The court held that with regard to real property that is collateral for a consumer debt, in addition to the three options set forth in § 521(a)(2)--surrendering the property or retaining the property by either reaffirming the debt secured by the property or redeeming the property under § 722--if the debtor is current on her obligation to the creditor, she also has the right to retain the property and continue to make payments to the secured creditor.
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Judge Ben T. Barry
The debtors argued that the reaffirmation agreement between themselves and the creditor was legally deficient because it failed to reflect disclosures the debtors believed to be required under § 524(c) and (k). They also argued the reaffirmation agreement was deceptive because it did not disclose that one of the debtors was allegedly reaffirming an unsecured loan. The court found that the reaffirmation agreement between the creditor and the debtors met the requirements of § 524(c) and (k) and was a valid reaffirmation agreement.
The creditor objected to the debtor's discharge under 727(a)(3), (a)(4), and (a)(5) based on multiple property transfers made by the debtor prior to filing bankruptcy. The Court found that the creditor failed to prove by a preponderance of evidence the necessary elements of 727(a)(3), (a)(4), and (a)(5), and, accordingly, denied the creditor's objections to discharge. The Court also found that the creditor had abandoned an additional claim under section 727(a)(2).
The court denied the debtor's discharge under section 727(a)(4)(A) for knowingly and fraudulently failing to disclose a malpractice claim and other material omissions in the debtor's petition and schedules.
The Court denied the debtors' Motion for Summary Judgment in both cases, ruling that the creditors were not barred by res judicata from bringing dischargeability actions in bankruptcy court when fraud was not alleged in prior breach of contract actions in state court.
The court overruled the chapter 7 trustee's objection to the debtor's third amendment to exemptions. Although the debtor was confused, the court did not believe the debtor acted in bad faith.
The Court granted the creditors' motion to dismiss an adversary proceeding because the debtors did not have a private right of action under § 524 for an alleged violation of the discharge injunction.
The plaintiff/creditor mis-identified real property on a mortgage and failed to correct its mistake after being advised of the mistake by the debtor. The Court found that the doctrine of equitable subrogation did not apply in this case because there was no intervening event between the debtors’ initial financing and their subsequent refinancing with the plaintiff/creditor such that an intervening creditor would have had a superior interest to the new plaintiff/creditor’s interest. The court also found that laches would be imputed on the plaintiff/creditor based on its inaction after being informed of the mistake.
The Court granted the creditor's motion to compel arbitration as to the debtor's claim of an alleged violation of the automatic stay under section 362. The Court dismissed the debtor's remaining claims for lack of subject matter jurisdiction.
In this chapter 7 case, under s.523(a)(15), the debtor's obligation to indemnify his ex-spouse in the event she is called upon to satisfy a third-party debt survives the debtor's bankruptcy.