A bankruptcy court rejected a Chapter 13 trustee’s valuation of the debtor’s pre-petition cause of action and found that an estimated value of the state court case should not be included in the plan distributions but that the plan may be modified if the debtor obtains a money judgment during the commitment period. In re Morales, No. 12-7296 (Bankr. P.R. July 2, 2015). [Read more…] about Trustee’s Valuation of Unresolved Pre-Petition Cause of Action Rejected
Court Disapproves Modification to Pay Outside Plan
Using inflexible reasoning, a bankruptcy court found that the debtors could not amend their plan to make mortgage payments outside the plan. In re Vela, No. 12-06512 (Bankr. W.D. Mich. March 13, 2015). [Read more…] about Court Disapproves Modification to Pay Outside Plan
Co-Debtor’s Death Drops Debtor to Below-Median Permitting Reduced ACP
When the major contributor to the debtors’ joint Chapter 13 plan died, the surviving spouse fell to below median status and the applicable commitment period fell from 5 years to 3 years. In re Childers, No. 10-10405 (Bankr. N.D. Tex. Jan. 26, 2015). [Read more…] about Co-Debtor’s Death Drops Debtor to Below-Median Permitting Reduced ACP
Debt Secured by Vehicle May Be Restructured in Chapter 20
The debtor filed for Chapter 13 relief after having received a discharge in Chapter 7 less than one year earlier. During her chapter 7 she neither reaffirmed the non-purchase money loan secured by her truck nor redeemed it. In her chapter 13, she sought to pay the debt secured by the truck, as well as other debt. The lender objected to the confirmation of the plan and sought relief from the stay to exercise its rights against the truck. The court denied the motions by the trustee and confirmed the debtor’s plan. In re Francis, No. 14-42974 (Bankr. N.D. Tex. Jan. 7, 2015). [Read more…] about Debt Secured by Vehicle May Be Restructured in Chapter 20
Good Faith in the Plan Modification Context
Two recent cases deal with the determination good faith in the context of a chapter 13 plan modification. In re Martin, No. 10-64790 (Bankr. N.D. Ohio November 27, 2013) and In re Maxwell, No. 11-17873 (Bankr. E.D. Cal. Nov. 8, 2013). [Read more…] about Good Faith in the Plan Modification Context
HAMP Trial Period Plans – Wells Fargo’s Fraudulent Coin Toss
Yesterday, the Ninth Circuit Court of Appeals held in Corvello v. Wells Fargo Bank, N.A., No. 11-16234, that Wells Fargo was contractually obligated under the terms of a HAMP trial period plan (TPP) to offer permanent modifications to borrowers who complied with the TPP by submitting accurate documentation and making trial payments. Such an interpretation of the TPP, the Court stated, “avoids the injustice that would result were Wells Fargo’s position accepted and Wells Fargo allowed to keep borrowers’ trial payments without fulfilling any obligations in return. The TPP does not contemplate such an unfair result.” More scathing was Judge Noonan’s concurrence in which he stated that:
“No purpose was served by the document Wells Fargo prepared except the fraudulent purpose of inducing Corvello to make the payments while the bank retained the option of modifying the loan or stiffing him. “Heads I win, tails you lose” is a fraudulent coin toss. Wells Fargo did no better.”
The Court rejected arguments that Wells Fargo’s failure to return a signed copy of the TPP to the borrower precluded liability. For purposes of the decision, the Court assumed that the borrowers fulfilled all of their obligations under the TPP, as alleged. The Court noted, however, that Wells Fargo could still raise factual disputes during the litigation.
Acceleration Clause Clears Way for Modification
A bankruptcy court in Maryland found that an acceleration clause in a deed of trust, making the remaining debt immediately due, triggered the modification clause of section 1322(c)(2). Fed’l Nat’l Mtg. Ass’n v. Griffin (In re Griffin), No. 12-19863 (March 18, 2013). [Read more…] about Acceleration Clause Clears Way for Modification
New CFPB Rules Fail to Resolve Problem of Dual-Tracking on Delinquent Mortgages
On January 17, 2013, the Consumer Financial Protection Bureau enacted mortgage servicing rules implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act provisions relating to the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). [Read more…] about New CFPB Rules Fail to Resolve Problem of Dual-Tracking on Delinquent Mortgages
In re Bullard, No. 12-54 (B.A.P. 1st Cir.)
Type: Amicus brief
Date: November 20, 2012
Description: Whether Chapter 13 plan that bifurcates residential lien and pays secured portion outside plan and unsecured portion within plan must pay off entire mortgage within five years.
Result: Judgment affirmed, May 24, 2013, Case dismissed by First Circuit as interlocutory, No. 13-9009 (May 14, 2014); U.S. Supreme Court cert. granted No. 14-116 (Dec. 12, 2014)
In re Scarborough, No. 04-4298 (3d Cir.)
Type: Amicus
Date: July 10, 2006
Description: Whether chapter 13 debtor may modify under section 1322(b)(2) an undersecured mortgage on a multi-unit property that includes a unit in which the debtor does not reside.
Result: Reversed. Debtor won. 461 F.3d 406 (3d Cir. 2006)
Scarborough NACBA Amicus 3rd Cir.