Whether liquidated damages (LDs) can be claimed after termination is a question which comes up regularly. It is very relevant in the current climate where contracts are often terminated following contractor insolvency. If I were devising a construction law exam paper, this classic question would undoubtedly appear.
Pursuant to 11 U.S.C. § 1322(b)(2), a Chapter 13 bankruptcy plan cannot modify the rights of a secured creditor whose claim is only secured by an “interest in real property that is the debtor’s principal residence.” On December 6, the Eleventh Circuit held that this provision prevents the discharge of a mortgage in a Chapter 13 bankruptcy, regardless of whether the plan “provided for” the mortgage or whether the mortgagee filed a proof of claim.
On December 27th, Jonathan and I returned to the studio to record the latest podcast for The Bank Account. We haven’t discussed New Year’s Resolutions, but we’ll try to return to a little more normalcy in 2019!
This article first appeared in Corporate Rescue & Insolvency, December 2018.
Key points
Key points
We at the BCLP Global Insolvency and Restructuring Developments (the GRID) continue to watch and cover the growing jurisprudence of trustees seeking to recover pre-petition tuition payments made by a debtor parent to support his or her child’s college education.
The West Virginia Consumer Credit and Protection Act (“WVCCPA”) is a remedial statute designed to protect West Virginia consumers from improper debt collection. Only “consumers” have standing to file a lawsuit under the WVCCPA. The term “consumer” is defined as a natural person that owes a debt or allegedly owes a debt. But does a person still owe debt if that debt was discharged by a bankruptcy court? Although there is some conflicting case law in West Virginia, an answer is forming.
On October 26, the Eastern District of Wisconsin issued a ruling dismissing a Fair Credit Reporting Act case. In Garland v. Marine Credit Union, the Court granted summary judgment in favor of the debt collector, holding the dispute was a legal issue such that the consumer could not establish a factual inaccuracy in the credit reporting.
Officers and directors work hard to shepherd their company through bankruptcy. But, even after all that hard work, creditors can still turn around and sue them individually for alleged acts prior to the bankruptcy. What kind of thanks is that? A debtor wishing to protect these hard-working officers and directors may seek to include a third party release in the plan.
The Northern District of Illinois recently held that a collection letter sent to a consumer’s attorney seeking payment on a debt discharged in bankruptcy did not violate the Fair Debt Collection Practices Act based on the “competent lawyer” standard. The case is Grajny v. Credit Control, LLC, No. 18-C-2719, 2018 U.S. Dist. LEXIS 173682, 2018 WL 4905019 (N.D. Ill. Oct. 9, 2018).