In re Chrystyna Hankewycz Sinclair

Summary

The United States Bankruptcy Court for the Middle District of North Carolina held that the automatic stay does not apply to the United States’ continuation of an action to enforce a restitution lien against real property. The court concluded that the Mandatory Victims Restitution Act supersedes the automatic stay where the restitution debtor previously held an interest in the property and a valid lien attached to that interest. The court denied the government’s alternative request for relief from stay as unnecessary.

Holdings

1. When a restitution lien validly attaches to a property interest held by the person ordered to pay restitution, the MVRA permits enforcement of that lien notwithstanding the Bankruptcy Code's automatic stay, including after the property interest has been transferred to the bankruptcy debtor.
2. The MVRA does not override otherwise applicable federal law when the restitution debtor holds no interest in the property and no restitution lien attached to it; however, that limitation does not apply where a valid lien attached to the restitution debtor's property interest before transfer.
3. The alternative request for relief from the automatic stay is denied as unnecessary because the automatic stay does not apply to the Civil Action.

Questions Presented

1. Whether the Mandatory Victims Restitution Act, 18 U.S.C. § 3613, overrides the Bankruptcy Code's automatic stay when the United States seeks to enforce a restitution lien that attached to a nonfiling spouse's interest in real property before that interest was transferred to the Chapter 13 debtor.
2. Whether the automatic stay applies because the restitution debtor is the debtor's nonfiling spouse, the property is now part of the bankruptcy estate, and the debtor herself was not the person ordered to pay restitution.
3. Whether the United States was alternatively entitled to relief from the automatic stay for cause under 11 U.S.C. § 362(d)(1).

Disposition

other