All posts in Chapter 13

Judge Zurzolo appearance instructions

Email from Keith Higginbotham

Dear Colleagues!

Judge Zurzolo has asked that attorneys appearing on his upcoming Ch13 Cf hrgs for MONDAY, September 14th register their appearances AS SOON AS POSSIBLE (now) due to the number of matters on that calendar.  Instructions for registration can be found on the calendar page for the tentatives for 9/14 (pages 1 & 2) and also on Judge Zurzolo’s webpage under “Telephonic Instructions”.

As you may be aware, Judge Zurzolo was the first Judge to create a tollfree appearance line so that we do not need to use CourtCall.  As a trade-off, we are REQUIRED to register your appearance(s) with his chambers beforehand using a new specific email address.

The Ch13 calendar for Monday, September 9/14 is now posted.  Instructions for making a telephonic appearance are also posted — including allowing you to register for more than 1 hearing in one email for ALL appearances for that day for that attorney.

The Court is prepared to accept registrations beginning TODAY and strongly encourages it.  The Court asks that attorneys begin registering now (at least for 9:00 and 10:30 hearings), and definitely no later than Wed 9/9.   That will help chambers be prepared and not deluged at the last minute.

As a reminder, Judge Zurzolo’s 9:00 a.m. and 10:15 a.m. hearings are listed on VZ webpage under “Chapter 13”.

The 10:30 a.m. hearings are posted under tentative rulings, and by Tues 9/8 the tentatives will be updated to identify hearings for which appearances are waived.

cdcbaa member

Keith Higginbotham

You know Legal and Equitable Rights, but have you heard of a Reversionary Right?

What happens when two spouses file two separate bankruptcy cases?  I will use Spouse 1 and Spouse 2 both to distinguish the spouses but also to establish the order of filing — first and second.  Spouse 1 files first followed by Spouse 2 later.

Do the community assets of Spouse 1 get included in Spouse 2′s bankruptcy case?  Not so says the Court in this published decision but Spouse 2 does have a “Reversionary Right” to those assets.

Here’s what happened in this published Chapter 13 Moreno case from Riverside.

Read more…

Watch out for Ford and reaff’s

This is from our consumer bankruptcy listserve, bankruptcy attys only, names have been withheld to protect the innocent.

Question (from consumer bk atty):  I filed a Chapter 7 for client.  Ford sent their letter saying to sign a reaffirmation agreement or they will repo the car.  Has anyone had Ford actually repo cars with no reaffirmation agreement?

Answer No. 1:  Yes…especially if they’re represented by Cooksey Toolen in Costa Mesa.

Answer No. 2:   Definitely. Watch out for Ford!

Comment from Hale Antico, President of our group:

I think the conventional wisdom is only Ford/Cooksey will go after a failure to reaffirm, but it’s still best practice to reaffirm, coupled with the next sentence. If the court disapproves it, we’re back to pre-BAPCPA ride-through. I know of no example of a repo after a court disapproval where debtor remained current.

Credit Unions won a reaff carve-out at 524(m)(2).

What is a “contingent” debt for chapter 13 eligibility purposes

I love this definition from a recent BAP case, Fountain v. Deutsche Bank National Trust Company (In re Fountain), — B.R. —  (9th Cir. BAP  Mar, 2020)

A debt is contingent when “the debtor will be called upon to pay [it] only upon the occurrence or happening of an extrinsic event which will trigger the liability of the debtor to the alleged creditor.” Fostvedt v. Dow (In re Fostvedt), 823 F.2d 305, 306 (9th Cir. 1987). If “all events giving rise to liability occurred prior to the filing of the bankruptcy petition,” the claim is not contingent. In re Nicholes, 184 B.R. at 88. A dispute over liability for a claim does not make the debt contingent. Id. at 89 (citing In re Dill, 30 B.R. 546, 549 (9th Cir. BAP 1983))

In my world, this comes up most often when an individual has guaranteed his business loans, i.e., corporate debts.  Is his personal obligation to the bank contingent?  Of course says I.  And the above quote supports that position.  The individual is called on to pay the debt only when the corporate entity has failed to pay it.  But in fairness, you have to read the words of the “guaranty.”  In commercial corporate guarantees, the ones I have read at least, the individual typically waives any rights he may have to require that the bank go after the corp first.  The guaranty is likely to say that the bank can ignore the actual borrower entirely and go after the individual if that’s what it chooses to do.   That may not be a contingent debt.

Summary of Chapter 13

This is a short and concise summary of chapter 13 in the Central District of California.  It is supported with code sections and case cites.  For a free pdf copy, click here - Summary of CH 13 final   A paperback version can be purchased on Amazon here.  I am always looking for comments.  Feel free to tell me what you think.

Chapter 13 Webinar featuring Cathy Moran

Another FREE Webinar in
The Academy’s Series
Prompted by COVID19 and The CARES Act

       
WEDNESDAY May 6th  
 1:00 eastern/12:00 central/11:00 mtn/10:00 pacific
 
As the economy lurches back into motion, bankruptcy lawyers will confront a clutch of troubled Chapter 13 cases.  In the face of disruption, distress, and the unknown, debtor attorneys will be called on to guide clients forward, in one direction or another.  In this webinar, with a combined SEVENTY-NINE years of experience representing individual and small business debtors, Certified Specialists Cathy Moran and Jill Michaux will review questions you will need to answer in order to provide the sharpest analysis for your clients.  This webinar is Part 2 and will focus on conversion and hardship discharge. Part 1 looked primarily at modification.

This webinar is part 2 of a 2-part series on COVID-19 and its impact on Chapter 13s.
If you cannot attend the live presentation, the Academy will post a recording of the webinar at ConsiderChapter13.org - Access to the recording will be free to Academy subscribers – or we offer a pay per view option.
Not a Subscriber?  Click here 
  (Registration for this webinar automatically places registrant on the Academy’s email list)      

$608.34 for Fee Apps for Opposed Motions for Relief – thumbs down.

How much should you request in your fee application?  Judge Johnson, in a lengthy and researched opinion here, spent considerable time reviewing 168 fee applications to come up with a standard.

  • $140.69 for unopposed motions (i.e. car lender files MFR to sell vehicle in its possession).
  • $442.50 for limited/no opposition in fraudulently hijacked cases where debtor got partial interest (debtor has no interest in defeating the motion since the property is not theirs).
  • $608.34 for opposed motions for relief (requires opposition and appearance).

Fee applications require counsel to demonstrate why their fees are reasonable in light of the customary and standard practice of the consumer bar.  Confirms my position to never file a case in Riverside.

Stay safe and hope everyone is doing well.

Sevan Gorginian, Esq.

Chapter 13 info from Aki on tax refunds and economic relief payments

Post by Aki on Facebook:

*****IMPORTANT*****

There are two additional issues that our office has been requested to address which I now have answers for:

TAX REFUNDS

As the tax refund turnover requirement is mandated by the plan and the order confirming the plan, your client will need to file a motion to modify the plan (MOMOD) to suspend the turnover requirement for tax refunds from the 2019 tax year. The trustee does not have the legal authority to waive the tax refunds without a court order.

For the MOMOD, please indicate why your client needs to retain the tax refund. This will usually include evidence that your client’s income has been directly affected by employer actions taken to deal with the COVID-19 threat or business income being reduced due to loss of business directly related to COVID-19. Your client will not have to file the MOMOD immediately and please indicate in your motion if your client wants the relief Nunc Pro Tunc.

ECONOMIC RELIEF PAYMENTS

The Trustee will not be seeking a turn over of any economic relief payments related to the COVID-19 threat.

New Chapter 13 Plan Payment rules – Kathy Dockery

Email from Aki Koyama:

NEW 341(a) PLAN PAYMENT POLICY

Starting with the February 7, 2020 341(a) Calendar, the Trustee will require all plan payments to be posted prior to the date of the 341(a) or the debtor must present evidence of the plan payment and mailing of the plan payment.  If the payment is made electronically, the debtor must present evidence that the plan payment is being processed.  Scheduling a payment for the day of the 341(a) or after the 341(a) is not sufficient.

Thank you.

Can the chapter 13 debtor modify their home loan? Sometimes says the 4th Circuit.

Thanks to Aki Koyama for steering us to this case.

 

Hurlburt v. Black (In re Hurlburt), — F. 3d —, 2019 WL —– (4th Cir. May 2019)

Issue:   May the chapter 13 debtors modify the mortgage on their home, i.e., strip it down, when the mortgage was due in full before the petition date?

Holding:   Yes under section 1322(c)(2).

The debtors’ chapter 13 plan proposed to bifurcate the mortgage on their home into a secured claim of $40,000 and an unsecured claim of $131,000.  The plan proposed to pay the secured portion in full during the Plan (I assume) and the unsecured portion zero percent, click here now to learn more about this kind of loans.  The debtor argued that they could modify the lien because the loan was due in full when the case was filed.  Section 1322(c)(2) says:

Notwithstanding subsection (b)(2)  . . . in a case in which the last payment on the original payment schedule for a claim secured only by a security interest in real property that is the debtor’s principal residence is due before the date on which the final payment under the plan is due, the plan may provide for the payment of the claim as modified pursuant to section 1325(a)(5) of this title. Read more…