Abstract: Mortgage cramdown has been proposed as a mechanism to avoid mortgage foreclosures in times of crisis. In this restructuring, the underwater portion of the mortgage is treated as unsecured debt and can be discharged during Chapter 13 bankruptcy. To quantify the ex-post effects of bankruptcy discharge in cramdown courts, we … Law Review: Cespedes, Jacelly and Parra, Carlos and Sialm, Clemens, The Effect of Principal Reduction on Household Distress: Evidence from Mortgage Cramdown Read More »

Many people in Pennsylvania are familiar with the practice of determining what bills to pay each month. There is no one reason people find themselves in this type of situation. Losing your car to repossession is a real problem for people struggling to make their monthly payments. Bankruptcy is often seen as the last resort. […] The post Can You File for Bankruptcy to Avoid Defaulting on a Car Loan in Pennsylvania appeared first on .

The thought of losing your home in a sheriff’s sale is frightening. Unfortunately, thousands of families in Pennsylvania face foreclosure every day. However, before a lender forecloses on a property, the homeowner must have defaulted. Filing for bankruptcy is one option to save a home. There are benefits to filing for bankruptcy before your mortgage […] The post Can You File for Bankruptcy to Avoid Defaulting on Your Mortgage in Pennsylvania? appeared first on .

It is not uncommon for homeowners to use the equity in their homes to obtain a second mortgage to renovate their home, send their child to college, or just take that extra special vacation. However, if you default on your second mortgage payments, your lender has the right to foreclosure on your property. Second mortgage […] The post Can You File for Bankruptcy to Protect Against Foreclosure on a 2nd Mortgage? appeared first on .

Summary: Following the decision in Copley, where it held that the IRS’s right to set off the debtors’ tax overpayment against their pre-existing tax debt superseded the debtors’ right to exempt the anticipated refund, the Fourth Circuit here held that, … 4th Cir.: Wood v. HUD- Tax Refund Offset did not Violation the Automatic Stay Read More »

If you fail to make monthly credit card payments or default on a loan, a creditor in Pennsylvania has a right to sue you in civil court. In addition to what you contractually owe a creditor, you could be required to pay additional court and attorney fees if a judgment is entered against you. You […] The post Can You File for Bankruptcy to Avoid a Lawsuit in Pennsylvania? appeared first on .

   Bankruptcy can be a great help to most debtors, but when a debtor tries to game the system, and fails to disclose relevant information, the discharge can be denied.  In In re Dhaliwal, 2021 Bankr. LEXIS 1462, Adv. No. 20-3391 (Bankr. S.D. Tex. 18 May 2021) the were multiple issues in the debtor's disclosures.  Debtor owned a 2016 Kenworth T680 truck liened to Paccar Financial Corporation, which had broke down in February 2019 with estimated repairs costing $21,500.  The extended warranty declined coverage.  Debtors continued payments through July 2019.  Debtors sold their California home on 30 September 2019 obtaining $90,000 in proceeds from the sale, which was used to repay relatives and friends for funds borrowed from them.   They filed chapter 7 bankruptcy on March 26, 2020 indicating that the truck would be surrendered, but despite this and an order lifting the stay, Paccar has been unable to locate the vehicle.  Debtors also failed to list the $90,000 received from the sale of the home.  11 U.S.C. §727(a)(2)(A) allows the court to deny the discharge in a chapter 7 bankruptcy if the debtor has intentionally concealed or permitted to be concealed property with the intent to hinder, delay, or defraud the chapter 7 trustee and creditors.  The elements required to make such a showing are 1) a transfer or concealment of property; 2) belonging to the debtor; 3) within one year of the filing of the bankruptcy; and 4) with intent to hinder, delay, or defraud a creditor or officer of the estate.1   The court found the debtor's explanation for the missing truck - that the engine of the truck was taken apart Pape Kenworth in Bakersfield, California, but that they left the truck there being unable to afford the repairs - to not be credible.  The truck was taken to the repair shop in February 2019 but was inspected by the Federal Motor Carrier Safety Association in August 2019 finding only an air leak in a tire and a leak in a hub.  The failure to disclose the $90,000 proceeds from the sale of the home and subsequent transfer of such funds to family and friends also supports a denial of discharge under §727(a)(2)(A).   Debtors claimed they misunderstood the instructions from their attorney.   While the intent to defraud must be actual rather than constructive, the court noted that a presumption of actual fraudulent intent arises when property is transferred gratuitously or transferred to relatives.2  The court denied the request to hold the debt nondischargeable under 11 U.S.C. 523(a)(2)(A), which bars discharge for a debt for money, property, services, or an extension, renewal or refinancing of credit, to the extent obtained by (A) false pretenses,  a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition; (B) use of a statement in writing (i) that is materially false; (ii) respecting the debtor's or an insider's financial condition; (iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and (iv) that the debtor caused to be made or published with intent to deceive.   As this looks back to the loan itself, and there has been no evidence of bad intention when the loan was obtained, the court found no basis to deny the discharge of this debt under such statute.   Plaintiffs also sought to deny the dischargeability of the debt under 11 U.S.C. §523(a)(4), which precludes discharge for commission of fraud, defalcation, or embezzlement while acting in a fiduciary capacity, or for embezzlement or larceny.   The fiduciary duty requirement is narrowly applied, requiring a technical or express trust.  No such trust was alleged here.  While the section can also apply to larceny or embezzlement, such facts were not alleged by Paccar.  Finally, Plaintiff sought to deny the discharge under 11 U.S.C. 523(a)(6), allowing a debt to be held nondischargeable for willful and malicious injury by the debtor to another entity or property of another entity.   The burden of proof is again on the creditor to show such facts by a preponderance of the evidence.  The Supreme Court has ruled that the section does not apply to negligently inflicted injury, but rather requires acts done with the actual intent to cause injury.3  This standard can be met if a debtor acted with objective substantial certainty or subjective motive to inflict injury.4  The court found this standard was met as failing to advise Paccar as to the location of the truck, as well as concealment of the proceeds of the sale of the home were certain to result in harm.  Thus the debt to Paccar was also found to be excepted from discharge under §523(a)(6).1 Pavy v. Chastant (In re Chastant), 873 F.2d 89, 90 (5th Cir. 1989).↩2 In re Chastant, 873 F.2d at 90.↩3 Kawaauhau v. Geiger, 523 U.S. 57, 59, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998).↩4 In re Williams, 337 F.3d 504, 508-509 (5th Cir. 2003).↩Michael BarnettMichael Barnett, PA506 N. Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

Summary: In split decision, the Fourth Circuit (following the similarly split decision from the 5th Circuit) held that the 2018 increase in fees paid by chapter 11 debtors to the U.S. Trustee Program applies to pending cases and violates neither … 4th Cir.: Siegel v. Fitzgerald: 2018 U.S. Trustee Fees Upheld and Bankruptcy Administrator System is Constitutional Read More »

Summary: DFWMM Holdings sought to have its judgments determined to be nondischargeable and the Mr. Richmond’s discharge denied, supporting its allegations by arguing that Mr. Richmond made false statements in the bankruptcy case by failing to disclose that his claimed … M.D.N.C.: DFWMM Holdings LLC v. Richmond- Reliance on Attorney as Affirmative Defense to Fraudulent Intent Read More »

For the past year, we’ve lived in a surreal world. Many people could not work, and those who could often work primarily -- if not...