Pierce v. Collection Associates, Inc. (In re Pierce)

No. 14-1365 (8th Cir. B.A.P. Mar. 9, 2015).
Transfers sought to be avoided by the debtors as preferential totaled less than $600 in the aggregate, and were therefore subject to the § 547(c)(8) defense for consumer payments. Affirmed.
Procedural context:
Debtor filed a petition to avoid preferential transfers against its former garnishor. The bankruptcy court concluded the preference action was barred by the defense for consumer payments under $600, and the debtor appealed.
Debtor’s wages were garnished over six prepetition pay periods. The first four garnishments, totaling $562.78, were delivered to Collection Associates. The last two garnishments, totaling $296.20, were returned to the debtor, who had filed for bankruptcy protection in the interim. In his complaint, the debtor alleged that a total of $858.98 in transfers had been made, but sought to avoid and recover only the $592.40 that had not previously been returned to the debtor. The Bankruptcy Appellate Panel concluded that “the terms of the avoidance petition make clear that the [debtor] sought only to avoid the first four garnishments,” and thus that the § 547(c)(8) defense to avoidance of transfers less than $600 barred the claim. In a dissenting opinion, Circuit Judge Colloton held that “[t]he better vew of Nebraska law is that Brandon gained an interest in the wages as soon as he earned them,” and read the debtor’s petition as seeking to avoid the entire transfer of wages totaling $858.98, thus rendering the § 547(c)(8) defense inapplicable.
Colloton, Bright, and Shepherd.

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