All posts in Chapter 13

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…

Ransom – My ABA summary of the Supreme Court case

I forgot about this summary I wrote for the ABA on the Ransom case at the Supreme Court.  http://sblog.s3.amazonaws.com/wp-content/uploads/2010/10/ABA-Preview.Ransom.pdf

 

From Kathy Dockery Staff Atty Aki re Chapter 13 payments

*****IMPORTANT*****

Best Practice Advice

If your client is making a plan payment within 5 days of a confirmation hearing date, please have them purchase a cashier’s check or money order instead of making the payment electronically via TFS. The TFS payments take about 3-5 days to process and the delay is causing an increase in conditionally continued or confirmed matters and even causing dismissal of cases.

An alternate strategy for making sure your client’s plan payments are made timely is to set up your client in TFS with a plan payment due date that is 7 days prior to the legal due date. This way, the posting delay will not be an issue.

For electronic payment evidence to be sufficient with this office, the payment must be in the status row which is titled “Processing Transactions”. An electronic payment which is in the status row for “Upcoming Transactions” is not sufficient.

Thank you.

ABI Commission Report on Consumer Bk

The ABI Commission just released the report on consumer bankruptcy.  You can find the summary of findings by clicking here.

Some interesting recommendations:  allow for postpetition chapter 7 attorneys fees, get rid of both credit counseling courses for a chapter 7, and increase chapter 13 debt limit to $3 million and eliminate the secured / unsecured distinction.    Interesting stuff in the full report which can be retrieved by registering your email here.  Curious what they will do with your email….

Adjusted Dollar Values – April 1, 2019

I am posting this because I always have a hard time finding the adjusted dollar values. I admit, I stole this from the Eastern District. You can find it by clicking here, and I have pasted a few choice numbers for convenience:

Debt limits for Chapter 13 cases: unsecured, $419,275; secured $1,257,850.

Wages entitled to priority: $13,650.

Definition of a small business: $2,725,625.

Definition of assisted person: $204,425.

Plan Payments Memo from Kathy Dockery Office

Email from Aki Koyama, Staff atty to Chapter 13 trustee Kathy Dockery

Hello Colleagues:

We are having a couple of issues with the evidence provided for electronic plan payments.

Issue No. 1
Scheduling Electronic Payments: Read more…

Subtle Difference Between “Deemed Exempt” versus “Claimed Exempt” — Just Because Schedule C Lists the $100 in Bank Account Does Not Mean Debtor Can Immediately Use It

I tried to make the title as concise as possible — Ockham’s Razor failed.

Client comes to see you and they have $5,000 in their checking account.  You list it on Schedule B then exempt it on Schedule C and file the case.  The 341(a) is in 30 days.  Client goes to the bank the next day and withdraws all of the funds to pay rent and spend it on gambling.  You don’t think it is a problem because the funds have been fully exempt.

But is it?

In Section 70a of the former Bankruptcy Act, there was an automatic exclusion of exempt property such that by simply listing the asset on Schedule C — then that asset was automatically and immediately exempt.  That is not how it works under the current Code — it is not automatic.  I was reading the Mwangi case from the Ninth Circuit that clarifies a subtle distinction between an asset that has been “claimed exempt” versus one that is actually “deemed exempt.“   In the hypo above, it is a “no harm, no foul” situation but it’s still worth thinking about.

Read more…

New Barash Ch. 13 Confirmation Hearing Procedures

I am advised that Judge Martin Barash has some updated local rules on getting your chapter 13 plan confirmed in his courtroom.  You can find the rules here.   Judge Barash states:

“These procedures are intended to increase the efficiency of chapter 13 plan confirmation hearings, reduce the amount of court time attorneys spend at these hearings, and discourage counsel from filing chapter 13 plans and delivering documents requested by the chapter 13 trustee shortly before the confirmation hearing.”

A summary is as follows:

1.  Attorneys who don’t check in by 9:55 am will be put on second call.

2.  Matters will be called in order of check in and once the attorney is at the podium, all of his or her matters will be heard together.

3.  Where a plan has been filed within 7 days of the confirmation hearing, or documents provided to the trustee within 14 days (i.e., late), the case will be “dropped to the bottom of the calendar” which does not mean that it is okay to file things late.

4.  Attorneys will not be allowed to give the trustee plan payments or documents during the hearing (meaning from the podium).

Wife Files Bk But Title To House In Non-Debtor Husband’s Name – “Brace” Yourself!

“I’m not on title, only my husband is on title!” — wow, how many times a week do I hear this statement re: a house, a car, a boat, etc.

In last year’s BAP opinion of In re Brace by Judge Lafferty, the panel clarified an interesting fight:  who wins between Community Property Presumption (CFC 760) versus Record Title Presumption (CEC 662).  I enjoy reading Judge Lafferty’s opinions — it’s very tutorial and easy to follow.  In this opinion, the panel held that the community property presumption wins.  This means, to me, that it does not matter if debtor is “not on title” to the house — the house is still property of the estate due to debtor’s community interest in the house.   This case is on appeal to the Ninth.