Showing 11 posts in Bankruptcy.

Exploring the Expansion of the Bankruptcy Code under the CARES Act

May 27, 2020 by Hinshaw & Culbertson LLP

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, provides widespread economic relief for individuals and businesses adversely affected by the coronavirus outbreak and includes several key modifications and amendments to the U.S. Bankruptcy Code. We explore how these revisions will immediately impact the bankruptcy landscape for both individual debtors and small businesses below. More ›

An Emerging Trend in Favor of Student Loan Discharges in Bankruptcy

February 11, 2020 by Hinshaw & Culbertson LLP

We recently reported on a Fifth Circuit decision that ruled some private, for-profit student loans are dischargeable in bankruptcy without a showing of undue hardship—something unusual and inconsistent with the widely-held belief that student loans are rarely discharged. It turns out that the Fifth Circuit's decision may have initiated a trend, for both private and federal loans. More ›

First Circuit Bankruptcy Panel Affirms "Gavel Rule" as Determinative of When a Bankruptcy Debtor's Right of Redemption Terminates

February 5, 2020 by Hinshaw & Culbertson LLP

The Bankruptcy Appellate Panel for the First Circuit has affirmed an earlier decision that concluded a borrower's right to redeem terminates when the gavel falls at a foreclosure auction, and not when a deed is recorded. More ›

Fifth Circuit Rules For-Profit Student Loans Are Dischargeable Without Proof of "Undue Borrower Hardship"

November 19, 2019 by Hinshaw & Culbertson LLP

Many student loan borrowers, lenders, and servicers operate under the presumption that student loans are generally not dischargeable in bankruptcy, absent an "undue hardship." That notion may no longer be a bright line rule, following a recent ruling by the Fifth Circuit Court of Appeals. The court ruled that certain private, for-profit student loans can in fact be discharged without the borrower providing a showing of undue hardship. This decision is particularly notable as private, for-profit student loans—including loans to cover increasing tuition costs not covered by federal loans, refinance loans, and consolidation loans—continue to see increased use. More ›

FDCPA Claims Dismissed As a Result of Plaintiff's Bad Faith Bankruptcy Conduct

September 25, 2019 by Samuel C. Bodurtha

In Vedernikov v. Atl. Credit & Fin., Inc., (Vedernikov I), the U.S. District Court of New Jersey granted the defendant Midland Funding's motion to dismiss, which successfully argued the plaintiff should be estopped from bringing FDCPA claims that he failed to disclose during a bankruptcy action from which he had been discharged. After Midland Funding filed its motion to dismiss in Vedernikov I, the same Court also issued an Order to Show Cause and ultimately dismissed Vedernikov v. Oliphant Financial, LLC (Vedernikov II), another matter brought by the same plaintiff. More ›

Creditors Beware: Collection of Debt Based on Unreasonable Belief/Understanding That the Debt Was Not Discharged in Bankruptcy Might Lead to a Finding of Civil Contempt

August 13, 2019 by Fernando C. Rivera-Maissonet

In Taggart v. Lorenzen, the U.S. Supreme Court reviewed the 9th Circuit Court of Appeals' Order, which affirmed the Bankruptcy Appellate Panel's Order vacating civil contempt sanctions against Bradley Taggart's ("Bradley") creditors for violation of a Bankruptcy Court discharge Order. On certiorari to the Court, the central issue was to determine "what the appropriate criteria should be for a Court to hold a creditor in civil contempt for attempting to collect a debt that a discharge order has immunized from collection." And, SCOTUS adopted an objective standard, which creditors should be mindful of going forward. More ›

A Reminder for Borrowers: Post-Discharge Communications by Creditor Must Coerce or Harass in Order to Violate Bankruptcy Law

June 6, 2019 by Samuel C. Bodurtha

In Kirby v. 21 Mortg. Corp., the First Circuit Bankruptcy Appellate Panel examined the Kirbys' claim that the 19 written communications they received from their mortgage holder following their Chapter 7 discharge violated the Bankruptcy Code 524(a)(2)'s injunction. The Kirbys further claimed bankruptcy discharge violations arising from their mortgage holder's delivery of an escrow account disclosure, short sale letter, cash-for-keys letter, and right to cure notice for a total of 26 post-discharge bankruptcy communications. Below, we take a closer look at the decision and its comprehensive review of bankruptcy discharge law along with the process for determining whether a post-discharge correspondence violates the bankruptcy code's injunction. More ›

Despite Acceleration of Debt Through Prior Dismissed Foreclosure Action, Bankruptcy Petition Tolls Statute of Limitations on Subsequent Action

April 18, 2018 by Han Sheng Beh

In Lubonty v. U.S. Bank National Association, a mortgagor sought to void a mortgage loan claiming that the six-year statute of limitations to foreclose had expired. The mortgagor had commenced multiple bankruptcy proceedings that trigged automatic stays and prevented foreclosure from proceeding for approximately four and a half years. New York law, CPLR § 204, extends the statute of limitations "[w]here the commencement of an action has been stayed by a court or by statutory prohibition," and the trial court held that the six-year statute of limitations was extended by the time period during which the foreclosure was stalled through successive bankruptcy petitions. More ›

No Surrender: Massachusetts Appeals Court Preserves Foreclosure Challenges for Bankruptcy Petitioner

September 8, 2017 by Hinshaw & Culbertson LLP

Like Bruce Springsteen, a Massachusetts bankruptcy debtor said "no surrender" when it came to his home. In EverBank v. Chacon, a panel of the Massachusetts Appeals Court issued a non-binding decision that a debtor's "surrender" of real property in a bankruptcy petition does not waive defenses to an eventual foreclosure. EverBank had foreclosed on Mr. Chacon's home mortgage, acquired the property at the sale, and then sought to evict him through summary process action filed in Massachusetts state court. Mr. Chacon claimed that that EverBank did not comply with a HUD regulation that requires a face to face meeting prior to foreclosure rendering the foreclosure void. More ›

Supreme Court Watch: Debt Collector Filing Bankruptcy Proof of Claim for Time-Barred Debt Avoids FDCPA Liability

May 17, 2017 by Barbara Fernandez

What does the United States Supreme Court's decision issued earlier this week in Midland Funding, LLC v. Johnson mean for debt collectors? It means that debt collectors may file proofs of claim in a debtor's bankruptcy on time-barred debt without risk of violating the Fair Debt Collection Practices Act (FDCPA). In Johnson, a debt collector filed a proof of claim in bankruptcy court for a debt that was outside the six year statute of limitations, the bankruptcy court dismissed the claim as time-barred, and the debtor filed a separate, subsequent lawsuit arguing that the claim was misleading in violation of the FDCPA. The Eleventh Circuit agreed concluding that filing proofs of claim on time-barred debt amounted to false and misleading conduct. More ›

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