Justia Bankruptcy Opinion Summaries

After Kimberly Adkins and Chaille Dubois filed separate Chapter 13 bankruptcy petitions in the Bankruptcy Court, Atlas filed proofs of claim in their bankruptcy cases based on debts that were barred by Maryland’s statute of limitations. At issue is whether Atlas violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq., by filing proofs of claim based on time-barred debts. The court held that Atlas’s conduct does not violate the FDCPA because filing a proof of claim in a Chapter 13 bankruptcy based on a debt that is time-barred does not violate the FDCPA when the statute of limitations does not extinguish the debt. Accordingly, the court affirmed the judgment. View "Dubois v. Atlas Acquisitions LLC" on Justia Law

Debtors purchased a home from creditors. The purchase was financed via a loan from creditors. In exchange for the loan, debtors granted creditors a deed of trust on the property and executed a promissory note requiring monthly payments. Where the rate of interest on debtors’ residential mortgage loan was increased upon default, at issue was whether a “cure” under section 1322(b) of the Bankruptcy Code allows their bankruptcy plan to bring post-petition payments back down to the initial rate of interest. The court held that the statute does not allow this, as a change to the interest rate on a residential mortgage loan is a “modification” barred by the terms of section 1322(b)(2). The court affirmed the judgment of the district court insofar as it required that post-petition interest payments be calculated using the seven percent default rate of interest, but reversed that part of the judgment which applied only a five percent rate of interest to payments calculated “for the period between September 16, 2013 and the December 2013, effective date of the plan.” The court remanded the case to the district court for further proceedings. View "Anderson v. Hancock" on Justia Law

PHA filed suit against Wells Fargo, alleging that Wells Fargo falsely represented that it would forbear collection of the principal balance of a line of credit, ultimately causing PHA to default and enter bankruptcy. PHA subsequently filed suit in Virginia state court, which Wells Fargo removed to federal court. Along with repeating the claims made in the bankruptcy adversary complaint, PHA alleged new theories of lender liability. The district court dismissed the suit. The court rejected PHA's contention that the district court erroneously gave res judicata effect to various sale orders issued during PHA’s Chapter 11 bankruptcy, concluding that the elements of res judicata are satisfied. Accordingly, the court affirmed the judgment. View "Providence Hall Assoc. v. Wells Fargo Bank, N.A." on Justia Law

Stubbs is owed approximately $200,000 in legal fees from representing debtor in bankruptcy proceedings. Debtor is subject to nearly $1 million in secured tax claims, and the estate has insufficient funds to pay both Stubbs’ fees and the tax claim. At issue is which of these claims takes priority in a Chapter 7 liquidation under the Bankruptcy Code. Under the version of section 724(b)(2) of the Bankruptcy Code, 11 U.S.C. 724(b)(2), in effect when the bankruptcy court rendered its decision, the court concluded that it is clear that debtor is not entitled to subordinate the IRS’s secured tax claim in favor of its unsecured claim to Chapter 11 administrative expenses. The court need not reach the issue of whether the same result would have been obtained under the pre-Bankruptcy Technical Corrections Act of 2010, Pub. L. No. 111-327, 124 Stat. 3557, version of section 724(b)(2). Accordingly, the court affirmed the judgment. View "Angell v. Stubbs & Perdue, P.A." on Justia Law