REAL ESTATE & BANKRUPTCY (Preferential Transfer)

REAL ESTATE & BANKRUPTCY (Preferential Transfer)

Whether a non-judicial foreclosure sale, carried out under State law in the 90 days to 1 year before bankruptcy, will be considered a “preferential transfer,” and therefore invalid, will depend upon many factors. The court must hear evidence regarding whether or not the foreclosing creditor received more in the pre-bankruptcy foreclosure sale than it would have received through the bankruptcy. The court cannot say, as a matter of law, that such creditors always receive more in a pre-bankruptcy non-judicial foreclosure than they would have received in the bankruptcy. Therefore, whether a particular sale is barred as a preferential transfer will be determined on a case-by-case basis.

In re: Buckskin Realty Inc., Case No. 1-13-40083-nhl, Adv. Pro. No.: 15-01004-nhl
United States Bankruptcy Court, E.D. New York filed March 26, 2021, interpreting 11 USC Sec. 547 and BFP v. Resolution Trust Corp., 511 U.S. 531 (1994).

 

REAL ESTATE & BANKRUPTCY (Lien Stripping)

REAL ESTATE & BANKRUPTCY (Lien Stripping)

Where debtor received discharge of unsecured junior mortgage in Chapter 7 proceeding, and then filed a Chapter 13, the Court held that the junior mortgage was an unsecured debt, but not uncollectible, and the debtor should be required to make affordable payments on that unsecured debt as part of the debtor’s Chapter 13 plan.[The property was not foreclosed.]
There is no lien stripping (particularly of undersecured or unsecured junior mortgages) in Chapter 7 bankruptcy.

In re Leonidas, Case No. 6:17-bk-19739;(Memorandum Opinion), filed 6/19/2019

BANKRUPTCY LAW (Discharge):​ Relief From Pre-Petition Debts

BANKRUPTCY LAW (Discharge):​ Relief From Pre-Petition Debts

BANKRUPTCY LAW (Discharge):​ A Chapter 7 Petition, and accompanying discharge, provide relief from pre-petition debts. The 9th Circuit Court of Appeal has stated:

A Chapter 7 bankruptcy discharge releases the debtor from personal liability for her pre-bankruptcy debts. . . . A discharge is the “legal embodiment of the idea of the fresh start; it is the barrier that keeps the creditors of old from reaching the wages and other income of the new . . .” If the debtor receives a discharge, the creditor will receive only its pro-rata share of the distribution of the property of the bankruptcy estate . . . . [Para.] Specifically, § 727 of the Bankruptcy Code  ;. . . “discharges the debtor from all debts that arose before the date of the order for relief.” 11 U.S.C. § 727(b). The Code defines “debt” as “liability on a claim.” § 101(12). “Claim” is defined as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” § 101(5)(A). “This `broadest possible definition’ of `claim’ is designed to ensure that `all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case . . . .'” Boeing N. Am., Inc. v. Ybarra (In re Ybarra), 424 F.3d 1018, 1022 (2005).

 

Bankruptcy Law: Sufficiency of Tax return

Bankruptcy Law: Sufficiency of Tax return

BANKRUPTCY LAW: Late, post-assessment tax returns were “tax returns” within the meaning of 11 USC Sec. 523 (a)(1)(B), and debtor’s old tax debt could be discharged pursuant to satisfaction of other statutory requirements. (In re Martin, adversary action vs. IRS) From NACBA: In finding that the Martins filed a “return” and that their tax debt was therefore dischargeable, the bankruptcy court applied the test set forth in Beard v. Comm’r, 82 T.C. 766, 774–79 (1984), aff’d 793 F.2d 139 (U.S. Sixth Circuit Court of Appeal, 1986)

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