confirmation

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Judge Johnson’s Dismissal of Chapter 13 Reversed by District Court

The mean-spirited, and legally insupportable approach to chapter 13 cases that led to denial of confirmation and dismissal of the debtor’s case in In re Mycek, has been reversed and remanded by the district court for the Central District of California. No. 12-369 (C.D. Cal. Oct. 22, 2013). [Read more…] about Judge Johnson’s Dismissal of Chapter 13 Reversed by District Court

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Hybrid Plans Rejected by First Circuit BAP

The BAP for the First Circuit rejected confirmation of so-called “hybrid” plans in chapter 13. Bullard v. Hyde Park Savings Bank, No. 12-54 (May 24, 2013). The debtor proposed a plan under which his mortgage (including both residential and non-residential elements) was to be divided into secured and unsecured portions under section 1322(b)(2), with the unsecured portion paid for cents on the dollar through the plan. The secured portion would be paid outside the plan and beyond the completion of the plan period as contemplated by the cure and maintain provision in section 1322(b)(5). The bankruptcy court found that sections 1322(b)(2) and 1322(b)(5) are mutually exclusive and therefore the plan could not be confirmed as proposed. In re Bullard, 475 B.R. 304 (Bankr. D. Mass. 2012). The BAP for the First Circuit accepted the interlocutory appeal. [Read more…] about Hybrid Plans Rejected by First Circuit BAP

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Co-Signed Loans May Receive Special Treatment in Chapter 13

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

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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

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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.