Barnhart Law Offices

02/14/2022

The Ninth Circuit Bankruptcy Appellate Panel (BAP) recently held that merely freezing a debtor’s bank account holding funds that had been garnished by a judgment creditor did not violate the automatic stay. This decision was based on the United States Supreme Court’s ruling last year in City of Chicago v. Fulton, holding that retention of repossessed vehicles that were possessed before a bankruptcy was filed did not violate the automatic stay.

In In re Stuart, a judgment creditor garnished funds held in the judgment debtor’s bank account. The bank froze the account, and before any other action took place in the state court, the debtor filed a chapter 13 bankruptcy case. The creditor promptly took action to stay the state court garnishment proceedings after the bankruptcy filing. The debtor argued that the automatic stay required the creditor and bank to release the garnished funds, and that the failure to do so was a violation of the automatic stay. The debtor filed a motion for sanctions against the creditor, requesting damages for physical and psychological distress, punitive damages, and attorney fees.

Most institutional creditors are aware of the automatic stay, which, true to its name, immediately goes into effect upon the filing of a bankruptcy petition, and which protects debtors from creditor actions to collect debts or take possession of the debtor’s property. Prior law indicated that a creditor had an affirmative duty to return a debtor’s funds that were garnished pre-petition. However, in a logical extension of the Supreme Court’s ruling in Fulton, the BAP ruled that a judgment creditor, and the bank, holding funds that had been garnished before the bankruptcy was filed, did not violate the automatic stay by holding the funds until a determination could be made regarding the disposition of the funds. Merely preserving the status quo does not violate the automatic stay.

This ruling is a welcome development for both creditors and financial institutions, protecting them against claims for violation of the automatic stay, which could expose them to damages and sanctions. Once a creditor becomes aware that a bankruptcy has been filed, it should of course immediately cease any affirmative acts to collect pre-bankruptcy debts. However, under the holding of this case, maintaining the status quo will not be deemed a violation of the automatic stay.

Please contact our experienced team of creditors’ rights attorneys to help with these and other bankruptcy issues.

02/02/2022

https://twitter.com/BarnhartLawOff/status/1488912449231364101

“The Biden administration has appealed a Bankruptcy Court's discharge of $100K of student loans for a 34 year old epileptic earning less than $1,200.00 per month as a delivery driver: https://t.co/dsdzw28C7R”

01/05/2021

https://www.democracydocket.com/wp-content/uploads/sites/45/2020/12/show_public_doc.pdf

12/16/2020

Can employers mandate workers to get vaccinated for COVID-19? Generally yes, employers may require mandatory vaccination, subject to limited exceptions.

What are those exceptions? Click to read more: http://ow.ly/9uHJ50CNdHk

11/18/2020

https://www.washingtonpost.com/politics/giuliani-pennsylvania-court-appearance/2020/11/18/ad7288dc-2941-11eb-92b7-6ef17b3fe3b4_story.html

The former U.S. attorney came under heavy criticism from opposing counsel and appeared unable to answer several questions from the judge about legal technicalities.

10/01/2020

The house judiciary committee approved a bill allowing discharge of student loans:

07/09/2020

06/26/2020

https://www.lexology.com/library/detail.aspx?g=6e2478f5-485d-4cbb-8fa7-536fde59c581&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Nebraska+State+Bar+Association+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2020-06-26&utm_term=

04/28/2020

https://www.forbes.com/sites/patriciagbarnes/2020/04/09/facing-potential-liability-employers-act-to-protect-regular-workers-from-covid-19/

A customer complimented her on the mask and the clerk said it was given to her by a customer who was concerned that she lacked personal protective equipment during the worst health crisis in 100 years.

04/17/2020

Congress recently passed the CARES Act. This Act allows certain bankruptcy debtors to reduce or suspend Plan payments and extend the length of bankruptcy Plan to seven years. It also permits homeowner with federally backed mortgages to forebear mortgage payments for several months.

03/13/2020

The Nebraska Supreme Court entered an order applicable to all courts on March 12, 2020 imposing requirements upon litigants and attorneys who meet the order’s definition of having an elevated risk of infection with COVID-19. Attorneys must notify opposing counsel and the Court if any party, witness or attorney meets the order’s definition and shall not attend any hearing, trial, conference, deposition or other proceeding without prior authorization from the Court. The full text of the order may be found at the link below.

Below is the Administrative Order signed March 12, 2020, by Nebraska Supreme Court Chief Justice Mike Heavican regarding Novel Coronavirus and COVID-19 Disease. Read the Order: Novel Coronavirus and COVID-19 Disease Access to justice and Nebraska’s courts is a constitutional priority even in emerg...

09/16/2019

https://www.esquireglobalcrossings.com/2019/09/bankruptcy-court-tells-debtors-they-must-choose-between-bankruptcy-or-being-able-to-buy-medical-ma*****na/

We have written before about the virtual dead end faced by ma*****na companies who try to seek protection in the bankruptcy courts. Almost uniformly,