Monday, March 11, 2013

First Circuit BAP: Feb. 2013: (a) mortgage avoidance and thus home sale by Ch. 7 Trustee, and (b) plan dismissal/limitation on re-filing.

BAP affirms order dismissing debtor's ch. 13 case and denying him ability to refile for 18 months;
discussion of "waiver" of issues on appeal and the standard for "excusable neglect":
Rivera v. Asume, Rivera, Chapter 13 Trustee (In re Rivera), (1st Cir. BAP 2/19/13)(Before Judges Hillman, Boroff, and Kornreich: Opinion by Kornreich).
This was the third Chapter 13 plan, the prior two dismissed for the debtor's failure to meet domestic support obligations; and this time for similar reasons along with failure to produce current tax returns and other relevant information to the trustee.

 What happens after the trustee avoids the mortgage? He gets to sell your house:
DiGiacomo, Chapter 7 Trustee v. Traverse (In re Traverse), (1st Cir. BAP 2/4/13)(Before Judges Haines, Deasy, Tester: Opinion by Haines).
BAP affirmed summary judgment in the Chapter 7 trustee's favor in denying the debtor's request to limit the scope of the sale of her home.  Debtor owed a first mortgage, which the mortgagee failed to record, and Debtor owed a second mortgage which was recorded, and Debtor recorded a $500,000 Massachusetts homestead. Trustee moved to avoid the first, unrecorded, mortgage for the benefit of creditors, which was granted. Debtor objected to any sale of her home, claiming her mortgages were paid current and could not be foreclosed even if the first mortgage was not recorded and thus avoided for the benefit of creditors.  Trustee successfully argued that the avoided mortgage was for the benefit of creditors (the unrecorded first mortgage) creating equity in the home which the trustee could sell, the trustee now standing in the shoes of the homeowner's right to possession and redemption.  Her homestead would be satisfied in the order of priorities after the first mortgage (avoided for the benefit of creditors) and second mortgage were paid, and then the homestead.


No comments:

Post a Comment