A proof of claim amendment filed after the debtor successfully completed his chapter 13 plan was too late to increase the mortgage arrears. In re Mason, No. 10-4195, 2014 WL 5502385 (Bankr. S.D. Miss. Oct. 30, 2014). In his chapter 13 case, the debtor proposed a 60-month plan to pay the ongoing mortgage to Carrington Mortgage (originally CitiMortgage) through his plan and to pay an arrearage in the amount of $12,000.00. Carrington filed a proof of claim listing the arrearage as $439.21. The plan was confirmed using the arrearage amount listed by the creditor. The debtor completed his 100% plan including the arrearage in 38 months. On March 5, 2014, the trustee filed a motion for an order declaring the default cured in accordance with the plan.
Pursuant to Rule 3002.1(g), Carrington filed its Response to the Trustee’s motion requesting that the Motion be set for hearing. On May 23, 2014, approximately 38 months after the Rule 3002 claims bar date, Carrington filed a second amended proof of claim listing the pre-petition mortgage arrearage as $12,608.52. Not surprisingly, the debtor objected to the proof of claim arguing that it was untimely filed.
Citing United States v. Kolstad (In re Kolstad), 928 F.2d 171 (5th Cir. 1991), the court discussed the bar date as circumscribing the list of creditors involved in the case but not necessarily pinning down the amount of a particular claim. However, the court found that Kolstad did not advocate unlimited license to amend claims. A late amended may be rejected where it essentially amounts to a new claim rather than a foreseeable change to the original claim or where the degree of prejudice resulting from the delay is too great to justify allowance of the amendment.
The court, finding that Carrington’s second amended claim did not state a new claim, turned to the question of unfair prejudice. On this issue, the court took counsel from In re Taylor, 280 B.R. 711, (Bankr. S.D. Ala. 2001) and In re Martinez, 513 B.R. 779 (Bankr. D. Puerto Rico 2014). In both cases the creditor filed an amendment significantly increasing its claim either just before, or after the debtor had completed the plan. Both courts found that where the fault for failing to file an accurate proof of claim earlier lay with the creditor, and the debtor was so near completion, or had completed the plan, it would be unfairly prejudicial to the debtor to permit the amendment. The Mason court found that “[b]ased on the holdings in Kolstad, Taylor and Martinez, . . . allowing Carrington Mortgage to amend its proof of claim, in such a large dollar amount, after the Debtor had completed all of his plan payments would be unfairly prejudicial to the Debtor.”
The fact that the plan was originally for 60 months but was completed in 38 months did not change the result. Under section 1325(b)(4)(B) the applicable commitment period is 60 months or the time it takes to pay the claims in full. When the debtor completed the plan more rapidly than 60 months he satisfied the temporal requirement. The court also rejected Carrington’s argument based on Espinosa noting that Espinosa did not freeze Carrington’s claim at the amount listed by the debtor in the original proposed plan. Rather, the proof of claim filed by the creditor is taken as prima facie proof of that claim amount in the absence of an objection by the debtor. “Neither the Trustee nor the Debtor had a responsibility to tell Carrington Mortgage how to complete its proof of claim.” The court, therefore, granted the motion for an order declaring the claim defaults cured.
Tags: Proof of Claim
