665 B.R. 670
Bankr. N.D. Ga.2024Background
- Debtor Marlene Evans has defaulted on her mortgage loan and engaged in prolonged efforts to delay foreclosure of her property, including numerous frivolous filings (“Junk Filings”) in real estate records and repeated, strategically timed bankruptcy filings.
- The Security Deed on the property was repeatedly upheld by the Georgia Superior Court, which also found some of Evan's filings to be forgeries and issued injunctive relief and contempt orders against her.
- Evans has filed eight bankruptcy cases since 2011, nearly all immediately before or on the day of scheduled foreclosures, and failed to prosecute or complete any of them in good faith.
- In August 2024, Evans filed her eighth bankruptcy case just before a scheduled foreclosure, but failed to obtain required pre-petition credit counseling and filed an infeasible Chapter 13 plan.
- Wilmington Savings Fund Society (“Wilmington”), the loan holder, proceeded with the foreclosure shortly after the bankruptcy was filed, and later sought to annul the automatic stay and validate the foreclosure sale, also arguing the case was part of a scheme to defraud.
- Both Wilmington and the Chapter 13 Trustee filed motions to annul the stay and dismiss the case; Evans opposed and also moved to waive the credit counseling requirement and challenge Wilmington’s standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Annulment of Automatic Stay and Validation of Foreclosure | Wilmington argued Debtor’s repeated, bad faith filings and failed compliance justify retroactive stay annulment and sale validation | Evans argued timely notice was provided of bankruptcy, making the sale void as a stay violation | Stay annulled retroactively; foreclosure sale validated due to exceptional bad faith and delay tactics |
| Scheme to Hinder, Delay, or Defraud under § 362(d)(4) | Wilmington asserted the case was part of a scheme involving unauthorized transfers and multiple filings to delay foreclosure | Evans claimed no bad faith or improper filings; challenged court jurisdiction | Court found clear, long-term pattern of bad faith; order entered under § 362(d)(4) |
| Eligibility to be a Debtor—Credit Counseling | Trustee argued Debtor failed to obtain credit counseling prior to filing, as required by § 109(h) | Evans moved to waive requirement, citing Wilmington’s lack of standing/not being registered | Motion to Waive denied; failure to obtain credit counseling made Debtor ineligible under § 109(h) |
| Standing of Wilmington | Evans argued Wilmington was not authorized to prosecute in Georgia for lack of state registration | Wilmington cited Georgia law exceptions allowing debt collection without registration | Court rejected Evans’s standing argument as meritless under Georgia law |
Key Cases Cited
- In re Albany Partners, Ltd., 749 F.2d 670 (11th Cir. 1984) (Bankruptcy courts may retroactively annul automatic stay in limited, compelling circumstances)
- In re Soares, 107 F.3d 969 (1st Cir. 1997) (Annulment is rarely granted and only when facts are unusually compelling; courts engage in case-by-case analysis)
- In re Myers, 491 F.3d 120 (3d Cir. 2007) (Actions violating stay are void but can be validated by annulment; broad bankruptcy court discretion)
- In re Nat'l Env't Waste Corp., 129 F.3d 1052 (9th Cir. 1997) (Annulment remedies are fact-specific and courts have wide latitude)