Virginia Bankruptcy Alternatives - Loans & Mortgages
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Loan and Mortgage Resources:
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Recent Notable Opinions from Virginia Bankruptcy Courts
In re Meloy, Case No. 98-31268-T before the Virginia Bankruptcy Court for the Eastern District, Richmond
Division, decided August 14th, 2000. The debtors originally filed a petition under Chapter 11. During
reorganization, the debtors reaffirmed a debt owed to the defendant bank. Thereafter, the debtors failed to make
timely payments as required by the reaffirmation agreement. The bank foreclosed upon RE securing the note and
sought reimbursement for the deficiency balance. In response to the bank's attempt to collect the deficiency
balance, the debtors then converted their case to Chapter 7 before the Virginia Bankruptcy Court.. All
objections in connection with the Chapter 7 case were resolved and debtors received a discharge. Issue before
the Virginia Bankruptcy court: Is the bank entitled to recover the deficiency balance following discharge? HELD:
in this case, yes, the Virginia Bankruptcy court determined the bank may recover because the reaffirmation
agreement was not specifically rescinded in the time allowed by statute. 11 USC 524 provides, in part, "(c) An
agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part, is based
on a debt that is dischargeable in a case under this title is enforceable only to any extent enforceable under
applicable nonbankruptcy law, whether or not discharge of such debt is waived, only if . . . (4) the debtor has
not rescinded such [reaffirmation] agreement at any time prior to discharge or within sixty days after such
agreement is filed with the court, whichever occurs later, by giving notice of rescission to the holder of such
claim." In this case, the Virginia Bankruptcy court determined the debtor's failure to provide proof of
notice of recession excluded the debt from the discharge injunction.
Recent Notable Opinions of the Supreme Court of The United States:
Archer v. Warner, Docket Number: 01-1418 IN THE SUPREME COURT OF THE UNITED STATES ON PETITION FOR WRIT OF
CERTIORARI, Argued January 13, 2003, Decided March 31, 2003. Leonard and Arlene Warner sold the Warner Manufacturing Company to Elliott and Carol Archer.
Later, the Archers sued the Warners for fraud related to the sale. This suit was settled. According to the settlement
agreement, the Archers released the Warners of all liability except for a $100,000 promissory note. After the suit
was voluntarily dismissed, the Warners defaulted on the first payment due on the note. The Archers then sued the
Warners for collection in state
court, and in turn, the Warners filed Chapter 7. The Archers
objected to the discharge of their note. The Code states a debt shall not be dischargeable "to the
extent it is for money obtained by false pretenses, a false representation, or actual fraud." This motion was
denied and discharge of liability for payment of the note was granted. The District Court and Court of Appeals affirmed.
Held: In a 7-2 opinion, the Court concluded "the Archers' settlement agreement and release of liability may have
worked a kind of novation, but that fact does not bar the Archers from showing that the settlement debt arose out
of 'false pretences, a false representation, or actual fraud,' and consequently is nondischargeable." If a release
of liability is obtained by fraud, the release within the agreement is voidable.
The resources we recommend pertain in some way to Virginia Bankruptcy cases, whether laws, rules of
evidence, rules of procedure, confirmation, discharge, reorganization, or one of many other topics . Large bodies of law
pertain to Virginia Bankruptcy proceedings must be honored by the courts. As new Virginia Bankruptcy laws are
established each year, the scope of this website will continue to
expand.
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