Cases of Interest
Stale Proof of Claim Violates FDCPA
Addressing what it termed a “deluge that has swept through U.S. bankruptcy courts,” the Eleventh Circuit found that a proof of claim to collect a stale debt in Chapter 13 bankruptcy violates the Fair Debt Collection Practices Act (“FDCPA”). Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. July 10, 2014), reh’g and reh’g en banc denied (Sept. 18, 2014). On a related note, where the court in Crawford explicitly declined to address the issue of whether the Bankruptcy Code preempts the FDCPA, the court in Davis v. NCO Financial Systems, Inc., 2014 WL 4954705 (M.D. Fla. Oct. 2, 2014) found that, even where the creditor’s conduct occurs while the bankruptcy case is ongoing, it does not. NCBRC assisted debtor’s attorney, Nick Wooten, in the Crawford case.
All Income Received during Look-Back Included in CMI
The court in In re Strickland, No. 13-42820 (Bankr. Minn. Jan. 13, 2014), interpreted the phrase “derived during” in section 101(10A)(A) to establish a temporal perimeter around the time the income was earned, even though it might be received after the 6-month period ends. In contrast, the Tenth Circuit BAP recently interpreted “derived during” to mean that all income received during the 6-month look-back period be included in the current monthly income calculation. In re Miller, No. 14-2 (B.A.P. 10th Cir. Oct. 8, 2014).
The two conflicting rules could thus be stated as:
Miller: all income received during the look-back period regardless of when it was earned.
Strickland: all income earned during the look-back period regardless of when it was received.
Post-Petition Equity Goes to Debtor upon Conversion
Equity created by payments into a chapter 13 plan belongs to the debtor upon conversion to chapter 7. In re Hodges, No. 13-361 (E.D. Tenn. Sept. 29, 2014). Hodges involved a tug-of-war between the debtor and the trustee over equity in the debtor’s residence that was created by the debtor’s payments into his chapter 13 plan prior to conversion. The district court affirmed the bankruptcy court’s order that the equity belonged to the debtor and found that the bankruptcy court correctly compelled abandonment of the property pursuant to section 554(b) “on the ground that it was of inconsequential value and benefit to the estate.”
Trustee Fee Cut Where No Meaningful Distribution
In three consolidated chapter 7 cases, the Bankruptcy Court, finding that carve-out or short sale agreements did not lead to any meaningful distribution to creditors, reduced the trustee’s fee by 50% of the requested amount. In re Scoggins, No. 12-42158 (Bankr. E.D. Cal. Sept. 8, 2014). Taking the case beyond its own boundaries, the bankruptcy judge, joined by six other judges in the district, established a set of Local Rules requiring that the trustee file a formal fee application in cases where:
a) the fee request is for more than $10,000;
b) the fee exceeds the amount remaining for unsecured priority and general claims;
c) the case involves a “carve-out” or “short sale”;
d) the trustee operates a business; or
e) the court orders a formal application.
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