Deepening the split among lower courts, in McCallister v. Evans, et al., No. 20-112 (D. Ida. Feb. 8, 2022). Chief Judge Nye of the District of Idaho, held that the chapter 13 trustee is entitled to retain her commission on funds collected from the debtors even though the debtors’ case was dismissed prior to confirmation. While recognizing the split of authority, the court followed in the footsteps of the Ninth Circuit Bankruptcy Appellate Panel in favoring the language of 28 U.S.C. § 586(e)(2) and dodging the clear textual differences between section 1326(a)(2)—applicable in chapter 13—and section 1226(a)(2)—applicable in chapter 12. Read More
Tag Archive: Plan confirmation
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Split on Chapter 13 Trustee Retention of Fees in Unconfirmed Cases Deepens
Posted by NCBRC - February 14th, 2022
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Pre-Petition Increase in Retirement Account Contributions
Posted by NCBRC - December 9th, 2021
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
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Standing Trustee Must Return Fee if Plan Not Confirmed
Posted by NCBRC - December 7th, 2021
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
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Debtor Need Not Provide for Secured Claim in Plan
Posted by NCBRC - December 2nd, 2021
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
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No Mortgage Modification for Mixed Use Property
Posted by NCBRC - October 21st, 2021
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
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District Court Upholds Local Rule Requiring Statements of Compliance
Posted by NCBRC - August 20th, 2021
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
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Debtor Loses the Battle but Wins the War
Posted by NCBRC - April 23rd, 2021
A confirmed plan binds the county tax creditor even though the plan did not provide for the interest claimed in its post-confirmation proof of claim where the county had notice of the plan and failed to object to confirmation. In re Bird, 624 B.R. 841 (Bankr. N.D. Ill., Feb. 2, 2021) (case no. 1:17-bk-2072). Read More
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TitleMax Can’t Have Its Cake and Eat it Too
Posted by NCBRC - April 21st, 2021
TitleMax waived its right to forfeiture under a title pawn transaction when it failed to object to treatment of the loan as a secured debt prior to confirmation of the debtor’s plan. TitleMax of Alabama v. Deakle, No. 20-335 (S.D. Ala. March 31, 2021).
Prior to filing for bankruptcy, the debtor entered into a title pawn transaction with TitleMax. The pawn matured and the grace period for redemption expired before the debtor filed her chapter 13 petition. Her proposed plan provided for payments to TitleMax as a secured creditor. TitleMax raised no objection to the treatment of the loan until three months after the debtor’s plan was confirmed. At that time, TitleMax filed a motion to “confirm termination or absence of stay.” The bankruptcy court found that, by failing to object to confirmation, TitleMax had waived the forfeiture provision of Alabama’s Pawnshop Act and was bound by the terms of the confirmed plan under section 1327(a). Read More
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Two Vehicles Securing One Claim Must Receive Identical Treatment in Ch 13 Plan
Posted by NCBRC - January 21st, 2021
Under section 1325(a)(5), a chapter 13 plan cannot provide for different treatment of two vehicles which were purchased at different times with loans from the same creditor where both lending agreements included cross-collateralization clauses securing each loan by both vehicles. Barragan-Flores v. Evolve Federal Credit Union, No. 18-50420 (5th Cir. Jan 14, 2021). Read More
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Texas District’s Treatment of Tax Refund In Chapter 13 Invalidated
Posted by NCBRC - September 8th, 2020
Finding that it encroached on a below-median debtor’s substantive rights, the Fifth Circuit invalidated a local form chapter 13 plan provision that required all debtors to turn over any tax refund in excess of $2,000. Diaz v. Viegelahn, No. 19-50982 (5th Cir. Aug. 26, 2020).
NCBRC filed an amicus brief on behalf of the NACBA membership in support of the debtor in this case. Read More
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