A Chapter 13 plan may provide for full repayment of a co-signed loan even though other unsecured creditors receive less. In re Rivera, No. 12-66 (B.A.P. 1st Cir. Apr. 5, 2013). In Rivera, the debtors proposed a Chapter 13 plan under which one creditor, Villa-Coop, was to receive repayment in full of the unsecured portion of its loan which was co-signed by the debtor’s mother-in-law. The other unsecured creditors would receive repayment of only 4.51 percent on their loans. The trustee objected to the plan because its treatment of Villa-Coop constituted unfair discrimination in violation of section 1322(a)(3) and (b)(1) and that section 1325(b)(1) requires equal distribution of projected disposable income. The bankruptcy court confirmed the plan. In re Rivera, 480 B.R. 112 (Bankr. D. P.R. 2012). [Read more…] about Co-Signed Loans May Receive Special Treatment in Chapter 13
NACBA Amicus Opposes “Carve-Out” Agreement
NACBA has filed an amicus brief in the Fourth Circuit case of In re Reeves, No. 12-2127. In that case, the trustee, claiming authority under section 724(b), sought to sell the debtor’s fully encumbered residential property to give effect to an agreement the trustee had entered into with the IRS, a lienholder, under which the IRS agreed to “carve out” a portion of its share of the proceeds from any sale of the property. That portion would then go toward administrative costs and unsecured creditors. [Read more…] about NACBA Amicus Opposes “Carve-Out” Agreement
Contract Interest Rate Only Through Confirmation
In First United Security Bank v. Garner, No. 11-10465 (11th Cir. Nov. 30, 2011) the court found that, under section 506(b), FUSB, an over-secured creditor, was entitled to receive post-petition interest at the contact rate of 10.5% until confirmation at which time the interest rate would drop to 4.25% as determined under the standard set forth in Till v. SCS Credit Corp., 541 U.S. 465 (2004). In so holding, the court relied on the Supreme Court’s statement in Rake v. Wade, 508 U.S. 464 (1993), that the temporal aspect of section 506(b) applies only from the date of filing to confirmation. The court additionally noted that the Second and Ninth Circuits have interpreted section 506(b) and the “cram-down” provision of section 1325(a)(5)(B)(ii) as allowing accrual of interest at the contract rate to continue only through confirmation.
Bell v. Fitzgerald, No. 10-10870 (D. Mass)
Type: Amicus
Date: June 10, 2011
Description: Whether “property distribution” under section 1325(a) may be satisfied by issuance of new Note.
Result: Affirmed. Debtor lost.