Stackin’ that Paper: Recent Changes to the Bankruptcy Rules Add New Requirements for Supporting Proofs of Claims in Individual Cases, Additional Notices in Chapter 13 Cases
Amendments to Bankruptcy Rule 3001, which went into effect December 1, 2011, added new requirements for supporting certain proofs of claims in bankruptcy cases in which the debtor is an individual, along with spelling out the (potentially) harsh consequences for failure to provide the newly-required information.
First, those responsible for preparing proofs of claims will notice that the appearance, content, directions, and signature block for Official Form B-10 (the standard proof of claim form) have changed; care should be taken to use the “12/11” version.
Next, new Rule 3001(c)(2) requires proofs of claims filed in cases in which the debtor is an individual and the claimant seeks prepetition interest, fees, expenses, and charges – in addition to the principal amount owed – to be supported by an itemization of those charges, regardless of whether or not a security interest is claimed. In the event the creditor claims a security interest in any of the debtor’s property (including the debtor’s principal residence), a statement of the amount necessary to cure any existing default must also be attached to the proof of claim. Finally (and most importantly for mortgage holders and servicers), in the event a security interest is claimed in the debtor’s principal residence, the new “Mortgage Proof of Claim Attachment” form must be completed and filed with the proof of claim along with an escrow account statement prepared as of the filing date.
The new rule also spells out the sanctions for a creditor that fails to attach the required information. These measures stop short of disallowing non-conforming claims. However, in the event an objection to the claim is lodged (which creditors filing non-conforming claims should expect), or other litigation ensues, the court may prevent the non-conforming claimant from presenting evidence of the omitted information at trial. Even the prospect of refusing to admit the type of information required by new Rule 3001(c)(2) could significantly alter the landscape of claim litigation.
Finally, the recent changes also added Rule 3002.1, which introduces ongoing requirements for creditors secured by a chapter 13 debtor’s principal residence and whose arrearage claims are being cured through a chapter 13 plan. First, these creditors must provide at least 21 days notice to the debtor, debtor’s counsel, and the trustee prior to a change in the amount of the ongoing mortgage installment payments. The new form should be filed as a supplement to the proof of claim. Additionally, creditors secured by a chapter 13 debtor’s principal residence must also file a notice of all post-petition fees, expenses and charges within 180 days after they are incurred and the new form should also be filed as a supplement to the proof of claim. Finally, within 30 days after the debtor completes all payments under the plan, the chapter 13 trustee must file a notice stating the debtor has paid the full amount required to cure the default on the creditor’s claim. Within 21 days after service of this notice, the mortgage holder must file a response as yet another supplement to its proof of claim indicating agreement with the trustee’s assertion that the arrearage is satisfied or provide support for any amounts the creditor believes remain unpaid.