Justia Bankruptcy Opinion Summaries

Plaintiff Erik Nielsen appealed from an order of the bankruptcy court finding his student loan obligations to Educational Credit Management Corporation (ECMC) to be nondischargeable. Nielsen and his spouse filed a joint voluntary Chapter 7 case in 2009. In 2010, Nielsen commenced an adversary proceeding seeking a determination that his student loans were dischargeable based upon undue hardship. A motion to intervene was granted as to ECMC. After a trial, the bankruptcy court found that Nielsen failed to meet his burden of proof and denied his complaint. The Eighth Circuit Court of Appeals affirmed, holding (1) the bankruptcy court did not err in any of its factual findings, and (2) Nielsen failed to meet his burden of proving undue hardship under the totality of his financial circumstances. View "Nielsen v. ACS, Inc." on Justia Law

Sandra Emas owned a life insurance policy issued by ReliaStar. The policy named her estate as the beneficiary. When Emas died intestate, she left her son, Jaysen McCleary, as her only heir. McCleary was appointed the administrator of his mother's estate. McCleary later filed for personal bankruptcy. McCleary, as the administrator of the estate, subsequently filed suit against ReliaStar, alleging that ReliaStar had wrongfully refused to pay the estate benefits under Emas's insurance policy. ReliaStar moved for summary judgment, arguing that Emas's interest in any cause of action against ReliaStar passed immediately to McCleary upon her death. The district court granted summary judgment in favor of ReliaStar. The Eighth Circuit Court of Appeals affirmed, holding (1) the estate was functionally closed, and McCleary could not bring a suit on behalf of a closed estate; and (2) there was not an issue of fact as to whether McCleary sold the estate's interest in his bankruptcy proceedings, as McCleary had the authority to sell the estate's interest in its claims against ReliaStar. View "McCleary v. Reliastar Life Ins. Co." on Justia Law

Debtor appealed an order of the bankruptcy court sustaining the chapter 7 trustee's objection to debtor's claimed homestead exemption. The court concluded that the bankruptcy court identified debts debtor incurred prior to October 2007, when the property at issue became his homestead. Debtor had not challenged that finding on appeal. Pursuant to Iowa Code 561.21(1), therefore, the house could be sold to satisfy those debts, notwithstanding debtor's claimed homestead exemption. Accordingly, the court affirmed the order. View "Shirley v. Smith" on Justia Law

The bank appealed the judgment of the bankruptcy court dismissing its complaint against debtor. At issue was whether the requisite elements of a claim of nondischargeability under 11 U.S.C. 523(a)(2)(A) have been satisfied. The court held that the record supported the bankruptcy court's finding that there was no evidence that debtor made a false statement to the bank prior to the bank's advancing the funds at issue. Accordingly, the court affirmed the judgment dismissing the bank's complaint against debtor. View "Montgomery Bank, N.A. v. Steger" on Justia Law

Debtor borrowed from Arvest to purchase a newly-constructed home, executing a promissory note and mortgage. After debtor filed a voluntary petition for Chapter 13 bankruptcy relief, Arvest then purchased the mortgaged property at a foreclosure sale for substantially less than what debtor owed on the promissory note and filed this adversary proceeding, seeking a judgment declaring the mortgage debt nondischargeable under 11 U.S.C. 523(a)(2) and (4). At trial, the bankruptcy court directed a verdict for debtor on the section 523(a)(2) claim but concluded that $65,000 of the remaining debt was nondischargeable under section 523(a)(4) because debtor held that amount of settlement proceedings in a fiduciary capacity created by section 4-58-105(b)(2) of the Arkansas Code. The BAP reversed and Arvest appealed. The court agreed with the BAP that the statute did not create the requisite fiduciary relationship, and that debtor was not guilty of embezzlement within the meaning of section 523(a)(4), affirming the judgment. View "Arvest Mortgage Co. v. Nail" on Justia Law

Debtor appealed an order of the bankruptcy court granting relief from the automatic stay to Bank of the West. At issue was whether the bankruptcy court properly granted relief from the automatic stay to Bank of the West to exercise its rights under state law with respect to real property that it purchased at a foreclosure sale. The court affirmed the decision of the bankruptcy court where Bank of the West was a "party in interest" under Bankruptcy Code 362(d) and where the bankruptcy court acted within its discretion when it granted relief from the stay to Bank of the West for "cause." View "Bushnell v. Bank of the West" on Justia Law

Debtors appealed from a bankruptcy court order dismissing their chapter 13 case without prejudice. The court held that, while the final order dismissing the case was timely appealed and was properly before the court, debtors simply did not provide any basis, or even a remote suggestion, that the bankruptcy court abused its discretion by ordering their case dismissed. Accordingly, the court affirmed the decision of the bankruptcy court. View "Johnson, et al. v. Fink" on Justia Law

Debtor appealed an order of the Bankruptcy Court directing that a third party receive a portion of a check made payable jointly to the third party and debtor for rent of debtor's property. At issue was whether the third party had a right to funds for rent of debtor's property when the rent check was made payable jointly to debtor and the third party. The court held that the third party had an interest in the funds by virtue of a contract between the parties and, therefore, the third party was entitled to the portions of the funds that the bankruptcy court required debtor to remit to him. View "Potts v. Guilford" on Justia Law

Debtors appealed from the Bankruptcy Court's Order Granting the Trustee's Motion for Approval of Compromise or Settlement of Controversy, relating to claims that they asserted against the Bank for lender liability and discrimination. Debtors also requested oral argument on appeal. The source of the dispute between the parties was a loan secured by debtors' property, which consisted of their residence and an adjacent commercial lot. The court held that the settlement proposed by the Trustee was within the range of reasonable compromises and the Bankruptcy Court did not err in approving it. The court also held that the facts and legal arguments were adequately represented in the briefs and record and that the decisional process would not be significantly aided by oral argument. View "Cockhren, et al. v. MidWest One Bank, et al." on Justia Law

Debtor appealed the BAP's decision affirming a bankruptcy court order that her homestead was not exempt from the Bank's antecedent debts. The court agreed with the bankruptcy court and the BAP that the plain language of section 561.20 of the Iowa Code limited the "new homestead" exemption to cases where "a new homestead has been acquired with the proceeds of the old." Therefore, the court rejected debtor's contention that there was a conflict in the published bankruptcy court decisions and held that debtor was properly denied a new homestead exemption. The court also held that the bankruptcy court did not err in concluding that the homestead was not exempt from the Bank's antecedent debts under section 561.21(A) of the Iowa Code as construed by the Supreme Court of Iowa and in lifting the automatic stay in bankruptcy as to that property. Accordingly, the court affirmed the decision. View "Walters v. Bank of the West" on Justia Law