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Rules Regarding Reopening Cases

Published on July 25, 2011 in Bankruptcy Filings and Motion. 0 Comments

Northern District of Ohio Bankruptcy Court Clarifies Rules Regarding Reopening Cases to File Reaffirmation Agreements and Motions to Avoid Liens

Under certain circumstances the Bankruptcy Code provides that a case may be reopened to administer assets, accord relief to the debtor or for other cause.  There are two situations that may arise in which a debtor may need to reopen a closed case.  The first situation is to file a reaffirmation agreement and the second is to avoid a judgment lien.  The Northern District Ohio under Judge Pat Morgenstern-Clarren has indicated that a case will not be reopened to allow the parties to file a reaffirmation agreement that was made after the discharge was entered.  Under the second situation, Judge Morgenstern-Clarren will allow the case to be reopened if there is a very short gap between the case closing and the motion to reopen, and the motion provides a satisfactory explanation for why the lien was not avoided while the case was open.

With regard to the courts procedure on reaffirmation agreements from a creditor’s perspective, the court provided some clarification.  Creditors should make certain to have the reaffirmation agreement signed and filed prior to discharge or the case being closed.  If a delay is expected, a motion to delay discharge should be filed in order to provide more time to obtain the reaffirmation.  From a creditor’s perspective, the courts procedure on motions to avoid is favorable as the court will not simply allow the reopening of the case in every situation and strictly scrutinize any motion filed.

David H. Yunghans practices in Bankruptcy with a focus on the Consumer Bankruptcy Group, and he is based in the Cincinnati office of Weltman, Weinberg & Reis Co., LPA. David can be reached at 513.723.2211 or .

Federal Rules of Bankruptcy Procedure Amended December 1, 2009

Published on February 10, 2010 in Appendix, Bankruptcy Automatic Stay, Briefs, Computing time, Federal Rules of Bankruptcy Procedure, Motion and Notice of Appeal. 0 Comments

By: , Associate

The Federal Rules of Bankruptcy Procedure were amended effective December 1, 2009.  Throughout the rules, the deadlines and time periods that have been amended are modified in the following manner:

∙ 5 day periods become 7 day periods
∙ 10 day periods become 14 day periods
∙ 15 day periods become 14 day periods
∙ 20 day periods become 21 day periods
∙ 25 day periods become 28 day periods

The following revised rules are the most frequently referred to timelines and deadlines in creditor bankruptcy practice:

1) Stay of Order Granting Relief from the Automatic Stay: An order granting a
motion for relief from an automatic stay is stayed until the expiration of 14 days after the entry of the order. Formally, relief from stay wasn’t effective for 10 days from the date of the order and the amendments have extended that time period to 14 days.

 2)   Time for Filing Notice of Appeal: The notice of appeal shall be filed with the clerk within 14 days of the date of entry of the judgment, order, or decree appealed from. Formally, the appellant had 10 days from the date of entry of the order to appeal.

 3)   Briefs and Appendix; Filing and Service: Unless the district court or the bankruptcy appellate panel by local rule or by order excuses the filing of briefs or specifies a different time limit, the appellant shall serve and file a brief within 14 days after entry of the appeal on the docket. Appellant formally had 15 days to file a brief from the date of the entry of the appeal on the docket.

 4)    Computing time: Per the amendments, when computing time periods, the moving party is to count everyday, including intermediate Saturdays, Sundays, and legal holidays. The former rules required we exclude those days when computing time periods and deadlines. 

 5)   Computing and Extending time for Motions—Affidavits: A motion and notice of hearing must be served no later than 7 days before the time specified for such hearing, unless a different period is fixed by these rules or by an order of the court. The rules formally required that the motion and notice of hearing be served 5 days prior to the specified hearing, unless the court specified otherwise. Most Courts specify a time to serve the notice that is earlier than 7 days prior to the hearing, and usually the Courts require the notice to be served immediately upon receipt.

These changes impact deadlines used in everyday practice. Creditors must be aware of the new timelines and guidelines and use them to effectively administrate orders and other notices issued by the Court.
  
Holly C. Thurman is an Associate in the Bankruptcy department of the Pittsburgh office. She can be reached at (412) 338-7105 or .

New Bankruptcy Filing Requirements In The Northern District of Illinois

Published on August 20, 2009 in Chapter 13, Local Procedures & Rules and Motion. 0 Comments

NEW: A post-petition payment history must be attached to all Chapter 13 motions for relief in the Northern District of Illinois.

The Northern District of Illinois (Chicago) requires filers to attach a “Statement to Accompany Motions for Relief from Stay” to all motions for relief.  The Statement has been revised three times in the last year.  The revisions have progressively required more details about payment defaults.

The latest revision (sent to all practitioners on August 19, 2009, and effective immediately) requires a post-petition payment history be attached to the Statement in all Chapter 13 motions for relief.  This is not required in Chapter 7 or Chapter 11 cases.

The history must detail the dates of individual payments and the amounts of those payments.  This can be satisfied in most cases by attaching a computer record for the period beginning on the date of the filing of the bankruptcy through the date of the referral.  If no payments have been made, a payment history is still required.

In addition to including a post-petition payment history for all Chapter 13 cases, all motions for relief (for all chapters) must include the following information:  the current balance, the next due date on the account, the amount of arrears, the amount of the regular payments, and the value of the collateral. 

The change occurred in part because courts are now heightening their scrutiny of mortgage defaults, but the result is that courts are requiring creditors holding collateral other than real estate, such as vehicles, to make the detailed disclosures as well.

Document Challenges To Motions For Relief From Stay In Chicago

Published on April 9, 2009 in Chapter 13, Chapter 7 and Motion. 0 Comments

There are ten bankruptcy judges in the Northern District of Illinois (Chicago).  Only one of these judges, Judge Schmetterer, has a standing order requiring supporting documents be filed with motions for relief.

Copies of the note and security interest must be filed as exhibits to the motion.  If the collateral is real estate, a recorded copy of the mortgage is required.  If it is a vehicle, the title is required, and if equipment, the UCC statement must be attached. None of the judges at this point require recorded assignments that show the moving party is the true party in interest, but Judge Schmetterer does require the relationship between the moving party and the original creditor be explained in the motion.

While vehicle titles and UCC statements are rarely challenged, debtor’s attorneys are increasingly asking for recorded documents and assignments or servicing agreements to prove that the moving party is the true party in interest.  This trend has been driven somewhat by activist attorneys, but perhaps as much or more so by debtors who have been paying attention to the media and surfing the net on the troubles some mortgage holders may have in proving they are the real party in interest.

It is always the best practice to send your attorney the note and/or security agreement, evidence of security, and any assignments or documents showing a servicing agreement. However, not every loan is equipped with a perfect portfolio of documents.  This is a problem only when the court requires them or debtors demand them.  In these cases, your WWR attorney will work with you to overcome or satisfy the debtors’ demands.

Protect Your Mortgage Lien: Dealing with Ohio’s Dower Interest

Published on March 16, 2009 in Motion and Real Estate. 0 Comments

The Ohio legal principle of “first in time, first in right” applies to mortgage liens as well as dower interest as indicated in a recent ruling in the Northern District of Ohio(1).  The bankruptcy court states that, “if a couple is married before property is mortgaged, the dower interest has priority over the mortgage lien.”  Usually, dower interest is not an issue when it comes to the creditor holding the mortgage, as the non-title holding spouse signs the mortgage to release dower interest at the same time the title holding spouse is executing the mortgage.  The release of dower interest acts as a subordination document rendering the dower interest secondary to the mortgage lien. 

If the dower interest is acquired before the mortgage lien and there is no signature releasing it, the dower interest will hold priority. Without a dower interest release, the dower interest is entitled to priority in proceeds from the sale of the property.  From a foreclosure perspective, the dower interest will receive payment after taxes are paid and before the creditor holding the mortgage claim is paid.  From a bankruptcy perspective, the trustee will want to object to any motion for relief from the automatic stay and for abandonment in order retain the dower interest on behalf of the bankruptcy estate.

The bankruptcy court in the Northern District of Ohio ruled that the value of the dower interest must be calculated on the full fair market value of the property.  In this particular case, the bankruptcy court noted that the dower interest value was significant and could provide funds for distribution to unsecured creditors.  The bankruptcy court went further to deny the creditor’s request for the trustee to abandon his interest in the property due to the significant dower interest value.

What does this ruling mean for creditors?

1. Trustees will be scrutinizing dower rights to see if there is any value, if applicable.  Such scrutiny and objection will result in a delay from receiving relief from stay and abandonment if you hold a mortgage claim on the property, or a general delay in administration of the estate if you are a general creditor.

2. Motion for relief from stay and abandonment will be denied or only relief from stay will be granted, providing a drastic delay in foreclosure proceedings as certain common pleas courts require both relief from stay and abandonment before a foreclosure can take place.

3. Creditors should review their documentation to make sure procedures are in place to deal with those states that have dower interests.

(1) In re Rosario, Case no. 08-14392 (N.D. Ohio March 9, 2009)