In Gross v. Rojas (In re Gross), 2019 Bankr. LEXIS 2452, BAP No. CC-18-1218-S KuTa (9th Cir. BAP 7 August 2019) the appellate panel reversed the California bankruptcy court's dismissal of the case for not confirming the plan in 14 months after filing.  The confirmation hearing had been continued seven times, due to the debtors' (Arnold & Laurie Gross) successful challenge of two secured claims.  The Grosses had continued to timely make the trustee payments.  Given the fact based ruling by both courts, a detailed analysis of the facts are in order.   The chapter 13 case was filed in May 2017, proposing $2500/mo payments to the trustee for 60 months, with full payment to priority creditors and a 32% dividend to unsecured claims and a cure of arrearages on the mortgage on the 1st mortgage on their home with an avoidance of the 2nd mortgage.  The trustee objected to the plan in July 2017, shortly before the first confirmation, based on service errors, disclosure of a prior chapter 7 case, insufficient income information, and feasibility.  The feasibility objection was based on not providing for a $127,904 secured claim of the IRS, whose claim totaled over $135,000.  The trustee also objected as to the best interest requirement of §1325(b)(1)(B) and requested additional documentation as to expenses.  Roughly a month following this hearing the Grosses filed to avoid the junior mortgage lien and the IRS lien, both as being fully unsecured.  Shortly before the hearing on these motions, the trustee filed another objection to confirmation under the same grounds as the first, but raised additional concerns regarding incomplete schedules having omitted a vehicle.  In November 2017 an amended motion to avoid the 2nd mortgage lien was filed, correcting the name of the lienholder; and changing the request against the IRS from avoiding the lien to an objection to claim.  The Grosses also filed amended schedules A/B adding the omitted vehicle, noting they had co-signed for their son who maintained the vehicle and made all payments on it.  The hearings on the confirmation and objection to the IRS were continued a few times until the IRS objection was finalized at a March 22 2018 hearing.  In June 2018 the Grosses filed and served a first amended chapter 13 plan, amending the plan to provide for a trustee fee of 11%, $2,000 in debtor counsel attorney fees, the IRS priority claim, and surrender of the vehicle the son maintained.      The plan erroneously stated an intent to avoid the 2nd mortgage lien, which had already been avoided,  misstated the dates of the confirmation hearings and the room number of the upcoming confirmation hearing, and was missing Mrs. Gross's signature.  The plan also reduced the dividend to unsecured creditors from 32% to 31%.    At the July 2018 hearing the trustee for the first time claimed that the Grosses were ineligible due to the debt limits.  No advance notice of this objection was given to the Grosses or counsel, and coverage counsel was unable to address the concerns and did not specifically ask for a continuance of the hearing.  The court ruled at the hearing that the case would be dismissed unless converted within seven days.  Instead Grosses counsel sought reconsideration, pointing out that the trustee has miscomputed the amount of debt, and the Grosses were not over the debt limit, and that they were not given due notice of the objection.  They also noted the trustee had been in error in asserting that Mrs. Gross'es signature was missing from the plan form.  The Grosses also alleged the error as to the confirmation date and room were clerical errors that should not result in dismissal of the case, and that they could quickly and easily fix the only remaining issue: the trustee's request for the 2017 tax return.  The bankruptcy court denied reconsideration and dismissed the case.  The Grosses filed a timely appeal.  The BAP first noted 11 U.S.C. 1307(c) which permits the court to dismiss a chapter 13 case for cause, setting forth non exhaustive list of grounds for dismissal.   While not specified in the bankruptcy court's decision, possible grounds under these facts would be §1307(c)(1) and (c)(5).  §1305(c)(1) permits dismissal for a debtor's unjustified failure to expeditiously accomplish any task required either to propose or confirm a chapter 13 plan.  However, in order to justify dismissal under this ground, the delay must be both unreasonable and prejudicial to creditors.1   While the bankruptcy court seems to have considered the delay in confirmation to be unreasonable, the original apparent basis for dismissal, the debt limit issue, has been conceded by the trustee to be based on an error by the trustee's office in double counting the IRS debt.  The only remaining issues then supporting the court's conclusion that the plan could not have been confirmed at the last hearing was the non-receipt by the trustee of the 2017 tax return and noticing errors.  Under §1307(c)(1) 'unreasonable delay' is a term of art, and should be viewed as a determination of ultimate fact encompassing an equitable assessment of all relevant circumstances akin to the 'excusable neglect' standard of Rule 9006(b)(1) articulated in Pioneer Inv. Sev. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 391-96, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993).  An exhaustive analysis of all circumstances leading to dismissal may not be required where it is apparently from the record that further delays would be futile; such as where they demonstrate that they are unwilling or unable to propose a feasible chapter 13 or fail to address plan defects pointed out by the court and trustee at prior hearings.2   A showing of bad faith, such as a disregard by the debtors of the need to promptly and accurately discharge their chapter 13 duties also will support dismissal.3  Finally, a debtor's defiance of the court's orders and directives, and dictates of chapter 13 of the Code can support a decision to dismiss the case.  The bankruptcy court below made no findings that any of these critical factors were present.  The record does not indicate futility, bad faith, or defiance.  Instead, only two legitimate flaws prevented confirmation at the last hearing: defective notice and a missing copy of the last tax return.  Both matters that could be quickly remedied.  The efforts of the Grosses to date reflected their serious attempt to confirm the plan, including timely payments to the trustee for the 14 months the plan was pending, and successful challenges to the secured claims of the 2nd mortgage and the IRS.  These types challenges often delay confirmation but are not 'unreasonable delay' absent other circumstances not identified here.   Even if the delay had been unreasonable, the court did not identify any prejudice to the creditors caused by the delay, nor did the BAP find any such prejudice.  The noticing defect could have been quickly and easily remedied.  No creditors had challenged confirmation of the plan.   Ultimately, the interest of the Grosses' creditors in the reasonable prospect of partial repayment is paramount, as recognized in §1307(c)(1).  Under the circumstances, a dismissal was dramatically more prejudicial to unsecured creditors than an additional continuance.  The other basis to dismiss, §1307(c)(5), requires both a denial of confirmation and a denial of a request for additional time to file another plan or modification.   This section cannot be properly applied unless the debtor was given a reasonable opportunity to correct or explain the trustee's perceived deficiencies.  No such opportunity was given in the bankruptcy court.  Given the absence of any other cause for dismissal specified by the bankruptcy court, the appellate court would not presume such a basis.  Nor did it note any findings or evidence that would support a finding of unenumerated cause for dismissal.  The bankruptcy court's power to fashion a cause for dismissal does not give the court authority to dismiss for a type of delay different than that contemplated by Congress in the Code.  The courts general and equitable powers cannot be exercised in a manner inconsistent with the Code's express provisions.4  The BAP reversed the bankruptcy court's dismissal of the case.1 Ellsworth v. Lifescape Med. Assocs., P.C. (In re Ellsworth), 455 B.R. 904, 915 (9th Cir. BAP 2011) (citing §1307(c)(1).↩2 See, e.g., In re de la Salle, 461 B.R. 593, at 596-99, 605 (9th Cir. B.A.P. 2011) (court gave debtors detailed instructions after denial of second amended plan but debtors did nothing); see also Villalon v. Burchard (In re Villalon), BAP No. NC-14-1414-KiTaD, 2015 Bankr. LEXIS 1747, 2015 WL 3377854, at *1-3 (9th Cir. BAP May 22, 2015) (debtor unable to cure even a small fraction of her large delinquency in plan payments though court gave her repeated opportunities to do so).↩3 See, e.g., In re de la Salle, 461 B.R. at 606 (debtors enjoyed the protection of the automatic stay, made zero payments to their secured creditor, and refused to propose a plan providing for its claim, instead focusing on their spurious noteholder standing litigation); In re Ellsworth, 455 B.R. at 920 (numerous indica of bad faith, including suspicious timing of petition filing and apparent intent of debtor to defeat collection of a single disputed judgment debt).↩4 Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365, 382, 127 S. Ct. 1105, 166 L. Ed. 2d 956 (2007) (citing Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 206, 108 S. Ct. 963, 99 L. Ed. 2d 169 (1988)).↩ Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100mbarnett@tampabankruptcy.comhttps://hillsboroughbankruptcy.com

From: New York PostBy: John Aidan Byrnehttps://nypost.com/2019/08/11/bankruptcy-filings-rising-across-the-country-and-it-could-get-worse/

From: Business InsiderBy: Hillary Hoffowerhttps://www.businessinsider.com/more-baby-boomers-in-debt-filing-for-bankruptcy-2019-8

from Courthouse News Servicehttps://www.courthousenews.com/nyc-cap-on-ride-hail-vehicles-made-permanent/

Pennsylvania has a “look-back” period of four years, giving bankruptcy trustees ample time to undo or “clawback” a transaction considered a “fraudulent conveyance.” Having to defend a transaction that occurred four years preceding a bankruptcy filing can cause stress to anyone. Here, Young Marr & Associates explain the inner workings of the look-back period in […] The post What is the Look-Back Period in Pennsylvania Bankruptcy? appeared first on .

   Debtor's counsel often do not have much experience in dealing with reverse mortgages in bankruptcy.  A recent case raised a couple of issues on these, when the reverse mortgage was initially in the debtor's mother's name, and transferred to him shortly before her death.  The debtor then filed a chapter 13 plan to reduce the debt to the value of the property, and pay this value through the plan.  The court denied the request to lift stay by the mortgage in In re Winstead, 2019 Bankr. LEXIS 2408, Case #19-50307-KMS (Bankr. S.D. Miss. 31 July 2019).    Winstead's mother executed the note and deed of trust for the mortgage in December 2008.  In June 2018 she quitclaimed the property to Winstead, and died a few weeks later.  Winstead filed for relief under chapter 13 in February 2019 at which time he was residing in the property, but was not on the note.  The chapter 13 plan proposed to refinance the property sometime during the 60 month plan, and then pay the tax appraisal of $76,040 to the mortgage holder, and make Till  interest only adequate protection payments in the meantime at $428/month.  The plan also provided for a 100% dividend to unsecured claims.  The mortgage holder asserted a fully secured claim for $100,793.32.  Two issues were raised by the motion for relief from stay.  Whether the mortgage can be included in the plan despite a lack of privity; and whether the claim must be paid in full through the plan.  As to the privity issue, the Supreme Court has held that "a creditor who ... has a claim enforceable only against the debtor's property nonetheless has a 'claim against the debtor' for purposes of the [Bankruptcy] Code."1  As to payment in full, the mortgage company cited 11 U.S.C. 1322(b)(2), which prohibits modification of  'a claim secured only by a security interest in real property that is the debtor's principal residence.'  However, §1322(c)(2) sets out an exception to this rule 'when  the last payment on the original payment schedule is due before the date on which the final payment under the plan is due.'  As reverse mortgages come due upon the death of the borrower, this exception applies to exclude the debt from the limitation of §1322(b)(2).  Thus, the debtor may provide for a modification and bifurcation of the claim into secured and unsecured components crammed down pursuant to §1325(a)(5).    The court did not address satisfaction of §§1322(c)(2) and 1325(a)(5), leaving those issues for confirmation.  It would be interesting to see whether the plan will be confirmed, and proof as to feasibility, as well as value would likely be required.1 Johnson v. Home state Bank, 501 U.S. 78, 85, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991) (quoting 11 U.S.C. § 102(2))↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100mbarnett@tampabankruptcy.comwww.hillsboroughbankruptcy.com

If your home is facing a foreclosure, filing for emergency bankruptcy could be your only option. Emergency bankruptcies must be handled with caution because of the potential for providing the court and creditors incorrect information. However, if you do not have much time to save your home from foreclosure, an emergency bankruptcy could be worth […] The post Can an Emergency Bankruptcy Filing Stop Home Mortgage Foreclosures in Pennsylvania? appeared first on .

  When a chapter 13 bankruptcy is filed when a debtor is behind on the mortgage payments, generally there are two plan options to keep the house.  The cheapest monthly payment is usually allowed by seeking mortgage modification mediation through the bankruptcy.  Many bankruptcy courts, including that in the Southern District of Florida, provide mortgage modification programs.  However, a successful modification mediation requires that the parties reach an agreed modification.  If not, then the debtor must revert to the 2nd option, a cure an reinstate plan.  Under this option, the debtor continues to pay the ongoing mortgage payment, and catch up the missed payments over time.  The problem arises when the debtor had made a number of payments at a lower monthly rate, then switches midstream to a cure and reinstate plan, as the debtor is already behind on the on-going post-petition mortgage payments.  This was the situation facing the debtor in In re Edwards, 2019 Bankr. LEXIS 2395, Case #13-25698-EPK (Bankr. S.D. Fla. 1 August 2019).   The initial plans provided for an ongoing payment on the Wells Fargo mortgage of $500/month.  This payment continued for 12 months during the mediation process.  When the mortgage mediation was unsuccessful, the debtor amended the plan to provide for a cure and reinstate option, with on-going mortgage payments for months 13-60 of $1,181.29; which was $136.26 higher than the contractual mortgage payment as reflected in Wells Fargo's claim, in order to cure the deficiency in the first 12 postpetition mortgage payments.  This plan was confirmed by the court without objection.  A couple of modifications to the confirmed plan affecting Wells Fargo were filed, both appearing to represent unintended typographical errors by counsel for debtor.  The second of these modifications resulted in payment to Wells Fargo that was insufficient to cure the delinquency in the first 12 months of payments.  The motion did not note the change in the treatment of Wells Fargo mortgage, and neither the court or the trustee recognized the modification to Wells Fargo's treatment.  The modification, and order approving such modification were both served on Wells Fargo, who did not object or seek reconsideration.  Wells Fargo also filed 4 notices of change of mortgage payments, all of which were lower than the payment due as of filing, and none of which reflected the shortfall from the initial 12 monthly payments.  On 5 July 2018 the trustee filed the notice of plan completion of notice of final cure payment.  Wells Fargo objected noting that the debtor was not current on post-petition payments, instead asserting a $4,810.37 delinquency.   The computation was not disputed by debtor, but asserted that as all payments under the confirmed plan as modified were made, believed she should not be required to pay the shortfall.  Debtor filed a motion to requesting the court to deem the mortgage current as of the final payment by the trustee on the mortgage, July 2018.  In May 2019 the court had granted the debtor's request to deem the mortgage current based on United Student Aid Funds, Inc. v. Espinoza, 559 U.S. 260 (2010) holding that a confirmed chapter 13 plan is binding on all parties in interest with adequate notice.  Wells Fargo then filed a motion for reconsideration, but did not cite any rule or legal standard in support of the request. Wells Fargo raised new arguments in the request for reconsideration.  The possible applicable rules, Fed. R. Civ. P. 59(e) and 60(b), made applicable in bankruptcy by bankruptcy rules 9023 and 9024 respectively, do not permit a party to raise arguments that could have been raised prior to the initial decision, but were not.1  Wells Fargo argues that the 11th Circuit's prior panel precedent rule applies to require the bankruptcy court to apply the standard from Universal Am. Mortg. Co. v Batement (In re Bateman), 331 F.3d 821 (11th Cir. 2003) which had held that the anti-modification language of §1322(b)(2) prevails over the binding effect of a plan under §1327(a).  This rule of the 11th Circuit was designed to minimize the risk that two or more panels of the court could issue decisions directly at odds with each other.  If a panel has previously ruled on an issue, the later panel is bound to follow it; subject to en banc review.  Further, Wells Fargo argues that Espinoza does not apply because it did not receive adequate notice of the modification reducing the payment on its claim.  The court rejected this argument, finding that while the text of the motion did not set forth the changes to Wells Fargo's claim, the plan itself and the order confirming such modification clearly noted the changed treatment.  Wells Fargo's failure to review these documents does not allow a later collateral attack on the modification.  Wells Fargo and the court next turned to Bankruptcy Rule 3002.1, which avoids the need to modify a confirmed plan every time a mortgage payment changes due to escrow or interest changes.  This section applies to claims secured solely by a debtor's principal residence, whether payments are made through the chapter 13 trustee or directly by the debtor.  It requires a holder of such claim to file and service a notice of any payment change at least 21 days before the change is to take effect.  Within 30 days after completion of plan payments by the debtor, the trustee is is required to file a notice that the debtor has paid in full the amount required to cure any default on the mortgage claim.  Within 21 days after service of that notice, the holder of the secured claim may file an objection, either as to the cure of the prepetition arrearage, or as to whether the debtor is otherwise current on all payments due on the claim.  Wells Fargo asserts that this provision allows it to complain that all post-petition payments were not paid.  The court disagreed, finding that rather than requiring the court to re-analyse what the amount of payments due were, the section only provides a mechanism to resolve disputes as to the accounting.  Rather, §1329 provides the exclusive method for modification of a plan after confirmation.  Finally, nothing in the Bankruptcy Code suggest that a creditor may collaterally attack a confirmation order, otherwise final and no longer subject to appeal, by a procedure provided in Rule 3002.1.    There are at least two morals to the story.  It appears the procedure to provide for increased on-going mortgage payments post-confirmation to cure a post-petition pre-confirmation delinquency due to reduced mortgage mediation adequate protection payments may be a good way for debtors to retain their homes after a failed mortgage mediation.  Second, it is incumbent on secured creditors to review any proposed modifications to confirmed plans to see if the documents reflect changes not apparent from the title or initial paragraphs of such motions.  Note, in our local jurisdiction (Middle District of Florida, Tampa Division) normally an amended plan would not be attached to a motion to modify.  This case reflects the advantage of having only one document to review rather than a multi-page plan to seek out any changes.1 Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 957 (11th Cir. 2009).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100mbarnett@tampabankruptcy.comwww.hillsboroughbankruptcy.com

Bankruptcy Alternative: Just Don’t Pay Some people want or need an alternative to Chapter 7 bankruptcy.  Meet Henry Hudson and his wife Beth. They came to see me several years ago. Their alternative to bankruptcy was a two part plan: just don’t pay, and “call my lawyer.” Here’s why. Henry and Beth were elderly, he […] The post “Just Don’t Pay” as an Alternative to Bankruptcy by Robert Weed appeared first on Robert Weed - AE.

New York Posthttps://nypost.com/2019/07/31/nycs-bid-to-limit-uber-is-starting-to-recreate-the-taxi-medallion-system/