Bankruptcy Case reopened based upon prior rescission that was ignored

Mar 26, 2015

For further information, please call 954-495-9867 or 520-405-1688

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In a closed bankruptcy case, the debtor filed a motion to reopen it because the schedules were wrong — resulting from an erroneous interpretation of the law regarding rescission. Hence the prior rescission was effective when mailed and thus there were significant assets in the bankruptcy estate that were unencumbered by operation of law and thus were not computed in the discharge of debts and payments of creditors.

There is still some confusion in that court as to whether its prior rulings about the mortgage and note was non operational, but the court conceded that there was a problem as a result of the recent 9th Circuit decisions and the unanimous Supreme Court decision in which Justice Scalia confirmed what that everyone already knew — the TILA statute is specific and provides a specific remedy in “rescission.” It allows the borrower to cancel the deal and by operation of law that is all the borrower needs to do — by an ordinary letter. It is effective when it is dropped in the mailbox. The note and mortgage are gone. So in Bankruptcy, treating the home as though it was an encumbered asset and allowing foreclosure to go forward is plainly wrong — although supported at the time by erroneous rulings from the 9th Circuit Court of Appeals.

Case No. 11-02024: Eastern District California, Sacramento Division. In the matter of Macklin v. Deutsche Bank National Trust Co. as Trustee for Accredited Mortgage Loan Trust Series 2006-2…on motion and notice provided, the court Grants the Motion to Reopen Adversary Proceeding. Upon review, there are no disputed factual matters from the previously closed case, thus, the issues will be resolved without argument from the parties. Plaintiff argues that recent 9th Circuit and US Supreme Court decisions warrant the court reopening this case…the Court agrees. Tentative ruling and case disposition shall be mailed to parties’ counsel.

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