 3608961 (11th Cir. July 5, 2016).

Owens v. LVNV Funding, LLC , 2016 WL 4207965 (7th Cir. Aug. 10, 2016).

Nelson v. Midland Credit Mgmnt., 2016 WL 3672073 (8th Cir. July 11, 2016).

Season 1, Episode 2

PHILADELPHIA REPORT

CK and Keith are back from NACTT in Philadelphia with a full report. Also, the first installment of Case of the Week features dismissal doldrums after Harris v. Viegelahan.

In re Bateson, 2016 WL 3475613 (Bankr. E.D. Mich. June 23, 2016) (Shefferly).