National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

Proof of claim

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Advanced Sick Leave Is Debt Subject to Recoupment

Advanced sick leave created a debt in bankruptcy that was subject to recoupment by the creditor/employer. Patterson v. Social Security Administration, No. 14-65877, Adv. Proc. No. 15-5129 (Bankr. N.D. Ga. Oct. 5, 2017).

Chapter 7 debtor, Tyree Patterson, worked for the Social Security Administration. The SSA had a policy whereby an employee who has exhausted his sick leave can “borrow” against future sick leave and “repay” the borrowed days with later-accrued sick leave. After Mr. Patterson obtained his discharge in bankruptcy, the SSA “collected” on his pre-petition advanced sick leave by reducing his newly accrued sick leave. Mr. Patterson reopened his bankruptcy to complain that the SSA’s conduct violated the discharge injunction. [Read more…] about Advanced Sick Leave Is Debt Subject to Recoupment

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No Presumption of Validity of Claim under Rule 3002.1

On January 3, 2013, the Chapter 13 trustee filed “Trustee’s Notice of Final Cure Payment and Motion to Deem Mortgage Current,” filed under Rule 3002.1(f) seeking an order that the debtor’s mortgagee was current, that all escrow deficiencies had been cured, and that all fees had been satisfied in full. The mortgage creditor filed a timely objection under Rule 3002.1(g), arguing that the debtor had incurred post-petition arrearages of $25,798.02. However, the creditor did not present any evidence of any disbursements to substantiate the arrearage. The court found that supplemental claims did not enjoy a presumption of validity and, because the debtor had made all payments required by the amended plan, it granted the trustee’s motion. In re Rodriguez, No. 08-80025 (Bankr. S.D. Tex. July 8, 2013). [Read more…] about No Presumption of Validity of Claim under Rule 3002.1

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Court Rejects Unsupported Escrow Charges

In In the Matter of Breit, the chapter 13 trustee filed an objection to JPMorgan Chase’s proof of claim relating to the debtor’s residential mortgage.  No. 11-32461 (Bankr. N.D. Ind. March 27, 2013). In its POC, Chase claimed an arrearage in the amount of $27,897.09, encompassing unpaid monthly installments of $1,102.53 which represented a principal and interest component of $804.79, and an escrow component of $297.74. Under this calculation, Chase sought $7,145.76 attributable to the escrow deficiency. Although RESPA contemplates the creation of an escrow account to cover, among other things, tax and insurance payments that the mortgage servicer is forced to pay on behalf of a delinquent debtor, the trustee argued that the arrearage claim should be reduced by $3,379.35 because Chase had actually paid only $2,909.37 for those obligations. The court agreed. It rejected Chase’s “mathematical manipulation” (Chase’s phrase) in calculating the pre-petition escrow shortfall and permitted recovery only of those expenditures authorized by RESPA. Thus, even though Chase had met its initial burden of proof with respect to Rule 3001, it failed to counter the trustee’s evidence refuting the POC and therefore failed to meet its ultimate burden of proving the validity of the claim.

Breit opinion