In our final review of the Amendments of the Federal Rules of bankruptcy Procedure (FRBP), we will discuss Sanctions for failing to file a notice of payment
change, the notice of post-petition fees, expenses, and charges. In addition, a
Notice to Cure in a Chapter 13 case required by the Chapter 13 trustee to be sent
to the current mortgage company and sanctions for non-compliance by failure to
respond within 21 days. It is imperative you are aware of these amendments if
you are currently in a Chapter 13 case and have a mortgage on your primary
residence or if you are thinking about filing for bankruptcy.The sanctions for a creditor failing to file a notice of payment change on your mortgage will render the payment change ineffective and the creditor can expect evidentiary sanctions where the court could prohibit a creditor from presenting evidence in a dispute about the claim. In addition, the court could impose awards for appropriate relief, including reasonable expenses and attorneys’ fees. Your bankruptcy attorney
should be aware and take any action deemed necessary to protect you.
The next amendment require mortgage holders/servicers to file a Notice of
Post-petition Fees, Expenses and Charges which are filed within 180 days from
the date the fees and costs took place. Once the notice is filed, the debtor and the trustee will have up to one year to object to notice. Since the changes to the rules were effective on 12/01/2011, mortgage companies should file the notice on all pending Chapter 13 cases disclosing all of the fees and costs that were incurred in the prior 180 days. This must be filed while the Chapter 13 case is ongoing and as a supplement to the original proof of claim, which reflects on the claims registry. The Notice may remedy the problem of what to do with attorneys’ fees incurred by the mortgage company post-petition but before the Chapter 13 plan is confirmed. There are some courts allowing the fees to be in the proof of claim while others require the filing of a fee application. It is suggested the mortgage company could include the post-petition and pre-confirmation legal fees in the first Notice of Fees they file in the Chapter 13 case, which also could be filed along with the initial proof of claim. Sanctions for failing to file the Notice of fees that the court may impose on the mortgage company is the potential disallowance of those fees and costs that should have been disclosed. The consequences for the creditor who fails to file the notice timely can be evidentiary, where the court can prohibit them from
presenting evidence in a dispute about the claim or awarding appropriate relief
including reasonable expensed and attorneys’ fees.
The trustee is required to send a Notice to Cure to mortgage holders/servicers that require them to respond within 21 days whether they agree or disagree with the trustee’s records. If the mortgage holder records do not agree with the trustee’s it is their responsibility to show the court why there is a difference. In a Chapter 13 case regarding a mortgage or other secured creditor at the end of your case your mortgage arrears should be paid in full and your mortgge account in a current status as long as you have paid your post-petition payements as agreed.
Sanctions for non-compliance in not responding within the 21 days for mortgage holders/servicers to the Notice to Cure include but are not limited to, disallowing the mortgage holder/servicer from collecting on any existing pre-petition arrears and allowing the debtor to maintain the current post-petition payments.
This has been a general overview of the recent amendments adopted by the Federal Rules of Bankruptcy Procedure (FRBP) as there are much more details involved in these rule changes. It is recommended if you have questions to contact your Chapter 13 bankruptcy attorney or find an affordable, experienced Phoenix attorney to discuss this when reviewing your potential Chapter 13 case.