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Collier Bankruptcy Case Update

The following case summaries appear in the Collier Bankruptcy Case Update, which is published by Matthew Bender & Company Inc., one of the LEXIS Publishing Companies.

October 14, 2002

CASES IN THIS ISSUE
(scroll down to read the full summary)

 

Collier Bankruptcy Case Summaries

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2d Cir.

Student loan obligation held nondischargeable due to debtor's unreasonable budget. Bankr. S.D.N.Y. PROCEDURAL POSTURE: Debtor filed a petition under chapter 7 of the Bankruptcy Code, 11 U.S.C. § 101 et seq. Debtor then commenced an adversary proceeding seeking a determination that debtor was entitled to the discharge of two student loan obligations pursuant to 11 U.S.C. § 523(a)(8). OVERVIEW: The court rejected the partial discharge approach, and found that 11 U.S.C. § 523(a)(8) did not allow a partial discharge. This section could not be rewritten using 11 U.S.C. § 105. The court rejected an individual loan analysis and concluded that chronological order might favor some creditors over others. It applied the Brunner test and conducted its undue hardship analysis with regard to the aggregate of the consolidated loans. It found that debtor met Brunner's second factor, due to his learning disability discovered in school and that his financial situation would continue in the foreseeable future. Debtor satisfied Brunner's third factor because the evidence presented supported his contention that he had made a good faith effort to repay his student loans. Debtor failed Brunner's first factor when he did not meet his burden of proof in persuading the court that his budget was reasonable. Because Debtor failed to meet his burden to establish all three elements of the Brunner test, his loans were nondischargeable pursuant to 11 U.S.C. § 523(a)(8). Pincus v. Graduate Loan Center (In re Pincus), 2002 Bankr. LEXIS 346, 280 B.R. 303 (Bankr. S.D.N.Y. April 16, 2002) (Beatty, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:523.14

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3d Cir.

University was excused from delivering transcript to debtor who was in default under her student loan. Bankr. D.N.J. PROCEDURAL POSTURE: Movant debtor sought to compel respondent university to turn over her academic transcript in chapter 13 case. OVERVIEW: After filing a chapter 13 petition, the debtor sought release of her transcript so she could continue her education at another school. Pursuant to its policy, the university withheld her transcript because she had not repaid a student loan. The debtor contended that the refusal constituted prepetition debt collection in violation of the automatic stay. The court interpreted the debtor's motion not as an effort to compel the turnover of the debtor's property, but rather as an attempt to force the university to perform on its promise to create and distribute a student transcript. Because the university was excused under basic contract law from delivering a transcript to a student who was in default under her student loan, it was not a violation of 11 U.S.C. § 362(a)(6) to refuse to release the transcript to the debtor in a chapter 13 case. The university's conduct was consistent with the purpose of the automatic stay to maintain the status quo. Had the debtor not filed for relief under chapter 13 she would not have been able to obtain the transcript, and the debtor should not have more rights under her contract inside of bankruptcy than she would enjoy outside of bankruptcy. In re Billingsley, 2002 Bankr. LEXIS 377, 276 B.R. 48 (Bankr. D.N.J. April 18, 2002) (Lyons, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 3:362.03[8]

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Balance due on credit line against which debtor drew by providing bank with worthless invoices was nondischargeable. Bankr. M.D. Pa. PROCEDURAL POSTURE: Creditor bank filed a complaint under 11 U.S.C. § 523(a)(2)(A) based on the debtor's personal guarantee of his company's liability under a line of credit, alleging that the debtor drew on the line of credit by providing worthless invoices which were not truly receivables because only one invoice was for product actually manufactured and, in that case, was defective. The company's customers refused to pay for goods that were not delivered. OVERVIEW: The debtor had testified that customers agreed to pay in advance of manufacturing, but, somehow, that obligation ceased when the debtor did not produce the part. Little written backup for the orders was provided. The court found that the debtor represented the invoices to be receivables intending that the bank rely on that representation. In reliance, the bank transferred funds to the company. Notwithstanding collectability, the invoices were not as represented. The debtor knew that a customer's obligation to pay was dependent on delivery of product, because he testified that there was no obligation by the customer to the estate at the time of trial. The debtor failed to share the contingencies of collectability with the bank prior to drawing on the line of credit. The debtor's conduct was reckless in cancelling two invoices due to lack of funding although the bank advanced the funds on those invoices to have permitted manufacture. Unrest in Indonesia rendered one order uncollectable, but the bank was not warned of the instability. Invoices had 'ship dates' that were really mere estimates of delivery times. The debt was nondischargeable under 11 U.S.C. § 523(a)(2)(A). Luzerne Nat'l Bank v. LaFratte (In re LaFratte), 2002 Bankr. LEXIS 817, 281 B.R. 575 (Bankr. M.D. Pa. May 29, 2002) (Thomas, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:523.08[1]

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Preferential transfer payments total increased to reflect payments for goods creditor could not prove were received during the preference period. Bankr. M.D. Pa. PROCEDURAL POSTURE: Plaintiff creditors' committee sought reconsideration of an order granting judgment in favor of the committee on its complaint to recover payments under 11 U.S.C. §§ 547, 549, asserting the court made an incorrect calculation as to preferential transfers on subsequent advances of new value, and requesting pre- and post-judgment interest. Defendant creditors cross-moved as to the ordinary business terms issue under 11 U.S.C. § 547(c)(2). OVERVIEW: The committee argued that certain invoices indicating delivery dates of goods as 'unknown,' as listed in two of the creditors' exhibits, should not have been calculated as new value setting off prior preferential transfers. The court found those invoices actually represented direct shipments of goods to the debtor, and found that in connection with one invoice, the creditor did not prove that the goods were actually received by the debtor during the preference period. The amount of that invoice could not be offset against preferential transfer payments. The judgment amount as to preferential transfers was increased by the amount of that invoice. The court saw no reason to doubt the propriety of allowing interest on the claim from the commencement of the action. Also, 28 U.S.C. § 1961(a) provided for interest. The applicable interest rate was that provided in 28 U.S.C. § 1961 for both pre-judgment and post-judgment interest. Official Comm. of Unsecured Creditors of Contempri Homes, Inc. v. Wholesale, 2002 Bankr. LEXIS 818, 281 B.R. 557 (Bankr. M.D. Pa. March 13, 2002) (Thomas, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 5:547.01

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4th Cir

Relief from stay denied for auto loan creditor where debtors were not in default. Bankr. E.D. Va. PROCEDURAL POSTURE: Defendants, married debtors, filed a petition for relief under chapter 7 of the Bankruptcy Code. The debtors filed a statement of intention of their plan to retain a vehicle without reaffirmation. Plaintiff creditor filed a motion to terminate the automatic stay pursuant to 11 U.S.C. § 362(d)(1), and the debtors responded. OVERVIEW: The debtors had executed a motor vehicle contract and security agreement with a car dealer, which was assigned to the creditor. The creditor claimed that the debtors had failed to adequately protect the creditor's interest in the vehicle because they: (1) defaulted under the contract on the bankruptcy filing date; (2) remained in default; (3) had not surrendered the vehicle to the creditor, redeemed the creditor's interest in the vehicle, nor reaffirmed their contract obligations. The court found that pursuant to the terms of the contract, the debtors were not in default when they filed their chapter 7 petition because they were within the contractual grace period. The court also found that they were not in default on the date of the preliminary hearing on the relief from stay. Termination of the automatic stay under section 362(d)(1) was not warranted. Allowing the debtors to remain in possession of the vehicle in exchange for payment of the monthly installments placed the parties in the same positions as they were in prior to the debtors' bankruptcy filing. The debtors were entitled to retain the collateral and continue to make payments pursuant to their contract. Tidewater Fin. Co. v. Cooper (In re Cooper), 2002 Bankr. LEXIS 826, - B.R. - (Bankr. E.D. Va. April 16, 2002) (Tice, C.B.J.).

Collier on Bankruptcy, 15th Ed. Revised 3:362.07[3]

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Debtors who were not in default allowed to retain motor vehicle without reaffirmation. Bankr. E.D. Va. PROCEDURAL POSTURE: Defendants, married debtors, filed a petition for relief under chapter 7 of the Bankruptcy Code. The debtors filed a statement of intention of their plan to retain a vehicle without reaffirmation. Plaintiff creditor filed a motion to terminate the automatic stay pursuant to 11 U.S.C. § 362(d)(1), and the debtors responded. OVERVIEW: The debtors had executed a motor vehicle contract and security agreement with a car dealer, which was assigned to the creditor. The creditor claimed that the debtors had failed to adequately protect the creditor's interest in the vehicle because they: (1) defaulted under the contract on the bankruptcy filing date; (2) remained in default; (3) had not surrendered the vehicle to the creditor, redeemed the creditor's interest in the vehicle, nor reaffirmed their contract obligations. The court found that pursuant to the terms of the contract, the debtors were not in default when they filed their chapter 7 petition because they were within the contractual grace period. The court also found that they were not in default on the date of the preliminary hearing on the relief from stay. Termination of the automatic stay under section 362(d)(1) was not warranted. Allowing the debtors to remain in possession of the vehicle in exchange for payment of the monthly installments placed the parties in the same positions as they were in prior to the debtors' bankruptcy filing. The debtors were entitled to retain the collateral and continue to make payments pursuant to their contract. Tidewater Fin. Co. v. Cooper (In re Cooper), 2002 Bankr. LEXIS 826, - B.R. - (Bankr. E.D. Va. April 16, 2002) (Tice, C.B.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:521.10

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Discharge of student loans denied as debtor failed to establish undue hardship. Bankr. E.D. Va. PROCEDURAL POSTURE: In bankruptcy proceedings, plaintiff debtor sued defendant United States Secretary of Education, and the United States Department of Education, seeking the dischargeability of student loan debts held by defendants. OVERVIEW: Debtor claimed an undue hardship discharge pursuant to 11 U.S.C. § 523(a)(8). The court held that 'undue hardship' meant more than unpleasantness associated with repayment of a just debt. Dischargeability of student loans should have been based upon a certainty of hopelessness. In the case at bar, while it was clear that debtor's current income level certainly indicated impoverishment, in determining undue hardship, the court also had to look to future income possibility. Neither debtor nor her dependent child suffered from any health problems. The last time the debtor had submitted a job search form to the department of social services was almost two years ago. Debtor had currently volunteered 20 hours per week with a legal aid service. She testified that she was unable to secure full-time employment because she could not afford a car. At trial, debtor testified that she lived within three-fourths of a mile of public transportation, but considered this distance too far to walk. Based on such facts, there was no evidence that debtor's present circumstances were likely to have existed for a significant portion of the repayment period. Weir v. Page (In re Weir), 2002 Bankr. LEXIS 830, - B.R. - (Bankr. E.D. Va. March 29, 2002) (Tice, C.B.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:523.14

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Confirmation of plan which proposed selling land without court approval or time limitation denied for lack of good faith. Bankr. E.D. Va. PROCEDURAL POSTURE: The debtor filed a petition for relief under chapter 13 of the Bankruptcy Code. The trustee and a creditor objected to the confirmation of the debtor's plan, asserting lack of good faith under 11 U.S.C. § 1325(a)(3). OVERVIEW: The creditor held an unsecured claim against the debtor based on a guaranty of a promissory note. The trustee claimed that the plan lacked good faith because: (1) the debtor proposed in his plan to sell land without further court approval other than confirmation of plan in violation of the Bankruptcy Code; and (2) there was no time limitation within which the property was to be sold to generate funds to fund the plan. The creditor also objected and claimed that the debtor: (1) proposed to pay only a limited amount to unsecured creditors; (2) had claimed unnecessary expenses; and (3) undervalued his residence in the schedules. The court believed that the debtor's plan was not proposed in good faith under section 1325(a)(3). The plan was contingent upon the debtor selling the land for a price sufficient to pay off the lienholder. The debtor was unable to show that there was a reasonable likelihood that the plan would succeed. The plan was not filed in good faith because the debtor proposed to pay all of a joint mortgage debt while paying only a small dividend to his individual unsecured creditors. The plan also included excessive expenditures. In re Stanley, 2002 Bankr. LEXIS 827, - B.R. - (Bankr. E.D. Va. March 18, 2002) (Tice, C.B.J.).

Collier on Bankruptcy, 15th Ed. Revised 8:1325.04

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5th Cir.

Bankruptcy court properly exercised jurisdiction in declining to enforce vague settlement agreement incorporated in approved plan. Bankr. E.D. Tex. PROCEDURAL POSTURE: In a chapter 11 bankruptcy proceeding, where a plan of reorganization had been confirmed, certain claimants moved to enforce a settlement agreement relating to their claims against a trust established to liquidate and resolve the claims in question. OVERVIEW: The claimants contended that the trust was obligated to pay no less than 3,000 claims. The trust argued that it was bound to pay no more than 3,000 claims under any circumstance, but could possibly pay fewer claims than the 3,000 ceiling. The critical provision of the settlement agreement was that the trust agreed to pay a sum 'per unit,' not to exceed a total of 3,000 units for all claimants. The court found that the settlement agreement was too vaguely written to be enforceable. The contested clause was ambiguous and reasonably susceptible to more than one meaning. The problematic term was not '3,000 claims' as the parties suggested. Rather, it was the use of the term 'unit,' which was undefined in the settlement agreement, the reorganization plan, and other documents, that rendered the settlement agreement unenforceable. Analysis of the 'four corners' of the document clearly indicated that a 'unit' was not a 'claim,' but there was insufficient information as to what a unit was or to indicate that the parties had a mutual understanding as to what the term 'unit' referred. In re United States Brass Corp., 2002 Bankr. LEXIS 354, 277 B.R. 326 (Bankr. E.D. Tex. March 20, 2002) (Sharp, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 2:105.01

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6th Cir.

Absent proof of mailing, debtor could not establish that it filed a tax return and IRS deficiency was nondischargeable. Bankr. N.D. Ohio PROCEDURAL POSTURE: Plaintiffs, married debtors, filed a petition for relief under chapter 7 of the United States Bankruptcy Code. The debtors filed a complaint against defendant, the federal government, to determine the dischargeability of their tax obligation. The government filed a motion for summary judgment, and the debtors responded to the motion. OVERVIEW: The Internal Revenue Service had sent a notice of deficiency to the debtors and the debtors failed to petition the U.S. Tax Court to challenge the deficiency. The debtors were later assessed for the deficiency, along with interest and penalties. The court found the key issue was whether there was sufficient evidence, for purposes of 11 U.S.C. § 523(a)(1)(B)(i), to find that the debtors filed a tax return. The IRS claimed that it never received a return and calculated the deficiency by preparing a tax return for the taxpayers. The court found that where the taxpayers sought to establish, in the absence of a postmark, that they actually mailed a tax document to the IRS, the protections of I.R.C. section 7502 did not apply. This was because these statutory exceptions to the physical delivery rule only applied when there existed proof of a postmark for an actual mailing of the document to the IRS. The court found that the federal government had offered evidence that it did not receive the debtors' tax return. Where the debtors were not able to produce a registered mail receipt to show otherwise, the court found that the taxpayers did not file a tax return for the year in question. Crump v. U.S., 2002 Bankr. LEXIS 819, 282 B.R. 859 (Bankr. N.D. Ohio July 17, 2002) (Speer, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:523.07[3]

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Loan in favor of debtor's cousin was not nondischargeable absent evidence of fraud or false pretenses. Bankr. W.D. Mich. PROCEDURAL POSTURE: Creditor, the debtor's cousin, filed an adversary proceeding to establish that a debt owed to him was nondischargeable under 11 U.S.C. § 523(a)(2)(A), alleging that the promissory note provided the noted was secured by real property, causing him to believe that the debtor owned the property. The debtor argued that he made a payment on the note and the 15 percent interest rate was usurious under Mich. Comp. Laws Ann. § 438.31 (West 1995). OVERVIEW: The first promissory note was for $30,000, a second note was for $25,000. The debtor made one payment of $33,000. The cousin offered no evidence as to how he applied the payment, thus, the state law presumption governed and the oldest note was paid first. With interest, the remaining balance on that note was $5,506. Under Mich. Comp. Laws Ann. § 438.61(1)(a) (West 1995 & Supp. 2001), the business entity exception did not apply, because the debtor did not give the cousin a written, sworn statement specifying the business purpose for the loan. Thus, no interest could be charged under the note and the first note was fully paid. Because the cousin agreed to make a second loan with no security, the court did not believe that the cousin relied upon representations regarding ownership of the property. The circumstances as to the second note were not timely pled and were not before the court. The checks written by the cousin were made payable to another entity, the owner of the property. The court accepted the debtor's explanation that he disclosed the material circumstances to the cousin. Importantly, when the debtor received an inheritance, he made the substantial payment. Corradini v. Corradini (In re Corradini), 2002 Bankr. LEXIS 381, 276 B.R. 571 (Bankr. W.D. Mich. April 19, 2002) (Gregg, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:523.08[1]

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Trustee could avoid unauthorized postpetition transfer of automobile that debtor won in golf tournament. E.D. Mich. PROCEDURAL POSTURE: Plaintiff trustee sued defendants debtor and golfers to avoid the postpetition transfer of a car and to recover the vehicle's value. The golfers requested a jury trial. The United States Bankruptcy Court for the Eastern District of Michigan, Southern Division, denied the request for a jury trial and granted summary judgment to the trustee as against the golfers, and the golfers appealed. The trustee's claim against the debtor settled. OVERVIEW: The debtor and golfers were in a golf tournament and agreed that if any of them won the hole-in-one prize car, they would split it. The debtor made a hole in one. After filing his bankruptcy petition, he took possession of the car and sold it to one of the golfers for his one quarter share. The trustee sought to (1) avoid the postpetition transfer of the car, (2) direct the purchasing golfer to turn over the car and its title to the trustee, and (3) hold the debtor and golfers jointly and severally liable for the difference between the car's value at the time of the sale and the amount received therefrom. The court found that (1) the car was part of the debtor's estate as the agreement was to divide the value of the car, not the car itself; (2) the golfers did not have a property interest in the car and they had no more than an unsecured claim against the debtor for their interests in the car; (3) the contract was not executory as the golfers had performed under the agreement; and (4) the trustee was entitled to avoid the transfer of the car from the debtor to the golfer and the payments made to the other golfers as unauthorized postpetition transactions. Annas v. Allard, 2002 U.S. Dist. LEXIS 6861, 272 B.R. 633 (E.D. Mich. February 15, 2002) (Roberts, D.J.).

Collier on Bankruptcy, 15th Ed. Revised 5:549.03

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7th Cir.

Motion to withdraw reference of matters pertaining to job actions in labor disputes as defined by Norris LaGuardia Act denied. N.D. Ill. PROCEDURAL POSTURE: Movants, unions, sought to withdraw the reference of a portion of the chapter 11 bankruptcy proceeding of debtor, a construction company, from the bankruptcy court under 28 U.S.C. § 157(d), and for relief from the automatic stay. The portion was all matters pertaining to the automatic stay of job actions in response to labor disputes, under the Norris-LaGuardia Act. In their reply, they asked the district court to take jurisdiction. OVERVIEW: In an order, following a temporary restraining order hearing brought by debtor seeking to enjoin certain activities by the union, the bankruptcy court found that the automatic stay of 11 U.S.C. § 362 applied to prohibit certain communications by the union to its members who were employed by debtor. No appeal was taken from this order. While the bankruptcy court did not enter the temporary restraining order, it did specifically rule that the stay applied to the contested behavior. As a final order, it was appealable to the district court under 28 U.S.C. § 158(a)(1). By foregoing appeal of the order, the unions were bound by the bankruptcy court's decision that the stay applied to the contested conduct. The Norris-LaGuardia Act did not preclude the application of the stay. The bankruptcy court was in a better position to decide the motion for relief from stay in the context of the entire bankruptcy case. United Union of Roofers, Waterproofers and Allied Workers Local 11 v. Sierra Constr. Servs., 2002 U.S. Dist. LEXIS 6697, - B.R. - (N.D. Ill. April 12, 2002) (Reinhard, D.J.).

Collier on Bankruptcy, 15th Ed. Revised 1:3.04

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8th Cir.

Proposed assignment of commercial lease was approved by bankruptcy court as in best interests of the estate. Bankr. N.D. Iowa PROCEDURAL POSTURE: Chapter 7 trustee moved under 11 U.S.C. § 365 for an order allowing debtor corporation's assumption of a commercial property lease for assignment to outside party. OVERVIEW: The court examined the assignment and assumption agreement entered into between the outside party and the trustee. The agreement stated that the bankruptcy estate would assume the lease from debtor corporation and, thereafter, assign the unexpired lease to the outside party. Upon payment of the assumption price, the trustee's interest in the lease would terminate and the outside party would be allowed to enter into negotiations with creditor city to cure the default outside of bankruptcy court jurisdiction. The court concluded (1) the offer by the outside party satisfied the criteria under 11 U.S.C. § 365; (2) it was in the best interest of the estate to approve the motion of the trustee to assign the lease to the outside party pursuant to the agreement executed between the trustee and the outside party; and (3) it would be beneficial for the estate to approve assumption of the lease between debtor and city. In re Tama Beef Packing, Inc., 2002 Bankr. LEXIS 362, 277; B.R. 407 (Bankr. N.D. Iowa April 19, 2002) (Kilburg, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 3:365.05

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9th Cir.

Noteholders' claim against third-party beneficiary of construction contract was discharged in bankruptcy of developer. 9th Cir. PROCEDURAL POSTURE: Plaintiff, an LLC representing noteholders to a bankrupt construction project, filed a breach of contract action against a casino corporation, as a third-party beneficiary to a contract between it and the project's developer, after the developer's bankruptcy. The United States District Court for the District of Nevada granted summary judgment for the corporation. The LLC appealed. OVERVIEW: The LLC challenged the bankruptcy court's jurisdiction over the noteholders' claim against the corporation. The challenge was meritless. The bankruptcy court's jurisdiction extended to proceedings under or related to cases under Title 11, and held the corporation's obligation to fund an escrow account was conditioned on the developer's performance of its obligation to raise equity, which it did not do. Thus, the corporation's obligation was discharged. The official committee did not appeal this judgment. Because the LLC and the official committee both represented the noteholders, the committee's failure to appeal the bankruptcy court's judgment was imputed to the LLC for res judicata purposes. Thus, it could not challenge the bankruptcy court's finding. Also, the developer's second reorganization plan discharged the corporation's obligation to the noteholders. The bankruptcy court confirmed this plan, and the Official Committee did not object. Thus, the LLC was barred from asserting a claim. The claim also failed because the corporation's obligation to fund an escrow account was conditioned on the developer's ability to raise equity, which it failed to do. Stratosphere Litig. v. Grand Casinos, Inc., 2002 U.S. App. LEXIS 16213, 298 F.3d 1137 (9th Cir. August 13, 2002) (Sneed, C.J.).

Collier on Bankruptcy, 15th Ed. Revised 4:524.01

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Bankruptcy court had post-dismissal jurisdiction to enter order reopening chapter 13 case and annulling automatic stay. B.A.P. 9th Cir. PROCEDURAL POSTURE: The debtor appealed orders of the United States Bankruptcy Court for the District of Hawaii reopening her previously-dismissed chapter 13 case and annulling the automatic stay of 11 U.S.C. § 362 as to the creditor's foreclosure proceedings, claiming the bankruptcy court had no jurisdiction under 28 U.S.C. § 1334, and that no adequate cause was shown to annul the stay because the creditor delayed in moving for relief for two years. OVERVIEW: The appellate panel held the bankruptcy court had jurisdiction to annul the stay notwithstanding the dismissal of the case and regardless of whether the case was reopened. The bankruptcy court had ancillary jurisdiction to interpret and enforce D. Haw. Bankr. Gen. Procedural Order 1, which required the debtor to advise the creditor and the state court of her bankruptcy and provided that failure to do so could constitute cause for nullification of the stay. The creditor's motion to annul the stay commenced a civil proceeding 'arising under' the Bankruptcy Code, as opposed to civil proceedings 'arising in' or 'related to' cases under the Bankruptcy Code, within the meaning of 28 U.S.C. § 1334(b). The 'arising under' jurisdiction did not depend on the existence of a non-dismissed, non-closed bankruptcy case. The debtor lacked standing to appeal the reopening. The bankruptcy court did not abuse its discretion by annulling the stay. The creditor was denied mortgage payments while the debtor gained free use of the home. That harm to the creditor and the lack of unjust harm to the debtor was ample justification for annulling the stay. Aheong v. Mellon Mortgage Co. (In re Aheong), 2002 Bankr. LEXIS 363, 276 B.R. 233 (B.A.P. 9th Cir. March 29, 2002) (Montali, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 1:3.01[4][c][i]

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10th Cir.

University was excused from delivering transcript to debtor who was in default under her student loan. Bankr. D.N.J. PROCEDURAL POSTURE: Movant debtor sought to compel respondent university to turn over her academic transcript in chapter 13 case. OVERVIEW: After filing a chapter 13 petition, the debtor sought release of her transcript so she could continue her education at another school. Pursuant to its policy, the university withheld her transcript because she had not repaid a student loan. The debtor contended that the refusal constituted prepetition debt collection in violation of the automatic stay. The court interpreted the debtor's motion not as an effort to compel the turnover of the debtor's property, but rather as an attempt to force the university to perform on its promise to create and distribute a student transcript. Because the university was excused under basic contract law from delivering a transcript to a student who was in default under her student loan, it was not a violation of 11 U.S.C. § 362(a)(6) to refuse to release the transcript to the debtor in a chapter 13 case. The university's conduct was consistent with the purpose of the automatic stay to maintain the status quo. Had the debtor not filed for relief under chapter 13 she would not have been able to obtain the transcript, and the debtor should not have more rights under her contract inside of bankruptcy than she would enjoy outside of bankruptcy. In re Billingsley, 2002 Bankr. LEXIS 377, 276 B.R. 48 (Bankr. D.N.J. April 18, 2002) (Lyons, B.J.).

Collier on Bankruptcy, 15th Ed. Revised 3:362.03[8]

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