POST BAPCPA:
Scraping Off Secured Debts:
In Re:
Mansaray-Ruffin, No. 05-4790
(U.S.
3rd Circuit Court of Appeals, June 24, 2008)
A debtor in a Chapter 13 bankruptcy case did not invalidate
a lien on her property by providing for it as an unsecured
claim in her confirmed plan, without initiating an adversary
proceeding as required by the Federal Rules of Bankruptcy
Procedure.
Read more...
In re
Sobczak,
369 B.R. 512 (9th Cir. BAP 2007). In a case arising out of
Arizona, the BAP reversed the Bankruptcy Court's dismissal
of the debtor's case, holding that (a) the debtor in a case
converted from Chapter 7 to Chapter 13 had standing to move
for dismissal of his bankruptcy, but (b) dismissal of the
debtor's bankruptcy in the circumstances presented was
improper. The BAP found that the debtor's realization that
in bankruptcy he was limited by §522 to Ohio's $5,000
homestead exemption, rather than the Arizona $150,000
exemption that would apply if he were not in bankruptcy, was
not a proper basis for allowing the debtor to move under
§1307 to dismiss his case.
In re
Brown, 346 B.R. 868 (Bkrtcy.N.D.Fla. 2006) LEWIS M. KILLIAN
JR., Bankruptcy Judge CREDITOR HOLDING PMSI NOT ENTITLED TO
DEFICIENCY CLAIM IN CHAPTER 13 WHERE DEBTOR SURRENDERS
VEHICLE IN FULL SATISFACTION OF DEBT § 1325(a)5) (hanging
paragraph), § 506, 502
Debtor proposed to surrender a motor vehicle subject to a
PMSI and purchased for personal use within 910 days of
filing the petition, in full satisfaction of the
undersecured debt. Creditor objected.
The court first held that despite languge in § 1325(a)
(hanging paragraph) that Code § 506 does not apply to a PMSI
debt, the debt is still a secured debt. The court ruled that
"just because § 506 does not apply does not mean that there
is no secured claim. Section 506(a) simply provides for the
bifurcation of claims into secured and unsecured portions in
accordance with the value of the collateral; it does not
form the basis for a secured debt." The court essentially
held that § 502 is the section that determines the secured
status of a claim.
The court then observed that "Secured creditors, like every
other party to a bankruptcy case, have to take both the good
and the bad," held that . . . the Hanging Paragraph
following § 1325(a)(9) allows the Debtor to surrender his
vehicle, which is the subject of a 910 claim, in full
satisfaction of the debt owed to Wells Fargo."
In re Sparks, 346 B.R. 767 (Bkrtcy.S.D.Ohio 2006) J. VINCENT
AUG, JR. Bankruptcy Judge CREDITOR HOLDING PMSI NOT
ENTITLED TO DEFICIENCY CLAIM IN CHAPTER 13 WHERE DEBTOR
SURRENDERS VEHICLE IN FULL SATISFACTION OF DEBT §
1325(a)(5)
The court held that where a vehicle is subject to a PMSI and
was purchased for the debtor's personal use within 910 days
of filing the petition the Code prohibits a "cram-down" but
does not prohibit the debtor from surrendering the vehicle
in full satisfaction of the debt, with no unsecured portion
remaining to be treated in the plan. In other words, the
anti-cramdown provision acts restricts both the creditor and
the debtor from treating the claim as a cram-down or
strip-down for a partially secured claim.
In re Pennington, 348 B.R. 647 (Bkrtcy.D.Del.
2006) MARY F. WALRATH, Bankruptcy Judge COURT COULD
DISMISS CHAPTER 13 FOR "ABUSE" NOTWITHSTANDING THE DEBTOR'S
INCOME WAS BELOW THE STATE MEDIAN
THRESHOLD FOR "ABUSE" WHERE THE MEANS TEST PER SE DOES NOT
APPLY IS 25% OF UNSECURED DEBT. § 707(b)(1)
Debtor's income was below the state median but actual
disposable income at the time of the hearing to dismiss or
convert was sufficient to pay 42% of the unsecured debt over
a 3-year plan. The court noted that the surplus income was
more than enough to pay more than 25% of the unsecured debt,
which was the "threshold were abuse is presumed under the
means test", even though the means test is not applicable.
WARNING
PRE-BAPCPA: IN RE:
PATTULLO (11/21/01 - No. 99-17615)(9th Cir. Ct
App) Appeal court lacks jurisdiction to hear appeal from a
Chapter 13 proceeding when lower court dismissed the
proceeding even if the court allowed debtors to file a new
petition.
ttp://caselaw.lp.findlaw.com/data2/circs/9th/9917615p.pdf
RANDOLPH
v. IMBS, INC. (05/12/04 - No. 03-1594, 03-2185, 03-2340,
03-3182, 7th Cir) The Bankruptcy Code does not
"preempt" the Fair Debt Collection Practices Act (FDCPA) when
the act alleged to transgress the FDCPA also violates the
Code. Dunning letters issued to debtors in Chapter 13
bankruptcy must be reconsidered in light of FDCPA section
1692.
http://caselaw.lp.findlaw.com/data2/circs/7th/031594p.pdf
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