On December 1, 2017, changes become effective to the Bankruptcy Rules that will impact mortgage companies/servicers and other secured creditors. In general the changes are as follows:
- the required use by debtors of a Model Chapter 13 Plan (Official Form 113)
- the explicit requirement that secured creditors file a proof of claim,
- the establishment of a proof of claim bar date tied to the bankruptcy filing date (70 days from the Petition date)
- the establishment of certain deadlines related to plan confirmation;
- the debtors in Chapter 13 cases permission to include objections to the amount and/or priority of claims in the body of the Plan.
Proof of Claims
The new text in Rule 3002(a) clarifies that a secured creditor must file a proof of claim in order for the claim to be allowed. The most significant impact for mortgage companies and servicers is the requirement to file a Proof of Claim under the stricter deadline of 70 days after the Petition date. The Proof of Claim is considered timely only if Official Form 410 is used along with the Proof of Claim attachments (Official Form 401A) and escrow analysis. The note (with all endorsements and/or allonges), mortgage and any and all assignments must also be attached to the Proof of Claim. There is a mechanism for additional time by way of motion, if needed to gather these documents, however, in general, these must be filed as supplements to the Proof of Claim no later than 120 days after the petition date.
Plan Objections
The amendment to Rule 3012 makes clear that a secured claim holder is bound by the amount set forth in the debtor’s plan, regardless of the amount included in the Proof of Claim. This amendment highlights the importance of creditors to carefully review the debtor’s plan to determine if an objection is necessary. Failure to do so could result in the undervaluation of a mortgage claimant’s collateral, and in the case of the holders of second priority mortgages, the potential stripping of the unsecured portion of those liens.