In re Chrystyna Hankewycz Sinclair (25-80223)

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Order on Motion for Determination that Automatic Stay Does Not Apply or, Alternatively, Relief from the Automatic Stay. The Court held that the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3613, overrides the bankruptcy code to the extent that a restitution debtor holds rights to property otherwise subject to the automatic stay. Debtor filed a voluntary chapter 13 bankruptcy case, listing among her assets real property subject to three liens.  One lien arose from a restitution judgment, subject to the MVRA, against Debtor’s ex-spouse, as a result of the ex-spouse having been found guilty of wire fraud. At the time the judgment was entered, Debtor and the ex-spouse owned the subject real property as tenants by the entireties. Upon entry of the judgment, the properly perfected lien attached to all of the ex-spouse’s property, including his undivided one-half ownership interest in the real property at issue. Subsequently, and prior to Debtor’s bankruptcy, the United States ( Creditor) initiated a civil action to enforce the lien against the ex-husband’s undivided one-half ownership interest in the real property in the middle district of North Carolina. Creditor sought a forced judicial sale and named Debtor as one of the defendants. Thereafter, Debtor filed for bankruptcy. Creditor requested a determination that the automatic stay does not apply to the Civil Action because the MVRA overrides the Bankruptcy Code. In the alternative, Creditor requested relief from the automatic stay. The Court determined that the automatic stay does not apply to the Civil Action. First, the Court noted that it had previously held that the MVRA allows for seizure of all property or rights to property notwithstanding any other federal law, also applies to and supersedes the Bankruptcy Code, including the automatic stay provided by 11 U.S.C. § 362(a). A restitution lien is valid against all co-owners, even if owned as tenants by the entireties, as here. While Debtor was not the defendant ordered to pay restitution, and although she had since become the sole owner of the property, the restitution lien nevertheless survived ex-spouse’s transfer of his interest in the property to her. The Court further noted that if such a transfer did permit a criminal defendant to evade the MVRA by simply transferring the affected property to a spouse after the property became subject to the restitution lien such a rule would also would eviscerate the statute’s effect. Therefore, the stay did not apply to the continuation, enforcement, and collection of the restitution against the real property in the civil action.  

Date: 
Wednesday, January 14, 2026
Published: 
Yes
Index Heading: 
Automatic Stay
Affirmed: