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
Compassion Wins the Day in Modification Case
The bankruptcy court properly exercised its discretion when it found that the chapter 13 debtor did not have to contribute the life insurance proceeds he received upon the death of his wife to repay his creditors in full, where the funds were necessary to his support. <i>Townson v. McAllister (In re McAllister),</i> No. 14-106 (N.D. Ga. Oct. 14, 2014). [Read more…] about Compassion Wins the Day in Modification Case
Galaxies Apart…
Men Are From Mars, Women Are From Venus is the classic guide to understanding relationships between men and women. A similar resource is desperately needed for consumer advocates and some federal regulators (Treasury and the NMS Monitor, specifically) because it seems we are not even working in the same galaxy! As evidence of this cosmic disconnect, Ocwen Financial Corp. recently announced (here) that it had received top marks from the HAMP compliance team in all categories for the second quarter of 2014. This is the same Ocwen that, in December 2013, agreed to a consent order with the CFPB and authorities from 49 states who believed that “Ocwen engaged in significant and systemic conduct that occurred at every stage of the mortgage servicing process.” (See CFPB Press Release and Complaint, here). According to the CFPB complaint, Ocwen: (1) took advantage of homeowners with servicing shortcuts and unauthorized fees; (2) deceived consumers about foreclosure alternatives and improperly denied loan modification; and (3) engaged in illegal foreclosure practices. It would be great if Ocwen truly remedied all these deficiencies in such a short time, but that’s not the experience on the ground. The glowing report from Treasury’s HAMP team sadly suggests that six years after the mortgage meltdown, consumer advocates and regulators are still worlds apart in even understanding how to measure compliance with Obama’s flagship program to help struggling homeowners.
Trustee May Not Compel Use of Non-Estate Property in Modified Plan
Relying on Eleventh Circuit precedent, a Georgia bankruptcy court found that a debtor could not be compelled to contribute life insurance proceeds received more than 180 days post-petition to his modified chapter 13 plan. In re McAllister, 2014 WL 1624106 (Bankr. N.D. Ga. April 3, 2014). [Read more…] about Trustee May Not Compel Use of Non-Estate Property in Modified Plan
Shortening Plan Duration without Decreasing Payment Amount Constitutes Modification
A proposed change to a confirmed Chapter 13 plan that would pay creditors the same amount owed through the confirmed plan over a shorter period of time constitutes a “modification” to which section 1329 applies. In re Refosco, No. 13-cv-01219 (W.D. Pa. April 9, 2014). [Read more…] about Shortening Plan Duration without Decreasing Payment Amount Constitutes Modification
Tax Purchaser Claim May Be Modified in Chapter 13
In a Chapter 13 bankruptcy filed before the expiration of the redemption period, a real property tax purchaser’s claim is treated as a secured claim, which may be modified in the plan. Alexandrov v. LaMont (In re LaMont), No. 13-1187 (7th Cir. Jan. 7, 2014). [Read more…] about Tax Purchaser Claim May Be Modified in Chapter 13
Bankruptcy Cannot Be Reopened to Permit Reaffirmation Agreement
Some banks are refusing to enter into post-discharge mortgage modification agreements when debtors have not reaffirmed the debt in bankruptcy. In In re Conner, No. 09-42532 (Bankr. S.D. Ga. Oct. 25, 2013), the debtor moved to reopen his chapter 7 bankruptcy to reaffirm his mortgage and clear the way to enter into a mortgage modification agreement with Wells Fargo. [Read more…] about Bankruptcy Cannot Be Reopened to Permit Reaffirmation Agreement