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Bankruptcy: Settlement Proceeds – Assignment – Dischargeability
Stephanie Maniscalco//April 21, 2011//
Bankruptcy: Settlement Proceeds – Assignment – Dischargeability
Stephanie Maniscalco//April 21, 2011//
Listen to this articleWhere the bankruptcy panel holds that a debtor’s settlement proceeds from her state court action against her home builder were not proven to be “miscellaneous proceeds” under the terms of her mortgage, the debtor could not have assigned the proceeds to a mortgage company-creditor, and even if the settlement proceeds were found to be miscellaneous proceeds under either a contract or tort theory, the Arkansas statutes relied on by the bankruptcy court did not create an express trust giving rising to a fiduciary duty that would require the debtor to pay the settlement proceeds to the creditor, and without a fiduciary duty, there could not be a non-dischargeable debt.
Judgment is reversed.
Arvest Mortgage Company v. Nail (MLW No. 62096/Case No. 10-6057 – 14 pages) (U.S. Bankruptcy Appellate Panel, 8th Circuit, Schermer, B.J.) Appealed from U.S. Bankruptcy Court Western District of Arkansas.
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