Beginning May 1st, a party filing a transfer of claim in the bankruptcy court will be required to pay a fee of $25. Pursuant to 28 U.S.C. § 1930(b), the Judicial Conference of the United States is authorized to prescribe fees in cases filed under the Bankruptcy Code. During its September 2012 session, the Conference established this new transfer of claim fee of $25. In considering this action, the Judicial Conference recognized the impact that claims transfers have had on the workload of the bankruptcy courts. Bankruptcy Rule 3001(e) requires the clerk of court to notice the transfer of a claim. If an objection to the transfer is filed, additional notice is required. As the business of claims transfers has grown exponentially, the associated work for the Bankruptcy Court and Clerks’ offices has also increased.
While most attorneys in the bankruptcy world have established CM/ECF accounts, where fees are paid via credit card, many mortgage servicers are not similarly equipped. The claims transfer fee will be treated just like any other court imposed fee. Presently, most bankruptcy courts permit multiple fee based filings or actions to be completed with the necessary fees being paid at the end of the transaction through pay.gov.
What constitutes a claim transfer? According to a source close to the Administrative Office of the United States Courts, a claim transfer is a sale of a claim in a bankruptcy proceeding by a seller/creditor that is willing to take a reduced price to have cash in hand or is concerned about how the claim will fare in the bankruptcy process.
The far reaching consequences of this fee remain to be seen. How might this fee impact the market for buying and selling claims? Will the fee discourage filing the transfer thus increasing the trustees’ workload? Will creditors be likely to reconsider the purchase of claims, particularly in portfolios where the fee is likely to exceed the collectable amount of the claim? Will the fee impact future pricing of forward flow sales of chapter 13 claims? These and many more questions remain to be answered.
If you are interested in a dialogue with the Administrative Office of the Courts, please send your name, company, phone number, and email address to the Academy.