agreement between a debtor
and creditor for payment of a dischargeable debt is enforceable);
(b) Ford’s acceptance and solicitation of Plaintiffs’
payments after discharge violated the discharge injunction of 11 U.S.C.
§ 524(a) (§ 524(a) prohibits a creditor to attempt to collect
a debt after discharge);
(c) the letter violated the automatic stay provision of the Bankruptcy
Code, 11 U.S.C. § 362; and (4) Ford’s conduct constituted
“unfair and unconscionable means to collect discharged debt”
and therefore violated the Fair Debt Collection Practices Act.
The Court held that the Plaintiffs failed to state any claims upon
which relief can be granted, and that their claims must be dismissed.
The 8th Circuit affirmed.
RIGHT TO POSSESSION OF PROPERTY
NECESSARY FOR HOMESTEAD EXEMPTION
In In re Stenzel, 259 B.R. 141 (BAP 8th Cir. 2001),
the Eighth Circuit Bankruptcy Appeals Panel ruled that a Chapter 7
debtor is not entitled to a homestead exemption for a reversionary
interest in parcel of real property adjacent to the debtor’s
homestead. Although the debtor may have actually occupied the adjacent
property, he is not entitled to claim the homestead exemption unless
he is legally entitled to possess the property. (A simple explanation
is that a reversionary interest is a right to succeed to an estate
in real property after the current grant of the estate to someone
else has expired. Example: Al grants the property to Bill, until Bill
dies. Bill has a life estate in the property, Al has a reversion.)
CONTEMPT NOT PROPER REMEDY
FOR VIOLATING AUTOMATIC STAY;
DATE OF TRANSFER CONSIDERED
Revised Article 9, N.D.C.C. § 41-09-32(1) has made a major change.
This section states that “A security interest in chattel paper,
negotiable documents, instruments, or investment property may be perfected
by filing.” However, as a |
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In James v.
Planters Bank (In re James), 257 B.R. 673 (BAP 8th Cir. 2001), Chapter
7 debtors’ had filed a complaint to recover certain prepetition
wage garnishments as avoidable preferences and asked that the Bank,
as garnishment creditor, be held in contempt for violation of the
automatic stay. The Eighth Circuit Bankruptcy Appeals Panel held that
the “transfer” date for purposes of § 547(b) was
the date upon which the garnishment lien attached (i.e., the date
the debtor earned his wages) and not the date the check was issued
to or received by the creditor. In addition, the Eighth Circuit BAP
held that contempt is not the proper remedy for a violation of the
automatic stay. (Note: § 547(b) pertains to preferences and says
that a trustee in bankruptcy may set aside any transfer made by the
debtor under certain fact scenarios.)
EIGHTH CIRCUIT BAP EXAMINES IMPACT OF BALLOON PAYMENT ON FEASIBILITY
The Eighth Circuit Bankruptcy Appeals Panel in In re
Wagner, 259 B.R. 694 (BAP 8th Cir. 2001), ruled that a Chapter 13
plan that proposed to pay a balloon payment of $20,000 in the third
year was feasible under § 1325(a)(6) where evidence showed that
debtor’s father was willing and able to assist the debtor in
making the balloon payment.
Perfecting a Security Interest in Instruments
Under the old Article 9, a security interest in instruments
could only be perfected by the secured party’s taking possession.
This is why business lawyers and bankers historically insisted that
a secured party take actual physical possession – a “pledge”
– of an instrument against which a security interest had been
created.
practical matter, it may be that secured creditors will continue to
prefer taking physical possession of instruments, instead of filing
a financing statement, to perfect a security interest in this type
of collateral simply because taking possession is thought of as
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