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March 08, 2010
Bankruptcy filings in Rochester through February 2010 are behind prior years
March 03, 2010
Claim for lost wages pro-rated pre-bankruptcy & post-bankruptcy:
February 22, 2010
Exigent circumstances permitting filing of petition without credit counseling
February 22, 2010
NDNY: Claim against contractor not discharged if trust fund was diverted
February 22, 2010
NDNY: Class-action claim was pre-petition asset
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Casenotes: 2009 WDNY Bankruptcy cases
Case notes written by Peter Scribner summarizing and analyzing 2009 cases from the United States Bankruptcy Court for the Western District of New York (Rochester and Buffalo, NY) and appeals of WDNY bankruptcy decisions.
Undersecured liens may not be avoided in Chapter 7
Posted by: Peter Scribner
January 27, 2010
In re Spears (Bk #08-13988; Judge Bucki decision Dec. 9, 2009): A Chapter 7 debtor attempted to avoid, or remove, a judgment lien and a mechanic's lien against commercial property. The property was worth $167,000 and had a $220,000 first mortgage. The debtor attempted to remove the junior liens under Bankruptcy Code Section 506(a)(1) and (d). Section 506(a)(1) says that a secured claim is an allowed claim to the "to the extent of the value of such creditor's interest in the [bankruptcy] estate's interest in such property. . .". Section 506(d) states that to the extent that "a lien secures a claim against the debtor that is not an allowed claim, such lien is void.. .".
But Judge Buckirejected the argumenty, based on Dewsnup v. Timm, 502 US 410 (1992). The debtor argued that a new provision in Section 506, enacted after Dewsnup, changes the analysis. New provision 506(a)(2) establishes a means of valuing personal property when determining the status of secured claims against such property. Judge Bucki rejected the conclusion that new Section 506(a)(2) merits any reconsideration of Dewsnup.
Note that a bankruptcy judge in the Eastern District of NewYork came to an opposite conclusing in a Chapter 13 case - see my blog on the 2009 case Lavella, under the topic list of bankruptcy cases outside of WDNY.
Car loan in excess of $16,000 is a 'luxury'
Posted by: Peter Scribner
January 14, 2010
In re: Andrea Daniel-Sanders; Bk #09-10695 (Judge Bucki 12/30/2009). In this chapter 13 case in Buffalo, a single mother with three kids filed a case where she had two cars, each with a car loan. Her chapter 13 plan called for keeping both cars and paying general unsecured creditors 25% of the amount owed to them. The chapter 13 trustee objected to the debtor keeping both cars. The trustee believed that if the debtor got rid of one of her cars, she would have more money to pay to unsecured creditors.
Judge Bucki concluded that the debtor was justified in having two cars. The father of her children lived with her and took care of the kids in lieu of day care. He did not have a car and so her second car was a necessary household expense as it provided transportation for the kids during the day.
However, the amount owed on the loan for the second car was $27,163. Judge Bucki stated that his long-time position was that car loans with a balance of over $15,000 were a “luxury”. At the request of both the debtor and the trustee, he revisited his “luxury” car loan amount. He noted that the average cost for acquiring a vehicle, whether new or used, was $12,907, according to the Bureau of Transportation Statistics. Judge Bucki concluded that 20% above this amount, or approximately $16,000, would be a reasonable amount for a car loan, and anything in excess of that he would consider a “luxury” and cannot be paid at the expense of general unsecured creditors. If the debtor wishes a second car, the debtor would have to surrender this vehicle and obtain permission to purchase more modest transportation. It appears that the $16,000 limit applies even if the debtor only owns one vehicle.
An open question is what sort of car loan someone who is already inChapter 13 could obtain, and at what interest rate. One option, in light of this position, would be for a debtor to purchase a car with a more modest loan immediately before filing bankruptcy.
Fraudulent Conveyance: return of engagement ring: Gallagher
Posted by: Peter Scribner
November 17, 2009
Constructive fraudulent conveyance under New York law calculated by balancing all the debtor's assets and liabilities at the time of the transfer to determine if the debtor was insolvent.
Reasonably anticipated changes in income & expenses: CFCU Federal Credit Union v. Frisbie
Posted by: Peter Scribner
November 17, 2009
District Court decision upholding Bankruptcy Court conclusion that, in answer to the mandatory question on the schedules asking about any reasonable anticipated increase or decrease in income or expenses, a blank answer is the same as "none". The case is not deemed dismissed for failure to provide an answer.
Non-debtor co-owner a necessary party to bankruptcy sale: Bankruptcy Exchange, Inc. v Langsland
Posted by: Peter Scribner
November 17, 2009
District Court decision upholding Bankruptcy order. If the trustee is selling a partial interest in real estate, the co-owners are considered creditors and must be served with the notice of sale.
PMSI car loan includes roll-over debt: Peaselee appeal
Posted by: Peter Scribner
November 17, 2009
In Chapter 13 in New York, the amount of an old car loan rolled over into a new car loan is part of the pmsi (purchase money security interest.)
Fixtures and the homestead exemption: Grucza
Posted by: Peter Scribner
November 17, 2009
Cinderblocks purchased to build a retaining wall are considered fixtures of the real estate and may be included in the homestead exemption.
Filing of claims in reopened cases (also: scheduling assets that are automatically abandoned and filing of informal proofs of claim): J&S Conveyor, Inc.
Posted by: Peter Scribner
November 17, 2009
Chapter 7 case closed, and then reopened eight years later. For claims filed in the original case, the statute of limitations (6 years) did not run, nor did it run by the time the case was reopened, as the original court notice instructed creditors not to file claims. Also, assets must be listed on schedule B to be considered automatically when the case is closed. Finally, a cash collateral agreement or other filing would not be considered an "imformal" proof of claim unless the filing indicates the creditor intends to hold the debtor personally liable.
Self-employment net income 90% exempt: Dziedzic
Posted by: Peter Scribner
November 17, 2009
90% of personal services income is exempt under New York law. For a self-employed person, the exemption applies to net, not gross, income.
Acceleration of a mortgage does not turn it into a short term mortgage: Maiorino
Posted by: Peter Scribner
November 17, 2009
In Chapter 13, home mortgages that are less than 5 years in length can be modified. When a mortgage is accellerated in a foreclosure, it becomes all due immediately. Thta does not convert it into a short-term mortgage.
Exempting life insurance after Wornick decision: MacDonald
Posted by: Peter Scribner
November 17, 2009
After a change in local bankruptcy case law, a debtor was allowed to retrieve life insurance funds previously turned over to the trustee.
Successor creditors must prove they own the claim: Doherty
Posted by: Peter Scribner
November 17, 2009
In re: Doherty #06-22278 & Benedetti #07-21620 (Decision February 23, 2009; Judge Ninfo): Proofs of claims were filed in each case by alleged successors to the original creditors. The Trustee objected to the claims, and the Court disallowed them, as the claimant failed to show the chain of title or anything else that would prove ownership of the claim.
Recorded mortgage with misspelled name not a perfected lien: Badagliacca
Posted by: Peter Scribner
November 17, 2009
Because of mis-spelled name on the mortgage, it wasn't perfected as against the trustee
Retainer agreement governs attorney fees for responding to turnovers: Kasperek & Martinelli
Posted by: Peter Scribner
November 17, 2009
Debtor's attorney must represent debtor in turnover motion if retainer agreement includes "all legal services." If the attorney wishes to receive additional attorney fee for extra work, that needs to be provided for in the retainer agreement.
Second Circuit Decision: 2005 New York State Homestead exemption increase retroactive: Hayward
Posted by: Peter Scribner
November 17, 2009
The Second Circuit Court Of Appeals upholds lower court decisions that New York State's 2005 increase in the homestead exemption applies retroactively.
Pay advice case #1: Riffle (affirmed by District Court)
Posted by: Peter Scribner
November 12, 2009
Rochester case: a bankruptcy case will not be dismissed without a hearing if the debtor has filed a advice. A hearing is required to determine if incomplete filings are nevertheless sufficient.
Pay advice case #2: Ober
Posted by: Peter Scribner
November 12, 2009
Buffalo case: If the chapter 13 trustee does not object to a case where pay advice was filed late, and the plan is confirmed, the case will not be considered dismissed.
Pay Advice case #3: Catania
Posted by: Peter Scribner
November 12, 2009
Buffalo case: Incomplete pay advise filed, and so case had to be considered dismissed; the Court had no discretion.
Pay Advice case #4: Gilbert
Posted by: Peter Scribner
November 12, 2009
Buffalo case: Trustee, who received pay stubs informally, could not bring a motion to have the case deemed dismissed.
Bankruptcy judges in the Western District of New York: Hon. John C. Ninfo II (Rochester), Hon. Michael J. Kaplan (Buffalo); and Hon. Carl L. Bucki (Buffalo)
