Thought for the Day Archive – 2012:

Bankruptcy related insights and information

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$79,500 principal reduction with Citimortgage modification just approved, reduction of interest rate to 2% increasing to maximum of 3.625. See more at


Agency/negotiable instrument status of mortgage notes. Oral argument 2nd DCA.


Realtor’s post sale expectations as conflict of interest. In re New River Dry Dock, Inc., 2012 WL 5675911 (11th Cir., 2012).


Kentucky bankruptcy court rules on issue of insurance proceeds after car totaled in chapter 13 when claim was crammed down. IN re Kelley, 2012 WL 5457331 (Bankr. E.D. Ky 2012).


Terry (Eric?) has added a case note to some praecipes, In re Parks, 475 BR 703 (Bankr. 9th Cir BAP, 2012) indicating that voluntary 401k deductions are not proper deductions on chapter 13 B22C’s, but most of the case law (ie In re Seafort, 669 F.3d 662 (6th Cir. 2012) seem to limit this to additional contributions once the 401k loans are paid off. An issue likely to be coming to a confirmation near you.

Updated analysis:

Looks like majority position remains allowed to keep same 401k contribution, but once loan paid off disposable income increases.


Discussion of acts by mortgage company in delayed foreclosure as possible violation of discharge injunction. In re Brown, 2012 WL 5378173 (Bankr. W.D. Pa. Nov 1, 2012).


10th Circuit reverses bankruptcy court’s inclusion of social security benefits in disposable income; debtor included deduction on schedule J for exempt benefits. In re Cramner, 2012 WL 5235365 (10th Cir., Oct 24, 2012).


Judge Williamson’s order ruling that 707(b) does not apply to cases filed under chapter 13 and converted to chapter 7.


Internet, cell phone charges as possible allowed telecommunications charges on the means test.


Judge Williamson disallows attorneys fees on mortgage claim in hearing held yesterday. The Debtors’ filed chapter 13 on March 3, 2012. Citimortgage, Inc. filed a claim asserting an arrearage consisting of the March 1 payment and $750 attorneys fees, Phelan Hallinan PC firm from Ft. Lauderdale. We rejected $400 settlement offer. Judge Williamson disallowed fees in full.


Debtor’s counsel receipt of fee from prior case constitutes preference.


Security Concerns:
Sensitive documents such as tax returns being sent to trustees can be intercepted and viewed by others if not sent securely.
Adobe Acrobat X allows encryption of pdf files, and Terry’s office can accept these encrypted documents (I recommend using the debtor’s social security number as the encryption key). Terry’s office will be beta testing another solution shortly, but in the meantime I recommend using encryption on any documents showing bank account numbers or social security numbers.


Judge Killian in Miami rules that modification of confirmed chapter 13 plans are not restricted by applicable commitment period.


Judge Briskman denies request by Lori Patton, Orlando chapter 7 Trustee, for administrative expense claim related to asset report ordered in every case.


Court rules on location and extent of deposition of defendant corporation in a mortgage fraud adversary.


Cases still being dismissed for no credit counselling. Sigh.


Texas bankruptcy court approves 4.25% cramdown rate on oversecured non-homestead mortgage claim.


Was at recent confirmation hearing with David Stein, where Kelly said that they would not second guess debtor’s decision as to whether roommate/significant other/etc was member of household or separate from household for purposes of B22C.


Details on settlement between state attorneys general and mortgage servicers.


Court sets limits on fees to trustee counsel. In re McLean Wine Co, Inc., 463 B.R. 838 (Bankr. E.D. Mich 2011).


Judge Williamson rules that reaffirmation filed without court hearing and approval is invalid when debtor is pro-se. In re Pitts, 462 B.R. 844 (Bankr. M.D. Fla. 2012).


Judge Schermer looks behind language in marital settlement agreement to find that obligation designated as property settlement is actually spousal support. In re Throgmartin, 462 B.R. 836 (Bankr. M.D. Fla. 2012).


Chapter 12 permitted to avoid mortgage based on error in legal description. In re Caine, 462 B.R. 688 (Bankr. W.D. Ark. 2011).


Judge Steele reverses Ft. Meyers decision supporting Jon Waage’s claim that social security income must be devoted to projected disposable income. IN re Vanderbosch, 459 B.R. 140 (M.D. Fla. 2011).


Chapter 13 debtors with Terry Smith as trustee may now send their plan payments electronically. To set this up register with the trustee’s office here.


Beware of newest problem alleged by US Trustee against major bankruptcy firm in Tampa, that the standard fee quoted and contract provides solely to file the case and that a separate contract and separate fee is required for continued representation post-bankruptcy (case #09-mp-0010-MGW). Be sure to fully understand what the retainer provides for, and read the contract before hiring an attorney. The firm should have the contract available on their website, and be able to explain the terms in full when you hire them.


Hoping all our clients and business associates had a wonderful holiday season and a much better new year.