Archive for the 'Chapter 13' Category

New Bankruptcy Relief from Stay Forms to Take Effect in Northern District of Ohio

Published
by
Scott Fink
on February 26, 2010
in Bankruptcy Filings, Chapter 11, Chapter 13 and Chapter 7
. 0 Comments

On February 23, 2010, it was announced that the Bankruptcy Court for the Northern District of Ohio will begin utilizing new forms for the filing of Relief from Stay Motions in Chapter 7, Chapter 13 and Chapter 11.  The forms will need to be used for any motions filed on or after April 1, 2010.

The Bankruptcy Courts affected include:  Cleveland, Toledo, Akron, Canton and Youngstown.  The new forms will require much of the same information as had been provided by creditors previously.  However, the forms will require greater specificity as to the calculation of the total balance and arrears owing on a loan, as well as a more structured and detailed analysis of a creditor’s right to enforce the Note, Mortgage or Security Agreement.

No new forms will be required by creditors filing only for Abandonment.  In addition, no new forms were created for the submission of agreed or stipulated orders.

The Bankruptcy Department at WW&R is reviewing the new forms and will provide a more detailed analysis in the coming weeks. If you have any questions, please contact Mr. Scott Fink, Esq. Scott is an Associate in the Bankruptcy department of the Brooklyn Heights office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 216.739.5644 or via e-mail at sfink@weltman.com.

Chapter 13 Trustees in the Southern District of Ohio Requiring Secured Debt Payments Through The Plan

Published
by
David Yunghans
on February 3, 2010
in Chapter 13
. 0 Comments

In the Southern District of Ohio, bankruptcy courts are now requiring debtors that file a Chapter 13 bankruptcy to pay secured debts through their bankruptcy plan.  Ordinarily, debtors have the option to pay these debts outside or inside the plan as a conduit payment.

Chapter 13 trustees in the Southern District of Ohio adopted a new policy regarding mortgage payments made outside the plan.  The current policy is that a debtor in Chapter 13 who previously paid their mortgage payment outside the plan will be required to amend their plan to include the payment inside the plan if the mortgage becomes delinquent post-petition.  At this time the rule is only the policy of the 13 offices, not an official rule. 

With regard to car loans, the Southern District of Ohio added a local rule requiring that all vehicle payments, whether lease or loan, be paid inside the plan.  The policy behind this rule change is to increase the percentage of completed plans in the district.  Forcing debtors to pay secured debts through the plan is likely to become the norm in most jurisdictions.

From a creditor’s perspective, there are both positives and negatives with this change.  On the positive, creditors are more likely to receive payments through the 13 than if the debtor pays outside the plan.  Debtors will want to keep their plans from failing and more likely pay their plan payments then skipping on a car payment to catch up their plan payments.  On the negative, creditors will need to stay on top of trustees for disbursements, as trustees do not disburse prior to confirmation and some Chapter 13 plans can take several months to confirm, thereby delaying payments to the creditor.

Has Mortgage Cramdown Died Its Final Death?

Published
by
Monette Cope
on December 17, 2009
in Chapter 13 and Real Estate
. 1 Comment

The House on December 11, 2009 rejected an amendment to the Wall Street Reform and Protection Act of 2009 that would allow mortgage cramdowns in Chapter 13 bankruptcies.  The surprise is that this is the same amendment that the House passed earlier this year.  This time it was defeated by a vote of 241 to 188 with both Democrats and Republicans voting it down.

The proponents argued that it would have limited effect on the mortgage financing industry because it would only apply to existing loans, not future loans, while slowing the rate of foreclosures and home depreciation.

Opponents argued that it would create havoc and more losses to the already unstable mortgage and lending industries, while increasing interest rates and toughening mortgage standards for all home buyers. 

Because the measure has now been defeated by both the House and Senate, it is unlikely to reappear in another bill, and should ease one of the worries facing lenders and investors from the flurry of new financial regulatory legislation.

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.

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.