New England Bankruptcy Law Blog

Preti Flaherty bankruptcy attorneys provide news and discuss up-to-date legal issues and emerging trends in bankruptcy, creditor’s rights and business restructuring law. The attorneys in the firm's insolvency practice represent clients in all areas of bankruptcy with a focus on business restructuring, formal bankruptcy proceedings and creditors’ rights litigation.

Recent Blog Posts

  • Recently in In re Guerra, the Bankruptcy Court for the District of Massachusetts joined the majority of courts in finding that United States Supreme Court’s decision in Bankof Am. v. Caulkett does not affect a chapter 13 debtor’s ability to strip off a second mortgage.  In Caulkett, the Supreme Court held that a debtor in a chapter 7 bankruptcy may not void a junior mortgage lien under 11 U.S.C. § 506(d) when the debt owed on a senior mortgage lien exceeds... More
  • Last week, the Supreme Court handed down its opinion in Czyzewski v.Jevic Holding Corp., stating that non-consensual, priority violating, structured dismissals are not allowed under the Bankruptcy Code.  In a well-reasoned opinion, the Court gave a simple answer to what has become a complex issue, especially in large Chapter 11 cases where the path out of bankruptcy is not always clear: the absolute priority rule is absolute (unless the affected parties agree otherwise). Czyzeweski v. Jevic Holding Corp. CaseThe Jevic... More
  • In a recent decision, the bankruptcy court for the District of Massachusetts found that a debtor who had not lived at a property for over 30 years could still claim an exemption in that property, even though her principal residence was elsewhere.The debtor owned a one-half remainder interest in property occupied by her elderly parents. On her Schedule C, she claimed an exemption in the property in the whole value of her interest, $14,945.29 under § 522(I) of the Bankruptcy... More
  • In September 2016, the U.S. Bankruptcy Court for the District of Vermont ordered a mortgage servicer to pay a $375,000 sanction to a nonprofit legal aid organization for failing to comply with Rule 3002.1 of the Federal Rules of Bankruptcy Procedure. This appears to be the first time that a bankruptcy court has awarded sanctions after a violation of Rule 3002.1. If this decision—In re Gravel, 556 B.R. 561 (Bankr. D. Vt. 2016)—serves as a guidepost to other courts that... More
  • As reported on our blog (here and here), the Eleventh Circuit ruled that filing a time barred proof of claim does not violate the Fair Debt Collection Practices Act, an issue which has divided courts and Courts of Appeals. The Supreme Court heard argument on this issue on January 17, 2017. The transcript can be found here.The advocates faced some tough question about the issues presented as well as the spirit and purpose of the Bankruptcy Code itself.... More
  • The Massachusetts Bankruptcy Court (Panos, J.) dismissed an adversarial proceeding complaint brought against debtor’s counsel which alleged legal malpractice. The trustee alleged that debtor’s counsel committed malpractice and asserted that the legal malpractice claims are assets of the bankruptcy estate. Debtor’s counsel moved to dismiss. After a hearing, the Court granted the motion to dismiss, ruling that the alleged malpractice claims were not property of the bankruptcy estate and that the trustee therefore lacked standing to assert them.In the adversarial... More
  • Almost every year, changes are implemented to the Federal Rules of Bankruptcy Procedure. On December 1, 2016, this year’s changes to the Bankruptcy Rules went into effect. The changes include revisions to Bankruptcy Rule 3002.1.Bankruptcy Rule 3002.1 requires secured creditors with an interest in the debtor’s principal residence, such as mortgage lenders, to periodically file notices of payment change in Chapter 13 cases. The changes to Bankruptcy Rule 3002.1 clarify when a secured creditor must file a payment change notice.... More
  • In the recent opinion of In re Failla, the Eleventh Circuit ruled that when a debtor indicates in a Chapter 7 bankruptcy schedules case that she or he intends to “surrender” property subject to a secured claim, the debtor can’t renege on that commitment. The Court of Appeals therefore affirmed the bankruptcy court’s order requiring the debtors to cease opposition to a secured creditor’s subsequent foreclosure of the surrendered property. The Faillas indicated in their Chapter 7 Statement... More
  • As reported on our blog, the Eleventh Circuit ruled that filing a time barred proof of claim does not violate the Fair Debt Collection Practices Act, an issue which has divided courts and Courts of Appeals. The Supreme Court has granted certiorari in the case of Midland Funding LLC v. Johnson. (See here.)  Presumably, this will resolve the circuit split on the issue and provide guidance for creditors and debtors on this tough issue.Stay tuned. We will report... More
  • Recently, the Bankruptcy Court for the District of Maine held that a debtor’s interest in an engagement ring is exempt under Maine law. In re Cynthia A. Chaney, Case No. 15-20725. In that case, the debtor claimed the full value of her wedding and engagement rings, valued at $5,200, as exempt under Maine law. The Chapter 7 Trustee in the case objected, arguing that Maine law allows an exemption in jewelry up to a maximum value of $750. In Maine, a... More
  • Do parents receive something of value when they pay for their child to attend college? The Massachusetts Bankruptcy Court (Hoffman, J.) recently considered this exact question in DeGiamcomo v. Sacred Heart University, Inc., AP No. 15-01126 (August 10, 2016). In this case, after the debtor’s parents were convicted of investment fraud for operating a Ponzi scheme, a Chapter 7 trustee attempted to avoid and recover over $60,0000 in tuition payments made to an area college as fraudulent transfers... More
  • With its recent opinion in In re Eric Dubois, Case No. 15-1945, the Fourth Circuit has joined Second, Third, and Seventh Circuits in ruling that proofs of claim filed for stale debt does not violate the Fair Debt Collection Practices Act.Two debtors in separate bankruptcy cases filed Adversary Proceeding complaints against Atlas Acquisitions LLC, which had bought claims from pay-day lenders and filed proofs of claim in the bankruptcy cases. The adversary complaints asserted that Atlas had violated ... More
  • Chapter 7 trustees’ success in avoiding mortgages with defective certificates of acknowledgement occurs with some regularity in Massachusetts.  See e.g. In re Giroux, 2009 WL 1458173 (D. Ma. Bankr. Jul. 27, 2011).  But it has not been that common in Maine.  Last month, however, a Chapter 7 trustee successfully avoided a Maine mortgage because of a defective acknowledgment and obtained the right to sell the property.  In re Bishop, No. 15-10554 (D. Me. Bankr. Jul. 28, 2016).  The Debtor’s mortgage... More
  • As part of the American Bankruptcy Institute Northeast Bankruptcy Conference and Consumer Forum, Tony Manhart presented an article, which I co-wrote with him, on whether a late-filed tax return is a “return” under section 523(a) of the Bankruptcy Code. Courts are divided on whether the definition of “return” added by the Bankruptcy Abuse and Consumer Protection Act makes tax debt associated with all late-filed returns non-dischargeable. Courts in the First Circuit have found that late-filed returns are not “returns” and the... More
  • A North Carolina bankruptcy court recently denied a Debtors’ attempt to “strip off” a junior lien on their primary residence by rejecting the argument that the property should be valued near the time of plan confirmation.  In re Cooper, No. 11-02804-8 (Bankr. E.D. N.C. Jun. 8, 2016). § 506(a) provides that for purposes of determining the secured status of a creditor “value should be determined in light of the purpose of the valuation and of the proposed distribution or use... More