The Chapter 7 debtor contended that repayment of her $100,000 student loan debt would be a undue hardship and, thus, was dischargeable under 11 U.S.C. § 523(a)(8). The debtor was 37 years old, not married, had no children or dependents or any physical or mental impairments. The debtor was completing her Master's degree and planned to pursue a Ph. D. degree. The court held that the debtor had failed to show that her current financial conditions were likely to continue in the future or that she had made good faith efforts to repay her student loans. The court held that the student loans were non-dischargeable.
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Judge James P. Smith
The debtors claimed as exempt a farm tractor as a motor vehicle and also as a tool of the trade. O.C.G.A. § 44-100-13(a)(7), (3). The court held that the farm tractor was not a motor vehicle under Georgia's exemption statutes because it was not designed to be used to transport people or property on roads. The court also held that the debtor-wife could not claim the tractor as a tool of the trade because she did not use the tractor and the tractor was not necessary for any work that she performed.
In order to secure his debt, the debtor signed a UCC-1 financing statement giving the defendant a security interest in an aircraft. The defendant filed the UCC-1 with the clerk of superior court but not with the FAA. The debtor later surrendered the aircraft in full satisfaction of his debt and signed an aircraft bill of sale conveying the aircraft to the defendant. The defendant filed the bill of sale with the FAA some four months later. The court held that since the conveyance of the aircraft was not filed for recording with the FAA within thirty days after the bill of sale was signed, the transfer was deemed to have occurred when the conveyance was filed for record, which was within the preference period of 11 U.S.C. §547(b). The court, however, held that the trustee had failed to prove, on summary judgment, that the defendant had received more than he would have in a Chapter 7 liquidation.
Chief Judge John T. Laney, III
A postpetition fire destroyed the debtors' house, resulting in insurance proceeds totaling $107,000.00, which the creditor bank held. The debtors filed a motion to use this cash collateral. Both parties agreed that the creditor bank was entitled to keep an amount equaling the payoff of the house note, but the parties did not agree on how the house note's dragnet clause (and subsequent credit transactions between the parties) affected the reach of the lien to further proceeds. The Court granted the debtors motion in part and denied it in part, allowing the debtors to keep the amount over the balance of the house plus the amount owed on a vehicle in which the creditor held a security interest. The car debt was treated in a confirmed Chapter 13 plan, and the creditor was bound by the terms of that plan.
In a lengthy opinion, the Court examined law of propely filed proofs of claim after several debtors objected to the claims filed by eCAST Settlement Corporation in each case. The Court limited the reach of its prior opinion, In re Stephens, 443 B.R. 225 (Bankr. M.D. Ga. 2010). The Court discussed compliance with Bankrupty Rule 3001 and Official Form 10 (on how a creditor can achieve prima facie validity for its proof of claim), the effects of noncompliance with Bankruptcy Rule 3001, and the proper procedures and allocation of burdens in deciding objections to claim. The Court ultimately sustained all three objections to claim.
In an adversary proceeding seeking to determine nondischargeability of a debt, the Court granted in part and denied in part the wife-defendant's motion to dismiss complaint and granted the plaintiffs' motion to amend complaint. The Court granted the motion to dismiss the fraud allegation because the allegation did not meet the particularity requirement of Federal Rule of Civil Procedure 9 (made applicable to adversary proceedings through Bankruptcy Rule 7009); the Court denied the motion to dismiss the embezzlement, larceny, and willful and malicious injury allegations because taking the allegations at face value and construing all reasonable inferences in favor of the plaintiffs, the complaint properly alleged all three. The Court granted the plaintiffs' motion to amend because the plaintiffs had not done anything justifying denial, and refusing to grant leave to amend without reason is an abuse of discretion.
The debtor objected to the claim of creditor SN Servicing Corporation, the current mortgage holder on the debtor's residence, claiming the mortgage was made current in the co-signor's earlier bankruptcy case and claiming that all subsequent payments were made on time. The creditor argued that the mortgage at issue was a simple interest mortgage, a mortgage in which interest accrues daily and failure to pay on time results in an increase in interest rather than late charges. Thus, the co-signor's cure did not reinstate the original amortization schedule because the late payments leading up to that prior bankruptcy resulted in a higher principle. The Court agreed with the creditor and overruled the debtor's objection.
The Chapter 7 trustee sought information and documents from the former law firm of several entities, including the debtor, owned and operated by nondebtor individuals, including information regarding related entities the law firm never represented. The law firm alleged attorney-client privilege, alleged work-product immunity, alleged that nondebtor entities were not proper targets of Rule 2004 examinations and for subpoenas demanding the production of documents. The Court denied the debtor's former law firm's motion to quash the Chapter 7 trustee's Supboena for Production of Documentary Evidence Under Bankruptcy Rules 2004(c) and 9016, and overruled the law firm's objection to the trustee's Motion for Bankruptcy Rule 2004 Examination and for Production of Documents Pursuant to Bankruptcy Rule 2004 and Bankruptcy Rule 9016. The owner-operators of the entities executed a broad waiver disclaiming any attorney-client privilege and granting the trustee the right to assert or deny and privilege. In holding that the work-product immunity had been waived, the Court adopted the reasoning in In re ANR Advance Transportation Company, Inc., 320 B.R. 607 (E.D. Wis. 2003). The Court further ordered that the examination and production of documents take place at the law firm's place of business and that the trustee pay for the costs of copying documents.
Judge James D. Walker, Jr.
For purposes of dismissal or conversion of a Chapter 7 case under § 707(b), the court cannot conclude as a matter of law that student loans are always consumer debt or always nonconsumer debt. Characterization of student loans depends on a consideration of all the relevant facts.
In the absence of a timely objection from the creditor, a plan that provided for surrender of the creditor's collateral in full satisfaction was not a bar to confirmation when the schedules indicated the value of the collateral exceeded the debt and the creditor presented no evidence to the contrary.