The Oregon Division of Child Services did not violate the automatic stay or the terms of the confirmation order when it engaged in collection activities where the efforts related to a time not covered by the debtor’s settlement agreement with his ex-wife forgiving all child support payments predating the adoption of their child. In re Bronson, No. 20-30704 (Bankr. D. Ore. Aug. 23, 2022). [Read more…] about DCS Properly Sought to Collect Child Support after Settlement
Sorry, Can’t Confirm Plan If You’re Dead
A debtor who has shuffled off this mortal coil cannot confirm a chapter 13 plan where he has no ability to fund it with future income and no need for the fresh start offered by bankruptcy discharge. In re Carrasco, No. 21-51420 (Bankr. W.D. Tex. July 19, 2022).
In this case, the debtor died after the meeting of the creditors, but before his proposed chapter 13 plan had been confirmed. The debtor’s counsel lobbied to substitute the debtor’s son to confirm the plan notwithstanding the fact that the debtor himself had ridden the carriage into immortality. The trustee objected to confirmation. [Read more…] about Sorry, Can’t Confirm Plan If You’re Dead
Creditor Could Not Object to Modification that Did Not Change Treatment of its Loan
A creditor that fails to object to treatment of its loan in the debtor’s proposed chapter 13 plan cannot object to modification of that plan where the modification did not change treatment of its loan. In re Powell, No. 21-3069 (Bankr. D.S.C May 16, 2022). [Read more…] about Creditor Could Not Object to Modification that Did Not Change Treatment of its Loan
Provision for Balloon Payment after Sale Precludes Confirmation
In a consolidated opinion, the Bankruptcy Court for the District of Massachusetts held that the “equal payment provision of § 1325(a)(5)(B)(iii) is best read to prohibit confirmation of a sale plan, over the objection of a secured creditor holding a mortgage of a principal residence, that contemplates periodic payments followed by a lump-sum payment.” In re Materne, No. 20-40027, and In re Gnaman, No. 19-40930 (Bankr. D. Mass. April 7, 2022). [Read more…] about Provision for Balloon Payment after Sale Precludes Confirmation
NCBRC Files Amicus on Pre-Confirmation Trustee Fees when Plan Not Confirmed
NCBRC has filed an amicus brief on behalf of the NACBA membership in the Tenth Circuit case of Goodman v. Doll (In re Doll). The case addresses the issue of whether a chapter 13 standing trustee is entitled to keep pre-confirmation statutory fees when the case is ultimately dismissed prior to plan confirmation. Case No. 22-1004 (filed April 6, 2022). The bankruptcy court found in favor of the trustee and the district court reversed. [Read more…] about NCBRC Files Amicus on Pre-Confirmation Trustee Fees when Plan Not Confirmed
Pre-Petition Increase in Retirement Account Contributions
A chapter 13 debtor’s post-petition contributions to his qualified retirement account may be deducted from the calculation of his projected disposable income and the amount of those contributions is presumed to be the average contribution made during the six months preceding bankruptcy. Where, as here, the debtor substantially increased his contributions on the eve of bankruptcy, he bears the burden of proving that his projected disposable income calculation should be reduced by the increased retirement account contributions. In re Huston, 2021 WL 4528883 (Bankr. N.D. Ill. Sept. 30, 2021) (case no. 20-81689). [Read more…] about Pre-Petition Increase in Retirement Account Contributions
Standing Trustee Must Return Fee if Plan Not Confirmed
The standing chapter 13 trustee must return his percentage fee to the debtor when the debtor’s plan is not confirmed. Doll v. Goodman (In re Doll), No. 21-731 (D. Colo. Dec. 6, 2021).
The debtor filed for chapter 13 bankruptcy and made $29,900 in plan payments to the standing trustee prior to confirmation. Of that amount, $19,800 went to his counsel, $7,503.30 was disbursed to the Colorado Department of Revenue on a priority tax claim, and the remaining $2,596.70 was retained by the standing trustee as part of his statutory 10% trustee fee. The plan was not confirmed and the bankruptcy court allowed the trustee to retain his fee over the debtor’s objection. The debtor appealed to the district court. [Read more…] about Standing Trustee Must Return Fee if Plan Not Confirmed
Debtor Need Not Provide for Secured Claim in Plan
Nothing in the Code requires a debtor to provide for a claim secured by his principal residence in his chapter 13 plan. In re Jones, 2021 WL 4465554 (Bankr. E.D. N.C. Sept. 29, 2021) (case no. 20-03607).
When he filed for chapter 13 bankruptcy, the debtor listed food stamps and VA disability benefits as his only source of income. He also listed his principal residence as securing a debt to Bank of New York Mellon (BONY). The debtor’s second amended proposed plan omitted any provision for BONY’s claim relating to the residence. The plan also specified that the debtor could sell the property without notice to the court or the chapter 13 trustee. BONY objected to confirmation arguing that section 1325(a) required the debtor to provide for its secured claim in the plan. The trustee also objected to confirmation on feasibility grounds and because of the provision relating to non-notification in the event of sale. The standing chapter 13 trustee filed an amicus brief on the issue of notice and on the grounds that the debtor’s failure to treat the secured claim in his plan violated section 1325(a)(3) and (5). [Read more…] about Debtor Need Not Provide for Secured Claim in Plan
No Mortgage Modification for Mixed Use Property
The chapter 11 debtor could not modify her residential mortgage even though much of the property securing the mortgage was used for income-producing purposes. Lee v. U.S. Nat’l Bank Ass’n, No. 20-222 (M.D. Ga. Oct. 4, 2021).
The debtor’s residence was located on forty-three acres of land of which she rented out approximately thirty-five acres as farmland. She took out a mortgage on the property in 2007 and, acting on the advice of the mortgagee, in 2010, allowed the mortgage to go into default in the expectation of refinancing the loan under the federal Housing Action Resource Test (HART). When she was unable to refinance, she filed for chapter 11 bankruptcy seeking to modify the mortgage.
US National Bank filed a claim as trustee for RMAC Trust, Series 2016-CTT (the Trust), in the amount of $253,070.25, representing $139,195.75 in unpaid principal and $82,228.15 in interest. It moved for relief from stay, and the bankruptcy court granted the motion finding that section 1123(b)(5) prohibited modification of the mortgage. The debtor appealed to the district court. [Read more…] about No Mortgage Modification for Mixed Use Property
District Court Upholds Local Rule Requiring Statements of Compliance
Finding the requirement to be procedural rather than substantive, the District Court for the Northern District of California upheld the district’s General Order requiring chapter 13 bankruptcy debtors who elect to pay their mortgages directly rather than through the trustee to submit regular notifications of compliance to the bankruptcy court. Gordon v. Bronitsky (In re Gordon), No. 21-643 (N.D. Cal. July 15, 2021). [Read more…] about District Court Upholds Local Rule Requiring Statements of Compliance