Monthly Archive for November, 2009

Additional Documentation Requirements in Southern Indiana and Southern Ohio

Published
by
Laura Faulkner
on November 27, 2009
in Bankruptcy Act 2009, Chapter 13 and Local Procedures & Rules
. 0 Comments

The Southern District of Indiana and the Southern District of Ohio are revising their Local Rules effective December 1, 2009. Both jurisdictions are revising their Rules to require creditors to attach a post-petition payment history to motions for relief from stay in Chapter 13 cases.

Additionally, the Southern District of Ohio will require additional documentation to be supplied with motions for relief from stay on real estate. Creditors will be required to attach a copy of the recorded deed upon which the debtor acquired the property to the motion for relief from stay.

Please include these additional documents when referring motions for relief form stay to our office in order for us to more quickly process the motion.

Changes to the Federal Rules of Bankruptcy Procedure

Published
by
Laura Faulkner
on November 25, 2009
in Bankruptcy Act 2009
. 0 Comments

Effective December 1, 2009, the Federal Rules of Bankruptcy Procedure will be updated. The most significant change that affects creditors is the change in various time periods. The Rules set forth a number of deadlines for filing pleadings or responses to pleadings. These deadlines are not consistent and oftentimes fall on weekends or holidays. The updated Rules streamline these deadlines to multiples of seven. For example, a 15-day objection period will be shortened to 14 days, while a 20-day objection period will be extended to 21 days.

Similarly, the 10-day stay under Rule 4001 will be extended to 14 days. Under the current rule, an order granting relief from stay is effective 10 days after the date of the order. Starting December 1, 2009, an order granting relief from stay will not be effective until 14 days after the date of the order. Some judges permit a waiver or modification of this rule. Weltman, Weinberg & Reis will continue to seek these waivers and modifications in the jurisdictions that permit it.
 
The Federal Rules of Bankruptcy Procedure are adopted in all courts, so these changes will affect creditors in every jurisdiction in which they file bankruptcy pleadings. Although they create additional burdens for creditors, the underlying goal is to protect debtors’ sensitive financial information and identities.

6th Circuit BAP Finds Kentucky’s Mortgage Curative Statute “IS” to be Applied Prospectively

Published
by
Jack Day
on November 23, 2009
in Real Estate
. 0 Comments

In 2006, the Kentucky legislature passed a statute titled “exception for instruments lodged for record prior to July 12, 2006” to cure defects in mortgages with defective acknowledgments.(1) Prior to that statute, bankruptcy trustees were filing many actions to avoid mortgages whose acknowledgment clauses contained minor technical and clerical errors. After passage of the statute, courts were applying the statute only to save mortgages filed prior to July 12, 2006. This may seem reasonable, given the title of the statute.

The 6th Circuit Bankruptcy Appellate Panel has now issued a decision finding that this statute must also be applied prospectively – to mortgages filed on or after July 12, 2006. The court noted that the title of the statute is not part of the statute and is ignored in determining what the statute means. Looking at the statute, the court agreed with the amicus brief filed by the Kentucky Bankers Association and held that the statute applies to both a mortgage which “is” or “has been, prior to the effective date of this Act, lodged for record. . . .”(2) In this case the “is” makes all the difference.  The court ruled the curative statute must also be applied to save mortgages with defective acknowledgments filed on or after July 12, 2006 from attacks by bankruptcy trustees.
(1) Ky Rev. Stat Ann. section 382.270
(2) In re Pelfrey, 2009 Bankr. Lexis 3623 (6th Cir BAP November 9, 2009)

Bankruptcy Filings Decrease in Northern District of Ohio

Published
by
Alan Hochheiser
on November 20, 2009
in Bankruptcy Filings
. 0 Comments

This year in the United States we have seen Bankruptcy filings increase almost 34% from 2008. However, some good news may be on the horizon in some jurisdictions. After posting a 65% increase in September of 2009, compared to case files in September of 2008, the Northern District of Ohio saw a decrease in October. In October 2009, bankruptcy filings decreased by 1% as compared to October of 2008. One month does not make a trend but we may be seeing some stabilization in this jurisdiction.

In addition, some reports have indicated that there has been a slow down in the number of commercial bankruptcies filed nationally. Some are attributing this to the slowdown in commercial lending.  The number of large Chapter 11 cases has slowed as well.

The rest of the year will be a sign of what is to occur in 2010. Weltman, Weinberg and Reis will continue to monitor the latest bankruptcy trends and its potential effect on creditors.

Procedure for Filing Notice of Mortgage Payment Change Amended in Western District of Pennsylvania

Published
by
Holly Thurman
on November 17, 2009
in Chapter 13, Local Procedures & Rules and Real Estate
. 0 Comments

Effective January 1, 2010, the Western District of Pennsylvania Court Procedure will change regarding notifying the Court and the Debtor of monthly mortgage payment changes. The Chapter 13 Trustee is the acting disbursing agent for ongoing mortgage payments in this district.

Notice of Mortgage Payment Change must be filed with the Court at least twenty-one (21) days prior to the date that the change is to become effective or the Creditor is forever barred from collecting the difference in the change. In order to comply with this deadline, your attorney will need the information and documents as soon as possible after the escrow changes or the interest rate changes.

The Notice of Mortgage Payment Change must include:

  • A complete and accurate loan payment history;
  • A computation of the payment change “in a format which is readably understandable by the Court and the Parties-in-Interest;” and
  • A declaration under penalty of perjury by a competent official of the Creditor substantiating the veracity and accuracy of the requested change 

The Notice can no longer simply state what the monthly payment is and the effective date, rather, we will have to compute and accumulate detailed information justifying the change.

If a loan is transferred or sold, the procedure will now require the new owner to file a copy of any applicable lien assignment evidencing the Creditor’s alleged right to payment if the Creditor is not currently a Creditor “of record”. The assignment must also include, on a separate page, a narrative summary of the chain of title evidencing the Creditor’s authority to act and be paid.

After a Notice of Mortgage Payment Change is filed, the Court will issue a standard order requiring the debtor to:

  • Amend the chapter 13 plan;
  • File a declaration that the existing chapter 13 plan is sufficient to fund the plan with the modified debt; or
  • File an objection to the Notice of Mortgage Payment Change as stated and the Court will schedule a hearing on the matter

If a Declaration is filed by the debtor that the monthly plan payment doesn’t need to change, we recommend a review of the Chapter 13 Trustee’s website to be sure that the changed monthly payment amount is disbursed. If an Objection to the Notice of Mortgage Payment Change is filed, additional documentation may be necessary to defend the Notice of Mortgage Payment Change.

If lenders want to be paid post petition fees, expenses or charges, then within 180 days from the date incurred, lenders must file a Notice of Post-Petition Fees, Expenses and Charges. Examples of fees incurred post petition are attorney fees, BPO fees, property inspections and other administrative fees. The notice must include an itemized list of the fees and expenses and when they were incurred. The Court will issue a standard Order giving the Debtor twenty-one (21) days to amend the plan, file a declaration, or object to the Notice.

Lenders must now be very diligent in administering loans secured by real estate and file the required notices with the court on a timely basis, or they will be barred from collecting increases in payments and other expenses. WWR is continuing to monitor these developments and will advise you as procedures change so that you can take the steps necessary to protect yourself while the debtor is in bankruptcy. 

The Administrative Order implementing this new procedure can be found on the Western District of Pennsylvania Bankruptcy Court’s website at http://www.pawb.uscourts.gov.

If you have any questions regarding this client advisory, please contact Ms. Holly C. Thurman, Esq. Holly is an associate in the bankruptcy department within the Real Estate Default Group of Weltman, Weinberg & Reis Co., L.P.A., and is located in the Pittsburgh office. She can be reached directly at 412.338.7105 or via e-mail at hthurman@weltman.com.