Consumer Bankruptcy Law and Practice: Introduction
Appendices D.2 and D.3, supra, contain annotated and completed bankruptcy forms to initiate chapter 7 and chapter 13 cases.
Appendices D.2 and D.3, supra, contain annotated and completed bankruptcy forms to initiate chapter 7 and chapter 13 cases.
Line 12 of Official Form 410 is adjusted effective April 1, 2022, as part of the tri-annual dollar adjustments required by 11 U.S.C. § 104.
Part 3 of Form 410A is amended to provide for separate itemization of principal due and interest due. Because under § 1322(e) the amount necessary to cure a default is “determined in accordance with the underlying agreement and applicable nonbankruptcy law,” it may be necessary for a debtor who is curing arrearages under § 1325(a)(5) to know which portion of the total arrearages is principal and which is interest.
Official Form 410A, Mortgage Proof of Claim Attachment, is revised in its content and format. Rather than requiring a home mortgage claimant to fill in blanks with itemized information about the principal, interest, and fees due as of the petition date and the amount necessary to cure a prepetition default, the form now requires the claimant to provide a loan history that reveals when payments were received, how they were applied, when fees and charges were incurred, and when escrow charges were satisfied.
This form is new. It must be completed and attached to a proof of claim secured by a security interest in a debtor’s principal residence. The form, which implements Rule 3001(c)(2), requires an itemization of prepetition interest, fees, expenses, and charges included in the claim amount, as well as a statement of the amount necessary to cure any default as of the petition date. If the mortgage installment payments include an escrow deposit, an escrow account statement must also be attached to the proof of claim, as required by Rule 3001(c)(2)(C).
The form is amended and renumbered. It is amended to add to the Notice of Appeal an optional Statement of Election to have the appeal heard by the district court rather than by the bankruptcy appellate panel. Current Rule 8005(a) eliminates the requirement, imposed by former Rule 8001(e), that a separate document be used in making an election to have an appeal heard by the district court rather than the bankruptcy appellate panel. It instead requires a statement that conforms substantially to the Official Form for such an election.
The form number is updated to comport with the form numbering style developed as part of the Forms Modernization Project. Other stylistic changes were made throughout the form.
This form is new. It is the Official Form for an appellee to state its election to have an appeal heard by the district court rather than by the bankruptcy appellate panel. If an appellee desires to make that election and the appellant or another appellee has not already done so, the appellee must file a statement that conforms substantially to this form within 30 days of service of the Notice of Appeal. 28 U.S.C. § 158(c)(1)(B).
The form is amended to reflect changes in the length limits specified by Part VIII of the Bankruptcy Rules for appellate documents and the broadened requirement for a certificate of compliance under Rule 8015(h). The rule now requires certification of compliance with the type volume or word limits for briefs filed under Rule 8015(a)(7)(b), 8016(d)(2), or 8017(b)(4), and documents filed under Rule 8013(f)(3)(A), 8013(f)(3)(C), or 8022(b)(1).
The form number is updated to comport with the form numbering style developed as part of the Forms Modernization Project. Other stylistic changes were made throughout the form.
This form is new. When the length of a brief is calculated by the maximum number of words or lines of text rather than by number of pages, Rules 8015(a)(7)(C) and 8016(d)(3) require an attorney or unrepresented party to certify that the brief complies with the applicable type-volume limitation. Completion of this form satisfies that certification requirement. This form is not needed if the brief meets the applicable page limitation under Rule 8015(a)(7)(A) or 8016(d)(1).
The form does not include a caption because it is included in the brief.
The Alabama Supreme Court has interpreted the state’s pawn statute as applying to auto title lending.59 Pawnbrokers in Alabama are permitted to charge 25% of the principal amount advanced in the transaction per month for an effective APR of 300%.60 Any fees or charges in excess of the amount statutorily allowed are deemed uncollectable and void the auto title transaction.61 The Alabama statute places several limitations upon pawnbrokers.
It is important to remember that once the automatic stay is terminated by order of the court or otherwise, if an appeal is contemplated, it may be essential to obtain a stay pending appeal.
At some point after default, some homeowners resolve their financial problems and are able to resume making their monthly mortgage payments. Others may be able to reprioritize their debts and ongoing expenses in order to free up sufficient funds to make payments. However, a big hurdle for low- and moderate-income homeowners is that most cannot afford to pay their accumulated mortgage arrears in a lump sum.
It is now well established that defaults on long-term debts such as mortgages may be cured under 11 U.S.C.
Some courts have found that a debtor retains an interest in foreclosed property under state law until the appropriate person (in most states, the mortgage holder, the trustee, the sheriff or another public official) executes a deed to the foreclosure sale purchaser (or similar memorandum that satisfies the statute of frauds),283 and the consideration (purchase price) has been paid,284 or the sale has not been confirmed by the court when confirmation is required.
If a chapter 13 bankruptcy plan proposes to cure a default, prospective monthly payments must be made starting within thirty days after filing bankruptcy.
Section 1322(c)(2) provides that, notwithstanding section 1322(b)(2), in a case in which the last payment on the original payment schedule for a claim secured only by a mortgage on the debtor’s principal residence is due before the due date of the final plan payment, the plan may modify the creditor’s rights pursuant to Code section 1325(a)(5).
After the death of the homeowner, heirs may want to keep the home, but may not have sufficient cash on hand, or qualify for a refinance, to pay the large lump sum payment due, even within six months of the homeowner’s death.184 For homes with little to no equity remaining, refinancing in a tight credit market may be impossible. Similarly, in a soft real estate market, heirs may have difficulty selling the property within the six-month window, or additional time as approved by HUD (up to a year with two possible ninety-day extensions).
An owner that is not personally liable on the loan note generally has the right to cure a default on the property under section 1322(b)(5). This is because the creditor continues to have a claim, and a “claim against the debtor” is defined to include a claim against property of the debtor.266 This issue arises when property is transferred from the person who obtained the mortgage to another person that files bankruptcy.
Courts had held in cases decided before the 1994 enactment of section 1322(c)(1) that a debtor may cure a default or pay off the balance owed on a mortgage in bankruptcy even after a completed foreclosure auction, when there is a state law unexpired right of redemption.276 Under those precedents, state law postforeclosure redemption rights come into the debtors’ bankruptcy estate.
As discussed in Chapter 10, infra,288 there are a variety of grounds on which a foreclosure sale can be set aside, depending on state law.
The effect of a cure under section 1322(b)(5) is to nullify all consequences of the default.294 Thus, in the case of a long-term mortgage, the debtor would normally be returned to the original amortization schedule once the default has been cured.295 In fact, once the plan is confirmed, the debtor’s ongoing mortgage payments should be applied from the petition date in accordance with the original loan amortization as if no default exists, with all prepetition arrears being paid separately under
The extent to which creditors may collect attorney fees and costs as part of the amount needed to cure in bankruptcy usually turns on the precise language of the contract and on state law.