Where both the debtor and the trustee paid down the debtor’s mortgage and arrearage, the court did not err in finding that the resulting overpayment should go to the trustee. White v. Regions Bank, No. 19-130 (E.D. Tenn. Feb. 24, 2020).
The debtor’s original chapter 13 plan provided for him to make mortgage payments outside the plan. After he fell behind on those payments, he modified his plan to provide for mortgage and mortgage arrearages to be paid through the plan. The debtor completed his plan, the trustee filed her final report, and the bankruptcy court entered an order of discharge on November 15, 2017. Soon thereafter it came to light that the trustee had failed to pay the mortgage arrearage. Citing F.R.C.P. 60(b) and her own error, the trustee withdrew her notice of final payment and moved to reopen to administer additional assets. The case continued under the plan with the trustee making payments toward the mortgage and arrearage.
At the same time, however, the bank sent collection letters to the debtor demanding payment of the mortgage and arrearage. The debtor, therefore, resumed his payments outside the plan. As a result, with both the debtor and the trustee paying mortgage and arrearage, the bank found itself with excess money on his hands. It sought instruction from the court as to where to refund the overpayment. In an order dated April 18, 2019, the bankruptcy court withdrew its earlier order of discharge and ordered the bank to submit the overpayment to the trustee for application to the remaining balance on the arrearage with any excess going to the debtor. The debtor appealed. Read More
