Debtor filed a chapter 13 case in which she was ineligible to receive a discharge pursuant to § 1328(f), because the case was filed less than four years after she filed a chapter 7 case in which she received a discharge. Debtor commenced an adversary proceeding seeking to “strip off” her second mortgage because there was no equity for the lien to attach to. The creditor filed a motion to dismiss the adversary proceeding arguing that a discharge is a requirement for lien avoidance under § 506(d). An objection to confirmation of plan was filed on the same grounds. The court held that to allow a debtor in a no-discharge chapter 13 to avoid a junior lien would run afoul of § 1325(a)(5)(B)(i)(I)(aa) which provides that the holder of a secured claim shall retain such lien until the earlier of the payment of the underlying debt or discharge. The court further stated that permitting such action would be contrary to both the Congressional intent in enacting BAPCPA and the ruling of the U.S. Supreme Court in Dewsnup v. Timm. The court granted the motion to dismiss adversary proceeding and sustained the objection to confirmation of plan without prejudice to the right of the debtor to file an amended plan. **Affirmed on appeal**
Patterson v. Homecomings Financial, LLC, 444 B.R. 564(February 2011) -- Judge Kelley
Chapter 13 Debtors' complaint alleging that mortgage servicer violated stay by charging and collecting post-petition, pre-confirmation attorneys' fees without disclosing those fees to the Court, survived motion to dismiss.
Debtor's counsel was sanctioned $500 for filing chapter 7 petition for debtor who was ineligible for discharge, for sole purpose of delaying garnishment creditor until such time as debtor was eligible for discharge.
Debtors filed a chapter 13 bankruptcy case within 910 days of purchasing a vehicle. Their chapter 13 plan, which provided for full payment of the vehicle claim pursuant to the “hanging paragraph” contained in 11 U.S.C. § 1325(a)(9), was confirmed, but the case was dismissed nine days later for failure to make plan payments. Four days after the creditor took judgment in state court, the debtors refiled a second chapter 13 case which was now outside of the 910-day period. Accordingly, debtors plan proposed to “cram down” the vehicle claim. Creditor objected to confirmation based on bad faith and the theory of equitable tolling. The court rejected the bad faith argument finding that refiling outside of the 910-day period alone is not enough to establish bad faith. However, the court sustained the objection to confirmation based on the theory of equitable tolling and the U.S. Supreme Court case In re Young, 535 U.S. 43 which held that a “look-back period” is subject to equitable tolling in cases where a creditor is disabled from protecting its rights. **Reversed on appeal**