Filing Proofs of Claim
challenge the holder of a claim who has
misapplied payments made during the
bankruptcy, or failed to notice payment
changes, fees, expenses and charges
during the bankruptcy, or even challenge
the validity of the charges under the
underlying note or nonbankruptcy law.
Even if the payment changes or the
additional fees, expenses and charges
were properly noticed under FRBP
3002.1(b) and (c), debtors who failed to
object under FRBP 3002.1(e) may ask
the court for a determination of whether
the debtor has cured the default and
paid all required postpetition amounts.
Therefore, failure to object within one
year of the service of notice under
FRBP 3002.1(e) does not bar a debtor
from objecting under subdivision (h)
before discharge.
Failure to Provide Required Notices
During and After Bankruptcy
If secured creditors fails to provide
notice of changes in payment amounts
or notice of additional fees, expenses,
or charges in connection with the loan,
they face serious consequences under
FRBP 3002.1(i), which states:
If the holder of a claim fails to provide
any information as required by
subdivision (b), (c), or (g) of this rule,
the court may, after notice and hearing,
take either or both of the following
actions:
(1) preclude the holder from
presenting the omitted information,
in any form, as evidence in any
contested matter or adversary
proceeding in the case, unless the
court determines that the failure was
substantially justified or is harmless;
or
(2) award other appropriate relief,
including reasonable expenses and
attorney’s fees caused by the failure.
This provision grants the estate and the
debtor a recourse for secured creditor’s
failure to properly notify debtors,
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CONSUMER BANKRUPTCY JOURNAL
debtor’s attorney and the trustee of
the change in the mortgage payment
or the accrual of additional fees,
expenses and charges. Unlike other
subdivisions, FRBP 3002.1(i) does not
state a deadline by which the debtor,
debtor’s attorney or the trustee must
file an action against a secured creditor
who fails to provide the proper notices
outlined in subdivisions (b), (c), or (g).
The debtor, debtor’s attorney and the
trustee may bring a motion at anytime
during the plan term to redress secured
creditor’s failure to provide proper
notice. As stated previously, debtor
attorneys should review all Motions
for Relief from Stay to be sure that
the defaults listed in the motion were
not related to a failure of the secured
creditor to provide notice of a payment
changes under subdivision (b), or for
additional fees, expenses and cost
under subdivision (c). If a failure to
notice in accordance to FRBP (b) and
(c) is discovered, the debtor, debtor’s
attorney or the trustee may chose to
request that the omitted information be
waived and attorney’s fees be awarded.
Furthermore, the debtor, debtor’s
attorney and the trustee may bring a
motion or file an adversary proceeding
against secured creditor holding a
security interest in debtor’s principal
residence after the discharge has been
issued and the case has been closed.
FRBP 3002.1(i) does not contain a time
limitation.
In addition, secured creditors are
subject to the discharge injunction
under 11 U.S.C. Section 524(i), which
provides:
The willful failure to a creditor to credit
payments received under a plan
confirmed under this title, unless the
order confirming the plan is revoked,
the plan is in default, or the creditor
has not received payments required
to be made under the plan in the
manner required by the plan (including
crediting the amounts required under
the plan), shall constitute a violation
Summer 2015
of an injunction under subsection (a)
(2) if the act of the creditor to collect
and failure to credit payments in the
manner required by the plan caused
material injury to the debtor.
Together Section 524(i) and FRBP
3002.1(i) provide a means to reopen
debtor’s bankruptcy after a discharge
has been issued and the case has
been closed. Furthermore, secured
creditor’s failure to apply payments
according the plan (e.g., postpetition
mortgage payments being applied to
the pre-petition arrears, thus accruing
additional late fees, expenses and
costs for the servicer), and its failure to
provide notice of postpetition payments
changes, fees, expenses and charges
as required under FRBP 3002.1,
together may constitute as a discharge
violation, subject to contempt and
sanctions under 11 U.S.C. Section
105(a), Section 524(a)(2) and FRBP
3002.1(i).
The importance of FRBP 3002.1
cannot be overstated. It allows lenders
and homeowner’s associations with a
security interest in debtor’s principal
residence to provide notices without
fear of violating the stay. It provides
the debtor, debtor’s attorney and the
trustee notices that may affect the
secured creditors claim and the chapter
13 plan and an opportunity to cure. It
also provides a recourse for the debtor,
debtor’s attorney and the trustee to
hold secured creditors accountable
for failure to provide required notices.
Collectively, FRBP 3002.1 provides
the tools to ensure a fresh start post
chapter 13 discharge.
National Association of Consumer Bankruptcy Attorneys