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Analysis of Enforcement of Money Judgments in Arizona Against a Judgment Debtor’s Residence / “Homestead” Property
By Larry O. Folks (10/26/20) (reprinted with permission of author)
Relevant Background Facts
Judgment Creditor obtained a money judgment (“Judgment”) against Judgment Debtor. The Judgment was recorded with the Maricopa County Recorder (“County Recorder”) prior to the Judgment Debtor having filed for bankruptcy protection and while Judgment Debtor resided in and owned a residence located in Maricopa County (“Residence”).
Judgment Debtor filed a voluntary petition for bankruptcy relief (“Bankruptcy Proceeding”) after the Judgment was recorded with the County Recorder. Judgment Creditor filed an unsecured Proof of Claim based upon the Judgment in the Bankruptcy Proceeding. Judgment Debtor received a Chapter 7 bankruptcy discharge.
Legal Analysis APPLICABLE ARIZONA LAW
The Arizona Court of Appeals’ 2018 decision in Pacific Western Bank v. Castleton, 434 P.3d 1187, 246 Ariz. 108 (AZ App. 2018) includes a comprehensive analysis of a judgment creditor’s rights with respect to collecting upon a recorded money judgment against a judgment debtor’s “homestead property” (residence) under Arizona law. Following are the important bullet point concepts:
- The general rule is that a recorded money judgment creates a statutory judgment lien on all real property owned by a judgment debtor in the county where the judgment is recorded.
- An exception to the general rule is that a “homestead property” is completely exempt from the statutory judgment lien. The recorded judgment simply is not a lien on the homestead property at all.
- Even though the judgment creditor does not have a lien on the “homestead property,” the judgment creditor is given the legal remedy to force a Sheriff’s execution sale of the “homestead property” if there is equity in the property above all consensual liens on the property and the $150,000 homestead exemption amount available to the judgment debtor.
APPLICABLE BANKRUPTCY LAW
The Arizona Bankruptcy Court has considered the issue and determined that “a recorded judgment shall not become a lien upon any homestead property” regardless of the value of the property.2 Therefore, when the Judgment Debtor filed for bankruptcy protection, Judgment Creditor did not hold a judgment
lien upon Judgment Debtor’s Residence. In addition, Judgment Creditor properly filed an unsecured Proof of Claim in Judgment Debtor’s Bankruptcy Proceeding.
The Bankruptcy Court, in In re Rand, describes that, when a Chapter 7 bankruptcy is filed, it is the Chapter 7 trustee’s obligation to sell the “homestead property” and distribute any equity above the consensual liens and $150,000 “homestead exemption” amount and make a general distribution to all creditors. Furthermore, the Arizona Court of Appeals, in Grand Real Estate, Inc. v. Sirignano,3 explained that, when a judgment creditor with a recorded judgment against a “homestead property” has no lien and was not a secured creditor, the debtor’s Chapter 7 discharge released the judgment debtor from personal liability and further enforcement of the judgment is barred.
My analysis of the bankruptcy law is that Judgment Creditor was an unsecured creditor when the bankruptcy was filed, its judgment was discharged, and it lost its state law right to force a Sheriff’s sale of the “homestead property” if it has equity after the date of the discharge.
Conclusion
Unfortunately, Judgment Creditor does not have a lien on the Judgment Creditor’s Residence and it cannot force a Sheriff’s sale of the Residence due the bankruptcy discharge.
2 In re Laurine, 2017 WL 2458354 (Bankr. D. Ariz. 2017) citing In re Rand, 400 B.R. 749 (Bankr. D. Ariz. 2008).
3 139 Ariz. 8, 13, 676 P.2d 642,647 (AZ App. 1983)
Larry Folks
Folks Hess, PLLC
1850 N. Central Ave., Suite 1140
Phoenix, Arizona 85004
602-256-5906 Direct Line
[email protected] www.AzDefaultLegalServices.com
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Over the last thirty, plus years, I have repeatedly heard that some ill-informed title companies require a debtor (someone who filed for and received a bankruptcy discharge), must pay a judgment “because it is recorded on their home”. You can see from Mr. Folks’ article, and several of my articles on this website, that is not an accurate reading of the laws of Arizona. In fact, it is blatantly opposite of the law.
What should you do if faced with this situation? Switch titles companies (call my office for referrals).
Just because someone in power tells you something does not mean they know what they are talking about. Talk to those who have more experience and are looking out for you, not just trying to make their lives easy.
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- Do I have to pay a judgment before selling my home?
- 10 Things You Need to Know Before Filing Bankruptcy
- Rebuilding Your Credit Score After Bankruptcy
- What is a Judgment Debtor’s Examination
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The post Enforcement of Arizona Money Judgment Against Debtor’s Residence “Homestead” Property appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.
If you’ve decided to file a Chapter 13 bankruptcy, then you’re probably wondering why the bankruptcy court appointed a trustee over your case. Bankruptcy trustees are there to guide debtors in creating their repayment plan and make sure that the three-to-five-year payment plan is followed to the letter.
Under bankruptcy law, there is nothing you can do to dismiss your trustee when filing bankruptcy. Instead, understanding their duties and obligation will help you as a debtor have a smoother bankruptcy process. Aside from being your guide in court, your bankruptcy trustee normally checks your tax returns before your bankruptcy filing, collects your payments and handles liquidation to your creditors, watches over your income and expenses, and oversee that you pay off your nondischargeable debts.
However since they cannot give you legal advice, you should work with a bankruptcy attorney to negotiate a fair plan and apply certain bankruptcy exemptions to your case.
Chapter 13 Trustee Roles
How active bankruptcy trustees are dependent on whether you reside in a suburban or rural judicial district or in districts where there is a high number of Chapter 13 bankruptcies filed. Below are the duties and responsibilities of a bankruptcy overseer:
- Review Bankruptcy Forms. The trustee verifies the information you provided by cross-checking your official forms and looking over relevant data about income, living expenses, assets, debts, paychecks, bank statements, and accounts. It is important to ensure that you have all the needed documents before filing your petition. Don’t misrepresent any data or fail to declare certain information to avoid jeopardizing your case.
- Oversee the Bankruptcy Petition. A borrower declaring a Chapter 13 bankruptcy will have to propose a new repayment plan that outlines how they can repay some or all of what they owe to their lenders. The trustee is there to make sure that the conditions are fair between you and a lender. Borrowers also receive financial help in terms of creating a realistic budget that fits their intent to repay creditors.
- Assess Property Value. When you file bankruptcy, you will need to give up certain non-exempt properties on assets in an estate and a hearing is conducted to appraise the value of each property. You can get a list of exemptions in your state online or from any bankruptcy law firm near you. Trustees attend this court meeting and may opt to invite an appraiser to help get a more accurate estimate of your assets’ net worth.
- Administer the Meeting of Creditors. One month after filing for bankruptcy, the trustee will call for a meeting with creditors. The filer will answer questions related to their bankruptcy paperwork under oath to determine the viability of their proposed repayment plan. Any creditor present during this meeting may also raise any question on your case. Should you lack supporting documentation, the meeting may be postponed to another date. Your trustee will also protect you from any unlawful claims filed by a creditor with no proper documentation.
- Monitor monthly payments. A month after your filed bankruptcy, you should start giving payments to your bankruptcy trustee following the terms of your proposed plan. It remains a proposal until the court approves or denies it. If approval is granted, the trustee who currently holds the funds will start releasing it to the lending companies or individuals.
- Attend Court Confirmation. If a lender has any objection to the court confirmation, you will have to create an opposition to support the plan. The trustee then attends a confirmation hearing to advise the bankruptcy judge if your plan meets all legal requirements.
- Modify repayment plans. Should you miss out on your payments, a trustee can provide you a reprieve. For the most part, you have control over your money after filing for bankruptcy provided that you regularly pay off secured debts. Should your financial situation change, such as when your regular income increases or a property value becomes raised, the trustee can have your payment schedule amended. The opposite is also true: if your earnings are lower, the trustee can adjust the payment terms or even advise you to convert to a Chapter 7 bankruptcy.
Trustee in Bankruptcy
In exchange for these numerous services, the court-appointed trustee normally gets a percentage of the money disbursed to creditors. This is perhaps one of the things that bankruptcy filers forget to consider when deciding to apply for bankruptcy.
Are you going through financial problems and need help in reviewing your bankruptcy paperwork, checking for compliance with bankruptcy laws, or exploring bankruptcy options? Contact Northwest Debt Relief Law Firm today.
Our bankruptcy attorneys have filed numerous Chapter 7 and 13 bankruptcy cases in the past and can give you a free consultation to get you started on the road to financial recovery and debt management.
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The post What A Trustee Does in A Chapter 13 Bankruptcy Case appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.
https://www.djournal.com/mbj/record-number-of-small-business-bankruptcy-filings-signal-covid-19-distress/article_5ccdcae6-13ab-11eb-8ccf-d37eb8a883c1.htmlOriginally appeared on Mississippi Business JournalA record number of small businesses based in Mississippi filed for protection under Chapter 11 of the U.S. Bankruptcy Code during the second quarter of 2020.That, of course, was when the coronavirus pandemic struck and the first lockdowns and restrictions were put into place across the nation.Chapter 11 allows businesses to reorganize while reaching an acceptable payout to creditors.There were 29 such filings in the second quarter, compared with six in the year-earlier period, according to U.S. bankruptcy data.Such businesses received a stroke of legislative luck when President Trump signed a bipartisan bill that became known as the Small Business Reorganization Act in August 2019, well before the coronavirus struck in March.
The act contains Subchapter V, which was subsequently amended by Congress to increase the maximum debt to $7.5 million, up from $2.75 million for one year, till March 27, 2021 under the CARES (Coronavirus Aid, Relief and Economic Security) Act to benefit debtors, as well as creditors.The number of cases in Mississippi are not big, but they belie a much broader toll on smaller businesses.Dawn Starnes, director of the National Federation of Independent Business in Mississippi, said that “most of our businesses” are family owned and don't file for bankruptcy protection – they just close.Ten or fewer employees is typical of membership, she said.The smallest of businesses keep a tight rein on their balance sheet and manage their inventory closely, though “a lot of folks are just hanging on,” Starnes said in an interview.Thus far, in the lower end of the business community there has not been a noticeable rise in bankruptcies, Starnes said.The Payroll Protection Program, which granted qualified applicants $605 a week but which expired in early August, was a major help, she said.Efforts to renew the program are being pursued, she said, but action looks doubtful till after the presidential election, she said.Two-thirds of NFIB members file their taxes as individuals, she said.In 2020, 97 percent are privately owned and comprise 47 percent of the private work force.Most of the NFIB members in Mississippi have fewer that 50 employees, she said.One of those small companies that has filed is Quality Welding and Fabrication Inc. in Columbia.At it peak, Quality Welding and Fabrication had 125 employees.That's before crude oil and natural gas prices dropped dramatically and demand for the company's tanks accordingly, said owner Kenny Breakfield.The viral epidemic-induced slowdown in the economy curtailed production of crude oil in Mississippi by 50 percent, compared with a year earlier, according to Dr. Sondra Collins, senior economist for the state Institutions of Higher Learning.
https://nypost.com/2020/10/22/brooklyn-roasting-company-files-for-bankruptcy-will-close-its-shops/ Originally appeared on New York Post
The pandemic has hit another beloved Big Apple hot spot.Brooklyn Roasting Company, known for its colorful logo and flavorful coffee, filed for bankruptcy protection on Thursday and said it’s planning to permanently close its remaining retail locations at 50 W. 23rd St. and at 25 Jay St. in Dumbo Brooklyn, according to its Brooklyn bankruptcy court documents.It will keep three other Brooklyn locations open, including at 200 Flushing Ave. and 45 Washington Ave., a spokesman said.The company is also hoping to save its wholesale business, however, which sells to New York institutions like Columbia University and Goldman Sachs as well as the airports.Founded in 2009 by Jim Munson, a former partner in The Brooklyn Brewery, BRC became a beloved New York brand with as many as seven locations across the city at its peak.But its problems began before the pandemic as the company over-expanded in an effort to be acquired, according to the filing.The coffee roaster had been in discussions in 2018 to be acquired for $22 million by an investment group including the former chief executive of Dunkin’ Donuts, the filing states. At the behest of its investors, BRC invested in new real estate and staff, but the acquisition never happened.By the beginning of 2019, “BRC’s financial condition was poor,” and revenues declined for the first time in 2018 to $9.7 million, according to the filing.Just as the company was getting its footing back — with revenues climbing to $10.3 million in 2019 — the pandemic wiped out more than half of the company’s retail sales. It’s wholesale business was also decimated.It reported an “extraordinary COVID expense” year to date without providing details about the debt.BRC received a $727,000 in federal stimulus loans, but the money ran out in August even as its sales remained “severely depressed,” according to the filing. Munson controls 13 percent of the company, the filing said.“This was a one two punch,” said distressed asset expert Adam Stein-Sapir. “They had a failed acquisition and all the additional costs they signed up for in anticipation of that and then Covid.”
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Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.