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MORTGAGE CLAIMS IN CHAPTER 13
JUDGE CRAIG A. GARGOTTAU.S. Bankruptcy Court, Western District of Texas
DAVID G. PEAKE, Chapter 13 [email protected], (713) 283-5400
CRISTINA RODRIGUEZ, Keeling Law [email protected], (713) 686-2222
YOSHIE VALADEZ, McCarthy Holthus, [email protected], (214) 291-3867
Materials Prepared By:Judge Craig A. Gargotta, David G. Peake, Cristina Rodriguez, Yoshie Valadez
CRAIG A. GARGOTTA
United States Bankruptcy Judge
Western District of Texas, San Antonio Division
H.F. Garcia Federal Building and United States Courthouse
615 East Houston Street, Suite 505
San Antonio, Texas 78205
(210) 472-5181
EDUCATION
B.A., History, Texas A&M University - 1981
M.A., History, Texas A&M University - 1984
J.D., St. Mary’s School of Law - 1989
PROFESSIONAL ACTIVITIES AND HONORS
United States Bankruptcy Judge, October 1, 2007 – present
Adjunct Professor of Legal Writing, St. Mary’s School of Law, 2002-2006, 2013 – present
Assistant U.S. Attorney, San Antonio, Texas, 1990-2007
Law Clerk to United States Bankruptcy Judge Ronald B. King, Western District of Texas, 1989-1990
Chair, FBA Bankruptcy Law Section
Fellow, Foundation of the Federal Bar Association
Member, National Conference of Bankruptcy Judges
Master, Larry E. Kelly Inns of Court (Austin and San Antonio)
Board Member, Texas Aggie Bar Association
Member, Law Review Advisory Board, ABI Law Review, 2010-present
Council member and VP of Professional Education, Bankruptcy Section, State Bar of Texas 2013-2016
Editor-in-Chief, The Federal Lawyer, 2003-2008
Contributing Editor, American Bankruptcy Institute Journal, 1993-2007
Contributing Editor, The San Antonio Lawyer, 1997-2001
President, San Antonio Chapter of the Federal Bar Association, 1996-1998
LAW RELATED PUBLICATIONS
Speaker - Bankruptcy seminars with the State Bar of Texas, University of Texas Law School, Federal Bar
Association, National Conference of Bankruptcy Judges, and San Antonio Bankruptcy Bar.
I have written 24 columns for the ABI Journal; published a law review article in the American Bankruptcy
Institute Law Review in 2003; and published roughly 25 columns or articles in other publications such as
The San Antonio Lawyer, The Federal Lawyer, In Bankruptcy (a DOJ publication), and the United States
Attorneys Bulletin.
COMMUNITY SERVICE
Boy Scouts of America, 2000 - 2015
United Methodist Church, Sunday School Teacher, 1998 - 2006
David G. Peake
Chapter 13 Trustee
Mr. Peake was appointed Chapter 13 Trustee, for the Southern District of
Texas, Houston Division, in June of 1998. Prior to that time Mr. Peake was in
private practice representing individuals and small businesses.
Mr. Peake is Licensed to practice law in the State of Texas. Mr. Peake is
originally from St. Paul, Minnesota where he completed undergraduate studies at
Macalester College and received his law degree from William Mitchell College of
Law. Mr. Peake is currently a member of the American Bankruptcy Institute, the
National Association of Consumer Bankruptcy Attorneys and the National
Association of Chapter 13 Trustees, where he also serves on the executive
committee as the organization’s President. In addition, Mr. Peake, recently served
on the Committee on Chapter 13 of the ABI’s Consumer Commission.
CristinaRodriguez
Keeling Law Firm 3310 Katy Freeway, Suite 200
Houston, TX 77007 713.686.2222
Cristina Rodriguez is an associate attorney with the Keeling Law Firm. She has been an active member of Houston’s consumer bankruptcy bar for over 9 years. She primarily represents debtors in Chapter 13 and Chapter 7 bankruptcies. Cristina is a native Spanish speaker and appreciates that she can use her bilingual education to help her clients. Cristina enjoys opera, martial arts, cooking, traveling, and spending time with her toddler.
BoardCertificationinConsumerBankruptcyLaw, Texas Board of Legal Specialization
EDUCATIONJuris Doctorate - The University of Texas School of Law,Austin, TexasBachelor of Arts - The University of St. Thomas,Houston, TexasMajor in Political Science, Minors in Philosophy and Theology (summacumlaude)
PROFESSIONALMEMBERSHIPS
Member, Houston Association of Consumer Bankruptcy Attorneys Member, National Association of Consumer Bankruptcy Attorneys Member, Texas Bar Association – Bankruptcy Division Treasurer, Houston Bar Association – Bankruptcy Division Member, Houston Association of Young Bankruptcy Lawyers Member, Moller Foltz Inn of Court
YOSHIE VALADEZ
• McCarthy ♦ Holthus, LLP • m. 1255 W. 15th St., Ste. 1060, Plano, TX 75075 • d. 214.291.3867| f. 214.291.3801 |c. 214.326.6913 • e. [email protected]
Yoshie Valadez is the Managing Attorney of Texas Bankruptcy at McCarthy & Holthus, LLP. She joined the firm in 2016 as an Associate Attorney. She has a B.S. in Molecular and Cellular Biology and a B.A. in Cultural Anthropology from The University of Arizona and a J.D. from Golden Gate University School of Law in San Francisco, California. She is admitted to practice in Texas, California and Massachusetts. She is also admitted to practice before the United States District & Bankruptcy Courts for the all Districts in Texas, all Districts in California, the District of Massachusetts and the United States Court of Appeals for the Ninth Circuit. Her practice is focused on representing secured lenders and financial institutions in bankruptcy and law. Prior to joining McCarthy & Holthus, LLP, she practiced bankruptcy at firms in both the Boston area and San Francisco.
Mortgage Claims in Chapter 13Debtor, Creditor & Trustee Perspectives
Discussion Moderator: Hon. Craig Gargotta, U.S. Bankruptcy Court, Western District of Texas – San Antonio, TX
Panelists:David G. Peake, Chapter 13 Trustee Houston, TXYoshie Valadez, - McCarthy & Holthus, LLP Plano, TX Cristina Rodriguez, Keeling Law Firm Houston, TX
Mortgage Claim Perspectives
Common problems
No proof of claim filed, late filed proof of claims, total debt claims, mortgage loan modifications, and more
Review What to look for, how to identify and correct mistakes
Rules A brief review of recent changes to Rules 3001, 3002, 3002.1, & 3007
Federal Rules of Bankruptcy Procedure
3001, 3002, 3002.1, & 3007
Rule 3001Proof of Claim
• Creditors Must use the 410 &410A Form
• Rule 9009 Forms. Requires theuse of official forms withoutalteration, except to add moreor delete excess space, or asotherwise provided in thenational instructions
• DEBTOR TIP: object or request official form (e.g. payment history)
• CREDITOR TIP: Start working on the POC early as compiling the payment history can be time consuming particularly for service transferred loans.
(A) Form and Content. A proof of claim is a written statement setting forth a creditor’s claim. A proof of claim shall conform substantially to the appropriate Official Form.
Form 410A
Rule 3002Filing Proof of Claim
• New Rule effective 12/1/2017
• Clarifies what case law previously established.
• Mortgage creditors are now required to file a proof of claim
• Failure to file a secured POC does not affect the lien securing the debt.
(a) NECESSITY FOR FILING.
A secured creditor, unsecuredcreditor or equity security holder must file a proof of claim or interest for the claim or interest to be allowed, except as provided in Rules 1019(3), 3003, 3004, and 3005. A lien that secures a claim against the debtor is not void due only to the failure of any entity to file a proof of claim.
Rule 3002 (c) Time for filing
(c)(7) A proof of claim filed by the holder of a claim that is secured by a security interest in the debtor's principal residenceis timely filed if:
(A) the proof of claim, together with the attachments required by Rule 3001(c)(2)(C), is filed not later than 70 days after the order for relief is entered; and
(B) any attachments required by Rule 3001(c)(1) and (d) are filed as a supplement to the holder's claim not later than 120 days after the order for relief is entered.
Mortgage creditors now have a two-stage deadline to file their proofs of claim:
• 70 days of petition date to file Official Form 410, the Mortgage POC Attachment (Official Form 410A which includes loan history) and escrow account statement
• An additional 50 days (total 120 days of petition date) to attach all documents evidencing a perfected security interest including a copy of the note with allonge/endorsement, deed of trust and any other supporting document.
CREDITOR TIP: Avoid the two-stage deadline if possible.
Rule 3002 (c) Time for filing
(6) On motion filed by a creditor before or after the expiration of the time to file a proof of claim, the court may extend the time by not more than 60 days from the date of the order granting the motion. The motion may be granted if the court finds that:
(A) the notice was insufficient under the circumstances to give the creditor a reasonable time to file a proof of claim because the debtor failed to timely file the list of creditors' names and addresses required by Rule 1007(a); or…
Two reasons for an extension to file a POC are both based on insufficient notice because:
1) Debtor failed to give timely notice by listing the creditor in creditor’s matrix• Rule 1007(a) requires
the creditor matrix to be filed with the petition
2) Debtor gave notice to a foreign address
DEBTOR TIP: File a complete creditor matrix on the petition date with accurate creditor addresses
11 U.S.C. § 502(b): Claims filed under 11 U.S.C. § 501 are deemed allowed unless a party objects and the objection is sustained. Objection to POC may be sustained for late filed claim. However, not all Trustees will object to late filed claims.
Creditor Filed POC
Rule 3002: Claims Bar Date
Rule 9006(b)(3): Court does not have discretion to extend or enlarge the time
limit for filing POC.
Debtor Filed POC for Creditor
Rule 3004: Additional 30 Days
Rule 9006(b)(1): Court may in its discretion upon a motion for cause
shown enlarge the time for filing POC where failure to act was the result of
excusable neglect.
LATE FILED CLAIMS
Rule 3002.1Notice Relating to Claims Secured by Security Interest in Debtor’s Principal Residence
(b) NOTICE OF PAYMENT CHANGES; OBJECTION.
(1) Notice. The holder of the claim shall file and serve on the debtor, debtor’s counsel and the trustee a notice of any change in the payment amount, including any change that results from an interest-rate or escrow-account adjustment, no later than 21 days before a payment in the new amount is due. If the claim arises from a home-equity line of credit, this requirement may be modified by court order.
• Rules were amended effective December 1, 2018
• (b) is now two parts
(1) Notice
(2) Objection
• Change authorizes courts to modify its requirements for claims arising from home equity lines of credit (HELOCs), which may adjust frequently and in small amounts
Rule 3002.1Notice Relating to Claims Secured by Security Interest in Debtor’s Principal Residence
(b) NOTICE OF PAYMENT CHANGES; OBJECTION.
(2) Objection. A party in interest who objects to the payment change may file a motion to determine whether the change is required to maintain payments in accordance with §1322(b)(5) of the Code. If no motion is filed by the day before the new amount is due, the change goes into effect, unless the court orders otherwise.
• Amended to acknowledge the right of a trustee, debtor or other party to object
• Does not set a deadline for filing a motion to determine but provides generally if no motion has been filed then payment change goes into effect
• SDTX – no longer need Emergency Motion to Stay Payment Change with objection (if filed within time frame)
Rule 3007Objection to Claim
(a) (1)TIME OF SERVICE.
An objection to the allowance of a claim and a notice of objection that substantially conforms to the appropriate Official Form shall be filed and served at least 30 days before any scheduled hearing on the objection or any deadline for the claimant to request a hearing.
• Requires 30 days’ notice
TIP: Remember to add 3 days when notice is per first-class mail per Rule 9006(f)
• No longer requires a hearing scheduled or held on every objection
• Negative notice is enoughTIP: Word your order carefully. Make sure it accomplishes what you need (e.g. reduction in claim vs disallowance of claim)
Rule 3007Objection to Claim
(a) (2)MANNER OF SERVICE.
(A) The objection and notice shall be served on a claimant by first-class mail to the person most recently designated on the claimant's original or amended proof of claim as the person to receive notices, at the address so indicated; and
• (i) if the objection is to a claim of the United States, … by Rule 7004(b)(4) or (5); or
• (ii) if the objection is to a claim of an insured depository institution, … by Rule 7004(h).
The address on the proof of claim is sufficient for most objections except for when adversary notice is required
REMEMBER: 7004 Notice is required for objections against:
1) US, its officers, or agencies
2) An insured depository institution
TIP: If an institution has appeared by its attorney, the attorney can be served by first-class mail
10
NATIONAL FORM 420BNOTICE OF
OBJECTION TO CLAIMRULE 9009 FORMS
Requires the use of official forms without alteration, except to add more or delete excess space, except as otherwise provided … in the national instructions for a particular Official Form.
Alterations may be made to this form in accordance with applicable local court rules
Reviewing Mortgage Proof of Claims for Accuracy
Mistakes, Math & More
Things to know prior to reviewing• When did/does the loan mature? (pre-petition, inside or outside the
terms of the plan)
• Mortgage type and terms? (1st lien, 2nd lien, home equity, ARM, balloon, homestead / investment, HUD)
• Was there any pre-petition loss mitigation? (deferrals, forbearances, modifications)
• Escrowed? (taxes, insurance, MIP, advances)
• Refiled case? (previous payments and applications, objections, orders)
• Who filed the claim?
Ongoing Payments Review Checklist
• Check the ongoing mortgage paymentoWhen is the first post-petition payment
due (TRAP: “61 month plans”)
• P&I should match note (or loan mod as applicable)
• Escrow statement payment should match Part 4
• No escrow shortage contained in monthly escrowo Look for double collection of private
mortgage insurance or projected escrow deficiency amounts
Mortgage Claim Review Checklist
• Supporting Docs should match information in 410 & 410Ao Look at the maturity date, interest rate, and unpaid principal
balance o Check that the note and deed match Debtor’s property
• All column totals match the corresponding lines in Parts 1 – 4 of the 410-Ao Exception for escrowed loans: Column G should NOT match the
missed P&I in Part 3 of the arrears calculation (G includes escrow)
• Check the charges in the payment history, Part 5 and escrow analysiso Non-recoverable fees are cancelled outo Funds on hand, or unapplied funds are applied properlyo Escrow payments are appropriate, no overcharges of taxes,
insurance or PMIo Starting balances are explainedo Starting Principal balance matches loan mod capitalized amount
ESCROW ARREARS
• refers to the escrow funds advanced prior to the petition day (for example - any taxes or insurance paid before the case was filed)
ESCROW DEFICIENCY
• refers to the anticipated amounts needed to make upcoming escrow disbursements for 12 months after the case was filed
ESCROW SHORTAGE
Escrow Deficiency
• Everything that was actually paid out of the escrow account prior to the date of filing
• Review Part 5 of the Mortgage Proof of Claim Attachment (the Loan Payment History from First Date of Default)
• Check that disbursements match property tax records
• Look for duplicate insurance premiums
• Verify that flood or wind insurance is required per the deed of trust
Escrow EstimatorMath
Escrow Estimator Spreadsheet
• Can be used to calculate projected escrow shortage required in proof of claims
• Can also be used to verify if a 3002.1 Notice of Mortgage Payment Change based on escrow is correct
• Available on Southern District of Texas Court’s website
https://www.txs.uscourts.gov/bankruptcy/bankruptcy-forms-filing-fees
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26
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Common ProblemsMortgage Loan Modifications, Unfiled Proof of Claim, Late Filed Proof of
Claim, Total Debt Claim
ESCROW SHORTAGE ISSUES IN MORTGAGE LOAN MODS• A loan modification only takes into account the
escrow disbursements that were made up until the date of the loan modification
• There is generally no provision made for post-loan modification escrow disbursements
• The amounts that would have been paid into an escrow account for anticipated payments are reset to zero as of the date of the loan modification
• There is no provision in this loan modification for the escrow payments due for January through April or the RESPA reserve
• There will be a shortage when the next escrow analysis is run that can significantly increase the payment debtor is expecting to make
• Discuss the anticipated
escrow shortage with the
debtor
• Consider putting the total
shortage amount in the
plan under a special
provision to pay out over
a period not to exceed 18
months (in this example)
• Number of months to
next analysis plus 12
month
ADDRESS THE PROJECTED SHORTAGE
THE MORTGAGE LOAN HAS BEEN MODIFIED. WHAT NEXT?
✓ Does the Court need to approve the loan modification agreement?
✓ What does the Trustee need as proof that the loan has been permanently modified?
• Copy of Fully Executed Loan Modification Agreement
• Filed Notice of Mortgage Payment Change per Rule 3002.1.
• Other verification from creditor or creditor’s counsel.
✓ Debtor to modify plan.
✓ Debtor to amend Schedules I and J.
✓ Debtor to file other documents. Example - EDTX requires Debtor to file a declaration under penalty of perjury regarding status of post-petition mortgage obligations (TXEB Local Form 3015-c).
❖ Loan Modification Program for Chapter 13 Cases in the Northern District of Texas (General Order 2018-02) – All active Chapter 13 cases pending on or after 10/1/2018 for any type of loan, extension of money or credit, or repayment of obligation secured by real property in which the debtor has an ownership interest whether principal residence and/or homestead property, secondary property or commercial property. Parties must follow special procedures for trial loan mod payments and the loan mod approval process.
Unfiled Proof of Claim• Debtor file a claim for the Mortgage Company
• File a claim, give notice of the claim to creditor
• Object to Debtor filed proof of claim to get res judicata effect on numbers
• What if Debtor does not have supporting documents, or is unsure of amounts due
• Do nothing
• Rely on plan confirmation order
• What about future 3002.1 changes – amendments to the proof of claim• Can the Debtor file Notice of Mortgage Payment Change? Should a Debtor?
• Future transfer of services / proof the correct party received notice
• Contact creditor and agree to allow a late filed proof of claim
• Can change plan payment – Debtor shouldn’t agree to increased arrears
• Increased ongoing mortgage (if proper) – Debtor should put effective date in agreed order (e.g. date of order, date proof of claim is filed, other)
• Other
District Plans & Unfiled Proof of Claims
Allowed secured claim based on timely filed POC and the TRCC or an order on an objection to claim. Ongoing post-petition mortgage payments:
Pre-confirmation: Trustee will make monthly payments based on the amount provided for in the plan or listed by the Conduit Debtor even if no POC has been filed by or for the creditor.
Post-confirmation – Trustee will only make monthly payments if a POC has been filed and has not been disallowed. Trustee shall reserve payments received until a POC is filed. If no POC is filed the reserve will be removed and disbursed to other claimants.
Allowed amount of cure claim is based on filed claim or final Court determination based on any objection thereto. The Trustee will reserve payments until a POC is filed. Eastern District is not a conduit district.
The Trustee’s Recommendation Concerning Claims (“TRCC”) serves primarily as a reconciliation device between the claims registry and the terms of a confirmed plan. No Court approval, no negative notice language nor any proposed order required. TRCC deadline is the 21st day following the date of service for:
(1) filing a POC objection;
(2) filing a motion for valuation of collateral to determine amount of secured claim pursuant to Rule 3012; or
(3) filing an appropriate pleading to avoid or challenge the validity of any security interest claimed in any filed POC.
NORTHERN DISTRICT OF TEXAS EASTERN DISTRICT OF TEXAS
District Plans & Unfiled Proof of Claims
The plan amounts control if no timely proof of claim is filed. Trustee to disburse funds per confirmed plan.
Paragraph 25. Presence or Absence of a Proof of Claim.
A. Secured and priority claims provided for in this Plan will be paid without the necessity of the filing of a proof of claim. If this Plan sets the amount of a monthly payment, monthly payments will be adjusted in accordance with the Court’s Home Mortgage Payment Procedures as applied by Paragraphs 8 and 11 of this Plan.
B. Unless otherwise ordered by the Court (and subject to the claims objection process), the amounts shown on a timely filed proof of claim govern as to (i) the amount of that claim, (ii) the amount of any cure amount; and (iii) the amount of any monthly payment, which monthly payment is subject to adjustment in accordance with the Court’s Home Mortgage Payment Procedures as applied by Paragraphs 8 and 11 of this Plan.
Austin and El Paso Standing Orders for Chapter 13 Administration: “The Trustee will not disburse Ongoing Mortgage Payments until a proof of claim is filed with the Court.”• Austin: Trustee will reach out to mortgage company to request the claim; if the mortgage company
does not file a claim, Trustee asks debtor’s attorney to file the claim within the deadline provided for debtor-filed claims
Waco Standing Order for Chapter 13 Administration: paragraph 9(b) provides that as to all creditors: “No objection to a late-filed claim shall be necessary; such claims are deemed disallowed unless otherwise ordered by the Court. The burden is on the claimant to request, by motion, allowance of a late-filed claim.”Midland Standing Order for Chapter 13 Administration § 19(D): • Pre-confirmation: Trustee will make monthly payments based on the proof of claim amount only if
the proof of claim has been filed by creditor and in the absence of a filed objection to the claim. • Post-confirmation: Trustee will only make monthly payments if proof of claim has been filed and
has not been disallowed and no objection is pending. Trustee will reserve payments received until the proof of claim is filed, or the claim filing deadlines expire. If no proof of claim is timely filed (or otherwise allowed) then reserve removed and funds disbursed to other claimants.
San Antonio: The W.D. Local Plan provides: 7.6 “Ongoing mortgage payments will be in the amount stated in the allowed proof of claim or pursuant to a Court Order.” Payment of the conduit mortgage is based on the amount in the proof of claim. If no proof of claim, an order of the court, or a Standing Order on chapter 13 procedure the Trustee does not believe she can pay the conduit mortgage payment.7.7 “The pre-petition arrears set forth below is an estimate only and the Trustee shall pay the pre-petition arrears based on the proof of claim as filed by the creditor, unless a different amount is allowed pursuant to a court order.”• Trustee takes the position that once the bar date for the creditor has expired the responsibility lies
with debtors’ counsel to comply with Rule 3004. Trustee objects to all late filed claims.• Trustee takes the position that the conduit mortgage payment which is contractually due post-
petition is an administrative expense for preserving an asset of the estate.
SOUTHERN DISTRICT OF TEXAS WESTERN DISTRICT OF TEXAS
TOTAL DEBT CLAIMS
• Total Debt Claim = Claim that are paid in full through the plan.
• Concerns mortgage loans maturing pre-petition, maturing during the plan term or loans proposed by debtor to be paid in full.
❖Are total debt claims classified correctly on the plan or plan modification?
❖Are ongoing post-petition escrow advances (taxes/insurance) on a total debt claim provided for in the confirmed plan?
❖If not, how does a creditor recover them on a total debt claim?➢ Creditor files a motion to pay administrative expenses (Section 503/Rule 2016).➢ Debtor agrees to modify the plan and parties enter into an agreed order to pay.➢ Creditor files Notice of Post-Petition Fees, Expenses and Charges.➢Creditor files a post-petition claim under Section 1305.➢Creditor files a Motion for Relief from Stay under Section 362.
District Plans & Total Debt Claims
Section II Debtor’s(s’) Chapter 13 Plan – General Provisions, Paragraph N – Post-Petition Non-Escrowed Ad Valorem (Property) Taxes and Insurance – applies whether debtor is a conduit debtor or not.
Paragraph N states if mortgage holder pays the taxes and/or insurance, the mortgage holder may file, as appropriate, a motion for reimbursement of the amount paid as an administrative claim or a Notice of Payment Change by Mortgage Lender or a Notice of Fees, Expenses and Charges.
For total debt claims, ongoing post-petition escrow advances may be paid by Trustee upon filing of a Notice of Fees, Expenses and Charges. The Trustee may file a Motion to Pay which is subject to objections.
Total debt claims should be listed under Section 3.4 – Secured Claims Subject to § 506 Bifurcation of the Plan [TXEB Local Form 3015-a] and Revised/Additional 506 Claims Section 3.4 of the Motion to Modify Confirmed Chapter 13 Plan [TXEB Local Form 3015-d]. Do not list as a cure claim under Section 3.2 of the Plan and Motion to Modify.
Section 3.8 of the Plan – Maintenance of Insurance and Post-Petition Taxes Upon Retained Collateral by debtor.
Motion to pay administrative expense (Section 503/Rule 2016) is the best way for creditor to recover ongoing post-petition escrow advances on total debt claim.
NORTHERN DISTRICT OF TEXAS EASTERN DISTRICT OF TEXAS
District Plans & Total Debt Claims
The plan requires a “Reserve Account” for post-petition taxes if the mortgage claim is paid as a Total Debt Claim. This creates a plan enforced savings for future taxes to help ensure Debtor stays current with post-petition tax obligations.
Paragraph 23. Reserves for Post-Petition Ad Valorem Taxes, Homeowners Association Fees or Other Periodic Post-Petition Obligations.
D. If this Plan provides for payment of a “Total Debt Claim” on real property and no lender-established escrow account is maintained, the Debtor(s) must establish Reserves under this Paragraph for the payment of ad valorem taxes. If the Debtor(s) subsequently surrender the real property, or if the automatic stay is terminated as to the real property, the amount of Reserves for taxes on such property will be paid by the Trustee, without further Court Order, to the holder of the claim secured by the most senior security interest against the real property.
The Bankruptcy Court in the Western District of Texas does not have a policy on matured claims.
Section 7.6 of the local form plan allows Trustee to make changes to ongoing mortgage payments based on Notice filed pursuant to FRBP 3002.1(b) and to pay fees, expenses, and charges based of Notice filed pursuant to FRBP 3002.1(c). The Trustee may request that Debtor filed amended Schedules I and J, and the Debtor shall do so on or within 30 days after receiving such a request from the Trustee. If Debtor lacks disposable income to pay ongoing mortgage payment, the Trustee may seek dismissal. The Debtor or Trustee may seek to modify the Plan. Alternatively, upon the filing by a mortgage creditor of a Notice under Rules 3002.1(b) or (c), the Trustee may file a Notice of Increase of Plan Payment if Trustee reasonable believes the increased payment should be Debtor’s responsibility.
SOUTHERN DISTRICT OF TEXAS WESTERN DISTRICT OF TEXAS
Interesting Case Law
• Deed of trust creditor was bound by res judicata effect of confirmed Chapter 13Plan. A deed of trust creditor had actual notice of the contents of the plan andfailed to object or appeal the confirmation of a plan that proposed for pro ratapayments over 54 months with interest in full satisfaction of the creditor’s claim.The plan further provided that creditor was to retain his lien only until his claim waspaid and debtors received their discharge. Upon discharge creditor required toexecute and record a full and unequivocal release of its liens, encumbrances andsecurity interest secured by the Debtors’ Homestead. In re Mark A. Shank, et al., 569B.R. 238 (Bankr. S.D. Tex. June 30, 2017).
• The confirmation of a chapter 13 plan is not an adjudication of the claims on themerits because the plan confirmation process and the claims allowance processserve two different functions in a bankruptcy case and one does not necessarilyforeclose the other. Chroba v. Quantum3 Grp. LLC (In re Chorba), 2018 Bankr. LEXIS 648(Bankr. D. Md. March 8, 2018).
• To recover post-petition tax advances on total debt claims, creditors should file amotion to request payment of an administrative expense under Section 503 andRule 2016. However, the Court also looks to non-bankruptcy law (detailedaccounting required by RESPA) to determine if creditor shall be reimbursed foramounts paid. Court found creditor’s filing of a Notice of Post-Petition fees,Expenses and Charges under Rule 3002.1 to be a “dead letter” since the claimprovided for was not a cure and maintain claim under Section 1322(b)(5).In re Tavares, 547 B.R. 204 (Bankr. S.D. Tex. March 11, 2016).
• Court delineated secured proofs of claims filed by creditors under Rule 3002 fromthose filed by debtors on behalf of creditors under Rule 3004. Court grantedchapter 13 debtor’s motion to allow late-filed claim under Rule 9006 and founddebtor’s failure to file a timely claim was partly due to the TRCC not being issuedwhich would have reminded debtor’s counsel to file the claim.In re Norton, 2017 Bankr. LEXIS 197 (Bankr. N.D. Tex. January 24, 2017).
DISCLAIMER: The materials available for this presentation are for informational purposes only andnot for the purpose of providing legal advice. You should independently verify the informationand/or consult with an attorney to obtain advice with respect to any particular issue or problem.Use of and access to this information does not create an attorney-client relationship. The opinionsexpressed at or through this presentation are the opinions of the individual author(s), do notconstitute legal advice and may not necessarily reflect the opinions of any Court, Judge or Panelist.
