In this chapter 13 case, the debtor proposed in his plan to cure an arrearage owed to the creditor holding a mortgage on his residence. The mortgage creditor filed an objection to confirmation and a motion for relief from stay premised upon the contention that the residence was not property of the debtor’s bankruptcy estate because a mortgagee’s deed transferring the property to the mortgage creditor had been recorded at the conclusion of a statutory foreclosure sale six days before the debtor filed his petition. The debtor argued that the residence remained property of his estate because the foreclosure sale was defective due to the mortgage creditor’s failure to state the specific default for which foreclosure was made in its Notice of Default and Intent to Sell as required by Arkansas Code Annotated § 18-50-104(b)(4). Whether the notice must disclose the specific default that occurred under the terms of the mortgage agreement or, alternatively, merely state that a default occurred was an issue of first impression in Arkansas. The court certified the question to the Arkansas Supreme Court and it concluded that the statute requires disclosure of the specific default. Based upon the Arkansas Supreme Court’s answer to the certified question, this court held that the statutory foreclosure sale was subject to being set aside and, as a result, the debtor had an interest in the residence on the date he filed his bankruptcy petition. Because the foreclosure sale had not been conducted in accordance with applicable nonbankruptcy law, the debtor was entitled to cure the arrearage through his plan under 11 U.S.C. § 1322(c)(1). Accordingly, the court overruled the creditor’s objection to confirmation and denied its motion for relief from stay.
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Judge Ben T. Barry
In this chapter 11 case, the court overruled a creditor’s objection to the debtor’s homestead exemption because the objection was untimely under Rule 4003(b)(1). However, because the court found that the debtor’s contradictory statements on Schedule C had created uncertainty regarding the amount of the debtor’s homestead exemption, the court granted the creditor’s motion to compel the debtor to amend the schedule pursuant to Rule 1009(a).
Here, the court overruled the chapter 7 trustee’s objection to the debtors’ amended exemptions. The trustee argued that the debtors should not be permitted to amend their schedules to elect state exemptions after having previously elected federal exemptions to which the trustee had not objected. However, the court found that Law v. Siegel and the unambiguous language of Rule 1009(a) authorized the debtors’ amendment to their exemptions. The court also found that the debtors’ mobile home was part of their homestead under Arkansas law. In addition, the court found that the creek that divided a portion of the acreage that the debtors claimed as their homestead was not navigable and therefore did not destroy the contiguous nature of the property.
In this case, the Court held that a state court judgment based on a jury verdict of negligence was nondischargeable under
§ 523(a)(6). The Court found that neither res judicata nor collateral estoppel precluded the Court from considering whether the injury was willful and malicious. However, the Court also found that the jury verdict did have a preclusive effect as to the amount of the debt owed by the debtor to the creditor.
Here, the Court sustained the debtor’s objection to a 910-car creditor’s inclusion of post-petition attorney fees in its secured claim. The Court found that § 502(b) directs courts to determine the amount of a claim as of the date of the filing of the petition;
§ 1322(b) allows modification of pre-petition contractual rights; and no section of the bankruptcy code expressly permits post-petition attorney fees for a 910-car creditor.
Here, the court found that a state court jury had awarded the plaintiff punitive damages based upon fraud, making a determination of fraud essential to the state court judgment and satisfying the final element necessary for the court to apply collateral estoppel to the plaintiff’s cause of action under § 523(a)(2)(A). As a result, the court found that the punitive damage award was nondischargeable under § 523(a)(2)(A). The court also found that a debt arising from the debtor’s embezzlement of the plaintiff’s vehicle was nondischargeable under § 523(a)(4).
In this case, the United States Trustee moved to dismiss the debtor’s chapter 7 case under § 707(b)(2) and § 707(b)(3). Because the court found that the trustee had not calculated the debtor’s current monthly income in accordance with § 101(10A), the court denied the relief sought under § 707(b)(2). After considering the totality of the circumstances of the debtor’s financial condition, including the debtor’s ability to pay her creditors, the court found that the granting of relief under chapter 7 would be an abuse of the provisions of the chapter and granted the trustee’s motion to dismiss under § 707(b)(3), subject to the debtor converting her case to a case under chapter 13 within 14 days.
Judge Richard D. Taylor
Mortgaged property subject to a statutory foreclosure has not been sold sufficient to avoid the consequences of section 1322(c) until such time as the entire process is complete. Regardless, cause may still exist to lift the automatic stay.
Chief Judge Phyllis M. Jones
Trustee’s objection to confirmation overruled. In determining the amount unsecured creditors would receive in a hypothetical chapter 7 liquidation for purposes of the best interests of creditors test of Section 1325(a)(4), parties should consider: (1) the estimated costs of sale associated with liquidating each asset; (2) the estimated costs of administering the chapter 7 estate, including a chapter 7 trustee’s statutory fee; and (3) any other factors that may be appropriate on a case-by-case basis.
Court adopted the “causal connection approach” and found that the 180-day bar of Section 109(g)(2) applies when the creditor’s request for relief from stay resulted in the debtor seeking and obtaining a voluntary dismissal of his prior case. In so ruling, the Court rejected the Debtor’s argument that the motion for relief from stay had to be pending at the time of dismissal of the prior case.