The U.S. Court of Appeals for the Fifth Circuit recently held that a bankruptcy court lacks the power to enforce discharge injunctions entered in other districts, and that the debtors’ particular private education loans were not excepted from discharge. A copy of the opinion in Crocker v. Navient Solutions, LLC is available at: Link to Opinion. Two debtors obtained student loans, one to prepare for his bar exam, and the other to fund tuition and expenses to attend a vocational school, from a “for-profit, public corporation whose loans are not part of any governmental loan program.” The loans were then transferred…
Posts published in “Bankruptcy”
The U.S. Court of Appeals for the Fifth Circuit recently affirmed a bankruptcy court order denying a bank’s motion to compel arbitration, holding that when a debtor seeks to enforce a discharge injunction, a bankruptcy court may decline to compel arbitration because it implicates a bankruptcy court’s ability to enforce its own orders. A copy of the opinion in Henry v. Educational Financial Service is available at: Link to Opinion. A borrower took out a student loan and subsequently filed for Chapter 13 bankruptcy. The bankruptcy court confirmed the plan. The borrower made the payments to her creditors, including her…
The U.S. Court of Appeals for the Seventh Circuit recently affirmed in part and reversed in part a trial court’s judgment against a debtor who filed an adversary proceeding alleging that a creditor and its counsel violated the bankruptcy discharge by trying to collect a discharged debt, holding that the attorney could not be held in contempt because he lacked knowledge of the discharge, but the creditor could be held liable for the actions of its counsel under agency law. A copy of the opinion in Jacqueline M. Sterling v. Southlake Nautilus Health is available at: Link to Opinion. The plaintiff…
The U.S. Court of Appeals for the Seventh Circuit recently reversed a bankruptcy court’s ruling that a lender failed to perfect its security interest because its UCC financing statement failed to provide sufficient indication of the secured collateral under Article 9 of the Uniform Commercial Code. In so doing, the Seventh Circuit concluded that under the Illinois version of the UCC, a financing statement’s reference to an unattached security agreement sufficiently “indicates” the secured collateral as required by Article 9, and need not “contain” a specific description of the collateral within its four corners. A copy of the opinion in…
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed the bankruptcy court’s denial of a debtor-borrower’s motion for sanctions, which alleged that her mortgage loan servicer violated her bankruptcy discharge by mailing a communication in a purported attempt to collect upon a discharged debt. In so ruling, the Eleventh Circuit held that the purportedly violative letter, entitled “Informational Statement,” which provided an amount due, due date, and payment instructions, coupled with a disclaimer, did not constitute an unlawful attempt at debt collection, because the servicer had not foreclosed the subject property and the borrower had the option to…
In determining the legal standard for holding a creditor in civil contempt for attempting to collect a debt in violation of a bankruptcy discharge order, the Supreme Court of the United States adopted an “objectively reasonable” standard, and held that a court may hold a creditor in civil contempt if there is “no fair ground of doubt” as to whether the order barred the creditor’s conduct. Accordingly, the Supreme Court reversed the Ninth Circuit’s ruling, which had applied a subjective standard for civil contempt. A copy of the opinion in Taggart v. Lorenzen is available at: Link to Opinion. The…
In an agricultural lien contest between three creditors of a bankrupt commercial farm, the U.S. Court of Appeals for the Fifth Circuit recently affirmed the trial court’s award of summary judgment in favor of a bank that provided debtor-in-possession financing, holding that the locale of the farm products determined the applicable lien law and that bank’s lien was superior to the liens of two nurseries that supplied trees and shrubs because the latter were either unperfected or unenforceable. A copy of the opinion in Fishback Nursery, Inc. v. PNC Bank is available at: Link to Opinion. The debtor, “a wholesale…
The Bankruptcy Appellate Panel for the U.S. Court of Appeals for the Sixth Circuit recently affirmed a lower bankruptcy court’s ruling that a refinanced mortgage was enforceable as to the interests of both husband and wife, where the wife did not execute the note and was not defined as a “borrower” in the body of the mortgage, but nonetheless initialed and signed the mortgage document as a “borrower” in the signature block. In so ruling, the Sixth Circuit BAP considered the Ohio Supreme Court’s answers to two certified questions stating that failing to identify a signatory by name in the…
The U.S. Court of Appeals for the Sixth Circuit held that a recent change to Ohio law involving notice of a defective lien had no bearing on a bankruptcy trustee’s ability to avoid the defective lien because such notice is irrelevant to a trustee’s status as a judicial lien creditor. Accordingly, the Sixth Circuit affirmed the Bankruptcy Appellate Panel’s upholding of the bankruptcy court’s denial of the mortgagee’s motion for judgment on the pleadings. A copy of the opinion in Donald Harker v. PNC Mortg. Co. is available at: Link to Opinion. The borrowers filed a chapter 7 bankruptcy petition that included…
The U.S. Court of Appeals for the Seventh Circuit recently held that a mortgagee could unilaterally cancel an erroneously recorded satisfaction of the loan where the borrower had not yet detrimentally relied on the erroneous satisfaction. A copy of the opinion in Trinity 83 Development, LLC v. ColFin Midwest Funding, LLC is available at: Link to Opinion. A company took out a loan from a bank secured by a mortgage. The bank sold the loan to a debt buyer. The debt buyer used a debt collector to collect payments. The debt collector inadvertently recorded a satisfaction of the debt releasing the mortgage before the…
The U.S. Court of Appeals for the Seventh Circuit recently held that a mortgagee’s failure to take a deficiency judgment against a borrower who filed bankruptcy in a concluded state foreclosure action precluded the mortgagee from making a deficiency claim in the borrower’s bankruptcy proceeding. A copy of the opinion in BMO Harris Bank N.A. v. Anderson is available at: Link to Opinion. Two borrowers received a loan secured by a mortgage. They defaulted on the loan and the mortgagee filed a two-count complaint in Illinois state court seeking relief under the mortgage and the note. One of the borrowers and his wife later filed…
The U.S. Court of Appeals for the Eighth Circuit recently affirmed a trial court judgment holding a bank and its principal in contempt and sanctioning them for violating a bankruptcy discharge injunction, based on the findings in a parallel state court proceeding. In so ruling, the Eighth Circuit held that the state court judgment did not preclude the bankruptcy court’s ability to enforce its own orders. A copy of the opinion in First State Bank of Roscoe v. Stabler is available at: Link to Opinion. A bank issued a loan to husband and wife borrowers for their business. After the business failed,…