Midland Funding, LLC v. Johnson

(U.S. Sup. Ct. May 15, 2017)

The Supreme Court holds that a creditor did not violate the Fair Debt Collection Practices Act when it filed a proof of claim on a debt that was barred from collection by the applicable statute of limitations. The proof of claim made clear that the limitations period had passed. The decision resolves a split among the circuits on the question of whether such a filing constituted “false,” “deceptive,” “misleading,” “unconscionable,” or “unfair” conduct under the act. The court reasons that while the claim may not be enforceable, it is nevertheless a “claim” under the bankruptcy code. It is not a false or misleading statement, but it can be disallowed based on its unenforceability. Similarly, the court reasons that the filing was not unconscionable or unfair, as there are protections built into the bankruptcy process that minimize risk to the debtor. Opinion below.

Justice Breyer

2017-05-15 – in re midland funding

Author: Matt Lindblom

In re Polly

(Bankr. W.D. Ky. May 17, 2016)

The debtor sustains, in part, the debtors’ objection to the creditor’s notice of post-petition mortgage fees, expenses and charges. The debtor contended the following fees were unreasonable: $500 for an objection to the debtor’s plan, $100 for the filing of the notice, and $650 for the preparation and filing of a proof of claim. The creditor submitted an affidavit of its counsel detailing the tasks completed for the case. However, the affidavit failed to allocate specific amounts of time to each task. Thus, the Court reduces the proof of claim fee to $200, finds the other fees are reasonable, and allows the creditor’s claim in the amount of $800. Opinion below.

Judge: Lloyd

Attorneys for Debtors: Kruger & Schwartz, Richard A. Schwartz

Attorneys for Creditor: Lerner, Sampson & Rothfuss, LPA, Kerry Nunley Bruckner

2016-05-17 – in re polly

Author: Matt Lindblom

Matteson v. Bank of America, N.A. (In re Matteson)

(6th Cir. B.A.P. Aug. 10, 2015)

The Sixth Circuit B.A.P. reverses the bankruptcy court’s finding that the mortgagee’s claim should be reduced by the amount the mortgagee would have received under the Chapter 13 plan if it had filed a proof of claim. The plan required the filing of a proof of claim in order to receive distributions under the plan. The mortgagee did not receive payments under the plan, and the debtor did not make the loan payments outside of the plan. After completion of the plan, the bankruptcy court held that, while the mortgagee’s liens remained, the amount of the debt must be reduced by the amount that would have been paid on the claims through the plan. The B.A.P. holds that there is no justification for this result, as the debtor or the trustee could have filed a proof of claim for the mortgagee if the debtor wished to pay the claim through the plan and avoid defaulting by not making payments outside the plan. Opinion below.

2015-08-10 – matteson v bank of america

Author: Matt Lindblom

In re Mackinder-Manous

(Bankr. E.D. Ky. Feb. 24, 2015)

The bankruptcy court sustains the chapter 13 trustee’s objection to the government’s late-filed tax claim. The court follows its prior precedent in holding that even if the creditor had no notice of the bankruptcy, a late-filed claim cannot be allowed in a chapter 13 case. Such a claim is not discharged, and thus equitable tolling does not apply, and the creditor’s fundamental fairness argument fails. Opinion below.

2015-02-24 – in re mackinder-manous

Author: Matt Lindblom

In re Sekema

(Bankr. N.D. Ind. Jan. 7, 2015)

The bankruptcy court finds sanctions are appropriate and enters an order fining the creditors $1,000 for submitting proofs of claim in violation of Bankruptcy Rule 9011. The debts were clearly barred by Indiana’s six-year limitations period. The debtor objected to the proof of claim, the creditors did not respond, and the claims were denied. The court then issued show cause orders, to which the creditors also did not respond. The creditors had not conducted the reasonable investigation required by Rule 9011 before submitting the claims. Opinion below.

2015-01-07 – in re sekema

Author: Matt Lindblom

In re Thomas

(Sixth Circuit B.A.P. Issued June 3, 2014, appeal from Bankr. E.D. Ky.)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s order overruling the debtor’s objection to his ex-wife’s priority domestic support claim for $12,500.  The debtor’s obligation to pay half of a mortgage was not a property settlement, but rather is in the nature of a domestic support obligation (as defined by the Bankruptcy Code) based on the intent of the parties in making the agreement.  Opinion below.

2014-06-03 – in re thomas