The winner? Confirmed plan. Where the mortgagee had notice and opportunity to object to confirmation of the debtors’ chapter 13 plan providing for mortgage arrears in the amount of approximately half the mortgagee’s allowed proof of claim, the mortgagee could not be heard, at the debtors’ successful completion of their plan, to complain that the debtors still owed pre-petition arrears. In re Edelstein, No. 17-11461 (Bankr. N.D. Ill. Nov. 7, 2022). Read More
Tag Archive: Proof of Claim
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Who Would Win in a Fight, Allowed Claim or Confirmed Plan?
Posted by NCBRC - December 9th, 2022
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Mortgage Creditor Sanctioned for Miscalculating Claim
Posted by NCBRC - September 16th, 2022
The debtor was entitled to attorney’s fees and a reduction in the mortgagee’s arrearage claim where the mortgagee failed to reduce the arrearage by the entire amount the debtor had paid in his prior chapter 13 bankruptcy. In re Simmons, No. 22-680 (Bankr. D. S.C. Aug. 31, 2022). Read More
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Attorney Fees Intended To Pressure Debtor Unnecessary
Posted by NCBRC - May 27th, 2021
The creditor’s attorney fees attributable to its repeated motions to continue foreclosure proceedings during the debtor’s pending bankruptcy cases were unnecessary given that the automatic stay was in place, and the bankruptcy court deducted those fees from the allowed claim. In re Peta, 2021 WL 608233 (Bankr. E.D. Pa., Feb. 10, 2021) (case no. 2:19-bk-13264). Read More
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Bankruptcy Court Says Call First Before Seeking Attorney’s Fees
Posted by NCBRC - January 23rd, 2019
The Bankruptcy Court for the Eastern District of Michigan recently ruled whether a creditor must pay attorney’s fees to the objecting party when the creditor filed a claim with deficient information. In re Ball, No. 17-22574 (Bankr. E.D.MI. Jan. 22, 2019).
The issue was brought before the court by the chapter 13 trustee. A creditor, Financial Edge Credit Union (FECU), was owed a debt for overdraft charges which was an open-end consumer debt. FECU filed a deficient proof of claim that only attached a copy of the deposit account contract and did not include the last payment date or the date of the debtor’s last transaction.
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Debtor’s Valuation of Worker’s Comp Claim Insufficiently Supported
Posted by NCBRC - April 19th, 2018
An affidavit by the debtor’s worker’s compensation counsel asserting that at the time of the bankruptcy petition the worker’s comp claim had a mere nuisance value, was insufficient to overcome the IRS’s claim for a secured interest in the amount the worker’s comp case actually settled for several months post-petition. United States v. Austin (In re Austin), No. 17-6024 (B.A.P. 8th Cir. April 9, 2018).
When Scott and Anna Austin filed their chapter 13 petition, Mr. Austin had a pending worker’s compensation action which they valued on their schedules at zero or “unknown amount.” The IRS filed a claim asserting a tax lien to which the Austins objected. While that action was pending, the Austins settled the worker’s compensation claim for $21,448.80, of which they received $15,661.60. The IRS amended its claim to show a tax lien secured by the $15,661.60 settlement amount. The Austins objected again, presenting the affidavit of their worker’s compensation attorney, Michael Smallwood, that, notwithstanding the ultimate settlement amount, the worker’s compensation claim in fact had only a “nuisance” value of $3,000 at the time the Austins filed for bankruptcy. Based on the affidavit, the bankruptcy court reduced the IRS’s secured claim to $3,000. Read More
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SCOTUS Finds Time-Barred POC Not FDCPA Violation
Posted by NCBRC - May 16th, 2017
“Midland’s filing of a proof of claim that on its face indicates that the limitations period has run does not fall within the scope of any of the five relevant words of the Fair Debt Collection Practices Act.” Midland Funding, LLC v. Johnson, 2017 WL 2039159 (May 15, 2017) (case no. 16-348), reversing Johnson v. Midland Funding, LLC, 823 F.3d 1334 (11th Cir. 2016). Read More
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Res Judicata Does Not Bar Post-Confirmation Objection to POC
Posted by NCBRC - April 5th, 2017
Plan confirmation did not adjudicate claim allowance on contested unsecured claims, therefore, res judicata did not bar the debtors’ post-confirmation challenges to the proofs of claim. LVNV Funding v. Harling, No. 16-1346, and LVNV Funding v. Rhodes, No. 16-1347 (4th Cir. March 30, 2017).
In two chapter 13 cases, LVNV filed proofs of claim prior to plan confirmation. The debtors, Derrick and Teresa Harling, and Jeffrey Rhodes, objected after plan confirmation but prior to the claims bar date. LVNV argued that the objections should have failed under the doctrine of res judicata. The bankruptcy courts found that res judicata did not apply, and disallowed the claims on the basis that the underlying debts were uncollectible due to the passage of the statute of limitations.
LVNV appealed both cases directly to the Fourth Circuit. Read More
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Court Denies “Comfort Order” to File Late POC
Posted by NCBRC - February 17th, 2017
Neither the Code nor the Bankruptcy Rules permit a Bankruptcy Court to grant a “comfort order” allowing a late proof of claim where no objection has been made to the filing. In re Rodriguez, No. 16-70150 (Bankr. S.D. Tex. Feb. 13, 2017).
Karina Rodriguez listed Ovation as a tax lien creditor on Schedule D of her chapter 13 petition. Ovation filed its claim, along with a motion to allow late filing, after the filing deadline had passed. Ovation’s contemporaneous motion objecting to confirmation because the plan did not provide for full payment of its claim was granted pursuant to an agreed order. Read More
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Late-Filed Proofs of Claim Disallowed
Posted by NCBRC - November 3rd, 2016
“If a creditor wishes to participate in the distribution of a debtor’s assets under a Chapter 13 plan, it must file a timely proof of claim.” Spokane Law Enforcement Fed’l Credit Union v. Barker, No. 14-60028 (9th Cir. Oct. 27, 2016).
Marcella Lee Barker filed her chapter 13 petition, and the Spokane Law Enforcement Federal Credit Union was notified of the filing and the deadline for filing a proof of claim. In the schedules accompanying her proposed plan, Ms. Barker listed a secured loan from the Credit Union in the amount of over $6,600 and an unsecured loan in the amount of over $47,000. Four months after the filing deadline had elapsed, the Credit Union filed its proofs of claim. The Credit Union sought an order from the bankruptcy court to allow the claims. The court denied the motion and disallowed the claims as untimely. The BAP for the Ninth Circuit affirmed. Read More
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District Court Gets it Wrong in Chapter 13 Lien Strip Case
Posted by NCBRC - August 12th, 2016
A district court in Maryland mistakenly applied section 506(d) when it held that a debtor may not strip off a wholly unsecured lien in chapter 13 where the creditor failed to file a proof of claim. Burkhart v. Community Bank of Tri-County, No. 14-315 (D. Md. July 27, 2016).
Edwin Michael, and Teresa Stein Burkhart’s home was subject to several liens, two of which were held by Tri-County and were wholly unsecured. Tri-County did not file a proof of claim in the Burkharts’ bankruptcy. The Burkharts filed an adversary complaint seeking to strip off the wholly unsecured liens under section 1322(b). Tri-County did not respond and the Burkharts moved for default judgment.
The bankruptcy court relied on section 506(d)(2), which provides: “to the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless . . . such claim is not an allowed secured claim due only to the failure of any entity to file a proof of such claim. . .” Because Tri-County had not filed a proof of claim, the court held its liens could not be stripped. (The court granted default judgment against PNC, the holder of another wholly unsecured junior lien, because PNC had filed a timely proof of claim). Read More
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