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Category: Bankruptcy

Bankruptcy Judge Has Broad Discretion to Determine What Constitutes “Cause” To Allow State Law Issues To Be Resolved in State Court Action

In re Rizzo, 603 B.R. 550 (Bankr. D. SC 2019)(Waites, J.) The Guardian for an Incapacitated Person, with whom the Debtor shared a joint bank account with, filed suit in state court against the Debtor in state court seeking recover of $250,000 the Debtor withdrew from that bank account. The Debtor filed a Chapter 13 bankruptcy and the Guardian filed a Motion for Relief from the Automatic Stay to proceed in state court. The Bankruptcy Court held that the Debtor’s plan did not depend on the use of disputed funds for its feasibility and that the estate could be further

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Debtor Has No Interest In Property After Foreclosure Sale and Ratification

Singh v. Shao Lin Lai, 2019 WL 4750420 (D.Md. 2019)(Hazel, J.) Property was foreclosed on and sold in February of 2017 and was ratified on July 25, 2017 by Montgomery County Circuit Court. On September 28, 2018, the Debtor filed this present bankruptcy case. The purchasers of the property filed a Motion to Confirm Termination or Absence of the Automatic Stay with respect to the Property which the Bankruptcy Court granted holding that the bankruptcy estate had no recognizable interest in the property. Under Maryland law, the Debtors’ interest in the property was terminated, as has the right to redeem

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IRS Violates the Automatic Stay If It Refuses to Allow Debtor to Modify Withholding to Prevent Over-Withholding

Moulden v. IRS (In re Moulden)(Alquist, J. 2020) Th Debtor asserts that the IRS sent a “Lock-In Letter” to her employer which directed her employer to disregard her W-4 form and instead withhold taxes using a “Single” filing status and no exemptions. The Debtor asserts that this caused a compulsory over-withholding and that the IRS violated the automatic stay of the 11 U.S.C. § 362(a) by refusing to allow the Debtor to adjust her tax exemptions. The Debtors allege that their wages are property of the estate, and that the IRS has violated the automatic stay by refusing to allow

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Mortgage Foreclosure Players Are Not Required to Seek Licensure Under the Maryland Collection Agency Licensing Act

Blackstone v. Sharma, 191 A.3d 1188 (Md. Ct. App. 2018) The State Collection Agency Licensing Board enforces the Maryland Consumer Debt Collection Act (MCDCA). Md. Code Ann., Com. Law § 14-201 et seq. The MCDCA generally requires that a person must have a license whenever the person does business as a collection agency in the State. Md. Code Ann., Bus. Reg. § 7-301(a). When comparing the legislative history of the Maryland Collection Agency Licensing Act (MCALA), Md. Code Ann., Bus. Reg. § 7-301 et seq. (1992, 2015 Rep. Vol.), including the 2007 departmental bill, against the almost contemporaneous Maryland mortgage foreclosure law reform, the

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Title Could Not Be Reformed Under Doctrine of Mutual Mistake to Add Debtor to Title and Prevent Foreclosure

In re Cheeks, 2019 Bankr. LEXIS 2530 (Judge Kenney) The Debtor, Ms. Cheeks, intended to be added to the title to the property. However, the Cheeks did not complete a condition precedent to that addition at the time they bought the home and, therefore, only Mr. Cheeks was on the property title.  The property of up for foreclosure and, Mr. Cheeks was under the mistaken belief that he was not able to file foreclosure again.  However, believing Ms. Cheeks to be on the title, she filed to prevent the foreclosure sale. The foreclosing trustee moved forward after the bankruptcy filing

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Motion to Reopen a Bankruptcy Case Granted in Order to Avoid a Judgment Lien for a Mortgage Deficiency Balance under §522(f)

In re Mammen, 2019 WL 2867103 (Bankr. E.D.Va 2019) (Slip Copy) Prior to the bankruptcy filing, the Debtors’ had a property which was foreclosed on. There was a deficiency balance in the amount of $294,380.21 plus interest, attorney’s fees, and costs recorded in Loudoun County, which attached to the Debtors’ residence at that time. Union Bank argues that the Judgment Lien cannot be avoided under §522(f) alleging that a deficiency judgment “arises out of “ a foreclosure and the Code prohibits the foreclosure of such liens and that the Debtors’ motion came 8 years after the case was closed and

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Proceeds from a car accident settlement for an accident that occurred after the Chapter 13 filing are not part of bankruptcy estate upon conversion to Chapter 7

In re Love, 2019 WL 2427198 (Bankr E.D. Va., 2019)(Huennekens, J.) Debtor was in a car accident two years after filing Chapter 13 case.  Debtor voluntarily converted Chapter 13 to Chapter 7 and received a discharge.  Debtor never amended their schedules to disclose personal injury claim arising out of automobile accident.  Debtor filed a motion to reopen bankruptcy case and amend her schedules to add personal injury claim and exempt it from the bankruptcy estate. The Trustee filed an Objection to the Debtors Exemption of Personal Injury Claim arguing that upon the reopening of the case, the property became part

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Discharge Injunction Not Violated When Creditor Did Not Receive Notice at Proper Address

Morris v. State Employees Credit Union, 615 B.R. 189 (Bankr. D.Md. 2020)(Alquist, J.) Plaintiff/Debtor had a credit card through SECU, which was identified and listed as an unsecured creditor on the creditor mailing matrix.  The Debtor used an address for SECU identified on her credit report. In reality, SECU neither owns the address listed on the Plaintiff’s credit repot nor has a branch there. In the months leading up to the bankruptcy filing, SECU had sent credit card statements to the Debtor which identified the proper correspondence address for SECU.  All of the mail from the Court to SECU was

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Creditor Who Refuses to Repay Overpayment from Trustee Violates Code

In re Alston, __ B.R. __, 2019 WL 7580136 (Bankr. D.S.C. 2019) Debtor’s Ch. 13 Plan paid Santander Consumer USA, Inc.’s, claim in full through the Ch. 13 plan. The Ch. 13 Trustee overpaid Santander by $1,815.61. Santander refused to return the overpayment. The Debtor’s counsel sought a refund of the overpayment as well as an award of attorney’s fees and sanctions against Santander.  The Court held that Santander willfully violated the terms of the debtors’ confirmed plan and as a remedy, it directed Santander to refund the overpayment and awarded reasonable attorney’s fees and costs in the amount of

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The Standard for Sanctions for Violating Discharge

Taggart v. Lorenzen, 139 S. Ct. 1795 (2019): The Supreme Court was asked to decide the standard applied to determine whether or not a Court may impose sanctions for conduct that violates the discharge injunction. The Supreme Court rejected both a subjective standard (preferred by the creditor) and strict liability (preferred by the debtor). The Court instead held that sanctions are appropriate “where there is not a ‘fair ground of doubt’ as to whether the creditor’s conduct might be lawful under the discharge order.” Are you experiencing debt collection abuse from your creditor? Enlist the help of an experienced debt collection

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