Avoiding Defective Mortgages In Chapter 13- The How And Why - Or How to Use your Strong Arm to Strip off a Defective Mortgage without Losing your Shirt

Avoiding Defective Mortgages In Chapter 13- The How And Why – Or How to Use your Strong Arm to Strip off a Defective Mortgage without Losing your Shirt – Part II of II

By Jan M. Sensenich, Chapter 13 Trustee for the District of Vermont

C. HOW TO INCORPORATE §544 LIEN AVOIDANCE INTO A CHAPTER 13 PLAN

Litigating a § 544 adversary proceeding is one thing, but how does the debtor propose a plan which will take into consideration the unknown outcome of the litigation? How is the debtor protected from loss of the house to the mortgage should the adversary proceeding litigation fail? Doing so takes some careful planning by debtor’s counsel and the trustee and some cooperation.

1. Avoiding the res judicata bar from plan confirmation

There is case . . .

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When (or Not) Is the Best Interests of Creditors Test Applicable in a Modified Plan?

August 22, 2021

By Henry E. Hildebrand, III, Chapter 13 Standing Trustee (Nashville, TN) While the best interests of creditors test is applicable upon modification of a Chapter 13 plan, post-petition acquired property of the estate is not included in such analysis in that such property would not be property of a Chapter 7 estate. (Somers) In re Taylor, 2021 WL 3118824 (Bankr....

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Critical Case Comment – 3002.1 and Reverse Mortgages

Henry E. Hildebrand, III

January 23, 2022

Requirements and remedies in Rule 3002.1 apply to reverse mortgages as well as conventional mortgages; while discharge of Chapter 13 plan does not discharge a mortgage obligation treated pursuant to § 1325(b)(5), the court may prohibit prospective use of a nondisclosed obligation as grounds for a default. (Waites) In re Legare-Doctor, 2021 WL 5712149 (Bankr. D. S.C. Dec. 1, 2021)...

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Social Media Scams: Con Artists Target the Vulnerable

Michael B. Joseph

July 23, 2023

Social media and internet dating sites have given rise to romance and confidence schemes. Catfishing and spear phishing are extensively used. Catfishing is faking an identity on the internet. Spear phishing uses more sophisticated and direct messages to trick the victim. New AI programs make it easier to reach and victimize the targets. The fraudsters prey upon the elderly, widowed...

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Critical Case Comment – Fourth Circuit Says Easy-Peasy

Henry E. Hildebrand, III

September 24, 2023

In calculating projected disposable income, 13 debtor may deduct entire mortgage payment notwithstanding amount exceeds the housing allowance as established by the IRS Financial Standards Allowance.

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Critical Case Comment – You Gotta Fix Your Own Screwups, on Your Own Dime

Henry E. Hildebrand, III

December 3, 2023

Debtor’s counsel should not be compensated for work undertaken on behalf of a debtor in order to correct errors.

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Happy Thanksgiving

November 19, 2023

As our ‘thank you’ to our loyal readers, we bring you a completely non-password protected issue! ENJOY.

Critical Case Comment – Fair Discrimination: A Win/Win

Henry E. Hildebrand, III

December 11, 2022

A Chapter 13 plan can be confirmed to pay a 100% dividend to unsecured creditors while maintaining payments to a student loan creditor as a long-term debt (which will not satisfy the student loan in the commitment period) without committing all available disposable income. (Mullin) In re Victoria Florita Durand-Day, 2022 WL 14938726 (Bankr. N.D. Tex. October 26, 2022) Case...

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The Hunt for Deductible Interest – Money Too Often Left on the Table

February 16, 2020

By Cathy Moran, Esq. (Redwood City, CA) One of the mysteries of Chapter 13 is why mortgage lenders don’t send an IRS 1098 for mortgage payments made through a Chapter 13 plan. And without that reminder piece of paper, our clients don’t realize that much of what the trustee pays to mortgage creditors is deductible interest. Miss that deduction and...

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Bankruptcy’s Eternal Struggle

May 10, 2020

By Cathy Moran, Esq. (Redwood City, CA) The timeless questions asked by mankind include “why are we here“, “which came first ...” and “coffee or tea“. Bankruptcy lawyers wrestle with “which controls, b-22 or Schedules I and J“. Having argued and lost the Pak case when BAPCPA was new, and felt vindicated when

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From the Editor – Confirmation

March 8, 2020

By The Honorable William Houston Brown (Retired) Equal monthly payments and attorney fees. The secured creditor objected to confirmation on basis that the plan improperly deferred its payments until debtor’s attorney fees were paid, and the District Court affirmed confirmation that delayed start of secured equal monthly payments for 21 months. The opinion examines three approaches to the issue: 1)...

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