CURRENT TEXAS ISSUES IN CLAIM OBJECTIONS. Presented by: Judge Letitia Paul Judge Stacy Jernigan

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1 CURRENT TEXAS ISSUES IN CLAIM OBJECTIONS Presented by: Judge Letitia Paul Judge Stacy Jernigan State Bar of Texas 10th ANNIVERSARY BENCH/BAR CONFERENCE AND CELEBRATION 2013 June 5-7, 2013 San Antonio, Texas

2 Current Issues in Claim Objections State Bar of Texas Bankruptcy Law Section 10th Anniversary Bench/Bar Conference and Celebration 2013 Hon. Letitia Z. Paul United States Bankruptcy Judge for the Southern District of Texas (Houston) Hon. Stacey G.C. Jernigan United States Bankruptcy Judge for the Northern District of Texas (Dallas) TABLE OF CONTENTS I. INTRODUCTION...1 II. PREPARATION OF PROOFS OF CLAIM GENERALLY: THE BASICS...1 A. Applicable Bankruptcy Code Sections and National Bankruptcy Rules Applicable Bankruptcy Code Sections Applicable National Bankruptcy Rules Applicable Local Bankruptcy Rules in the Northern, Western, Southern, and Eastern Districts of Texas...8 a. Northern District of Texas...8 b. Western District of Texas...8 c. Southern District of Texas...9 d. Eastern District of Texas...10 B. Noteworthy Case Law Involving Proofs of Claim Timing Issues Class Proofs of Claim Prima Facie Validity Jury Trial Issues Violations of the Automatic Stay Non-Dischargeability Informal Proofs of Claim Standing...14 III. SPECIAL CONSIDERATIONS FOR PROOFS OF CLAIM FILED BY CLAIMANTS WITH SECURITY INTERESTS IN A DEBTOR'S PRINCIPAL RESIDENCE...14 A. New National Bankruptcy Rule B. Applicable Local Bankruptcy Rules in the Northern, Western, Southern, and Eastern Districts of Texas Northern District of Texas Western District of Texas Southern District of Texas Eastern District of Texas...19 C. Relevant Case Law Addressing Mortgage Claimants' Proofs of Claim Jones v. Wells Fargo Home Mortgage (In re Jones), 366 B.R. 584 (Bankr. E.D. La. 2007) ("Jones I")...19 a. Subsequent History Following Decision in Jones I Other Cases Involving Mortgage Lenders' Proofs of Claim...21 IV. CLAIM OBJECTIONS...23

3 A. Applicable Bankruptcy Code Section and National Rule Applicable Bankruptcy Code Section Applicable National Bankruptcy Rule Applicable Local Bankruptcy Rules in the Northern, Western, Southern, and Eastern Districts of Texas...28 a. Northern District of Texas...28 b. Western District of Texas...31 c. Southern District of Texas...31 d. Eastern District of Texas...34 B. Noteworthy Case Law Involving Claim Objections...41 V. ETHICAL CONSIDERATIONS WHEN OBJECTING TO PROOFS OF CLAIM...43 A. Questions to Keep in Mind B. Recent Case Law on Ethical Considerations When Objecting to Proofs of Claim...43 VI. ADDENDUM

4 I. INTRODUCTION Proofs of Claim and Claim Objections may seem like fairly mundane topics. However, there have been developments at the national level and in the Texas Bankruptcy Courts in recent times that should serve as reminders to practitioners that: (a) the preparation of a proof of claim should be undertaken with care and thoughtfulness, in accordance with Bankruptcy Code Section 501, National Bankruptcy Rules , and applicable Local Bankruptcy Rules; (b) certain types of proofs of claim have special requirements (secured claims on a debtor s principal residence, see National Bankruptcy Rule and certain Local Bankruptcy Rules); and (c) claim objections should be prepared in accordance with Bankruptcy Code Section 502, National Bankruptcy Rule 3007 and Local Bankruptcy Rules. II. PREPARATION OF PROOFS OF CLAIM GENERALLY: THE BASICS A. Applicable Bankruptcy Code Sections and National Bankruptcy Rules 1. Applicable Bankruptcy Code Sections 501. Filing of proofs of claims or interests (a) A creditor or an indenture trustee may file a proof of claim. An equity security holder may file a proof of interest. (b) If a creditor does not timely file a proof of such creditor's claim, an entity that is liable to such creditor with the debtor, or that has secured such creditor, may file a proof of such claim. (c) If a creditor does not timely file a proof of such creditor's claim, the debtor or the trustee may file a proof of such claim. (d) A claim of a kind specified in section 502(e)(2), 502(f), 502(g), 502(h) or 502(i) of this title may be filed under subsection (a), (b), or (c) of this section the same as if such claim were a claim against the debtor and had arisen before the date of the filing of the petition. (e) A claim arising from the liability of a debtor for fuel use tax assessed consistent with the requirements of section of title 49 may be filed by the base jurisdiction designated pursuant to the International Fuel Tax Agreement (as defined in section of title 49) and, if so filed, shall be allowed as a single claim. -1-

5 2. Applicable National Bankruptcy Rules Rule Proof of Claim (a) Form and Content. A proof of claim is a written statement setting forth a creditor's claim. A proof of claim shall conform substantially to the appropriate Official Form. (b) Who May Execute. A proof of claim shall be executed by the creditor or the creditor's authorized agent except as provided in Rules 3004 and (c) Supporting Information. (1) Claim Based on a Writing. Except for a claim governed by paragraph (3) of this subdivision, when a claim, or an interest in property of the debtor securing the claim, is based on a writing, a copy of the writing shall be filed with the proof of claim. If the writing has been lost or destroyed, a statement of the circumstances of the loss or destruction shall be filed with the claim. (2) Additional Requirements in an Individual Debtor Case: Sanctions for Failure to Comply. In a case in which the debtor is an individual: (A) If, in addition to its principal amount, a claim includes interest, fees, expenses, or other charges incurred before the petition was filed, an itemized statement of the interest, fees, expenses, or charges shall be filed with the proof of claim. (B) If a security interest is claimed in the debtor's property, a statement of the amount necessary to cure any default as of the date of the petition shall be filed with the proof of claim. (C) If a security interest is claimed in property that is the debtor's principal residence, the attachment prescribed by the appropriate Official Form shall be filed with the proof of claim. If an escrow account has been established in connection with the claim, an escrow account statement prepared as of the date the petition was filed and in a form consistent with applicable nonbankruptcy law shall be filed with the attachment to the proof of claim. (D) If the holder of a claim fails to provide any information required by this subdivision (c), the court may, after notice and hearing, take either or both of the following actions: (i) preclude the holder from presenting the omitted information, in any form, as evidence in any contested matter or adversary proceeding -2-

6 in the case, unless the court determines that the failure was substantially justified or is harmless; or (ii) award other appropriate relief, including reasonable expenses and attorney's fees caused by the failure. (3) Claim Based on an Open-End or Revolving Consumer Credit Agreement. (A) When a claim is based on an open-end or revolving consumer credit agreement--except one for which a security interest is claimed in the debtor's real property--a statement shall be filed with the proof of claim, including all of the following information that applies to the account: purchased the account; (i) the name of the entity from whom the creditor (ii) the name of the entity to whom the debt was owed at the time of an account holder's last transaction on the account; and loss. (iii) (iv) (v) the date of an account holder's last transaction; the date of the last payment on the account; and the date on which the account was charged to profit (B) On written request by a party in interest, the holder of a claim based on an open-end or revolving consumer credit agreement shall, within 30 days after the request is sent, provide the requesting party a copy of the writing specified in paragraph (1) of this subdivision. (d) Evidence of Perfection of Security Interest. If a security interest in property of the debtor is claimed, the proof of claim shall be accompanied by evidence that the security interest has been perfected. (e) Transferred claim. (1) Transfer of Claim Other Than for Security Before Proof Filed. If a claim has been transferred other than for security before proof of the claim has been filed, the proof of claim may be filed only by the transferee or an indenture trustee. (2) Transfer of Claim Other Than for Security After Proof Filed. If a claim other than one based on a publicly traded note, bond, or debenture has been transferred other than for security after the proof of claim has been filed, evidence of the -3-

7 transfer shall be filed by the transferee. The clerk shall immediately notify the alleged transferor by mail of the filing of the evidence of transfer and that objection thereto, if any, must be filed within 21 days of the mailing of the notice or within any additional time allowed by the court. If the alleged transferor files a timely objection and the court finds, after notice and a hearing, that the claim has been transferred other than for security, it shall enter an order substituting the transferee for the transferor. If a timely objection is not filed by the alleged transferor, the transferee shall be substituted for the transferor. (3) Transfer of Claim for Security Before Proof Filed. If a claim other than one based on a publicly traded note, bond, or debenture has been transferred for security before proof of the claim has been filed, the transferor or transferee or both may file a proof of claim for the full amount. The proof shall be supported by a statement setting forth the terms of the transfer. If either the transferor or the transferee files a proof of claim, the clerk shall immediately notify the other by mail of the right to join in the filed claim. If both transferor and transferee file proofs of the same claim, the proofs shall be consolidated. If the transferor or transferee does not file an agreement regarding its relative rights respecting voting of the claim, payment of dividends thereon, or participation in the administration of the estate, on motion by a party in interest and after notice and a hearing, the court shall enter such orders respecting these matters as may be appropriate. (4) Transfer of Claim for Security After Proof Filed. If a claim other than one based on a publicly traded note, bond, or debenture has been transferred for security after the proof of claim has been filed, evidence of the terms of the transfer shall be filed by the transferee. The clerk shall immediately notify the alleged transferor by mail of the filing of the evidence of transfer and that objection thereto, if any, must be filed within 21 days of the mailing of the notice or within any additional time allowed by the court. If a timely objection is filed by the alleged transferor, the court, after notice and a hearing, shall determine whether the claim has been transferred for security. If the transferor or transferee does not file an agreement regarding its relative rights respecting voting of the claim, payment of dividends thereon, or participation in the administration of the estate, on motion by a party in interest and after notice and a hearing, the court shall enter such orders respecting these matters as may be appropriate. (5) Service of Objection or Motion; Notice of Hearing. A copy of an objection filed pursuant to paragraph (2) or (4) or a motion filed pursuant to paragraph (3) or (4) of this subdivision together with a notice of a hearing shall be mailed or otherwise delivered to the transferor or transferee, whichever is appropriate, at least 30 days prior to the hearing. (f) Evidentiary effect. A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim. -4-

8 (g) To the extent not inconsistent with the United States Warehouse Act or applicable State law, a warehouse receipt, scale ticket, or similar document of the type routinely issued as evidence of title by a grain storage facility, as defined in section 557 of title 11, shall constitute prima facie evidence of the validity and amount of a claim of ownership of a quantity of grain. Rule Filing Proof of Claim or Interest (a) Necessity for Filing. An unsecured creditor or an equity security holder must file a proof of claim or interest for the claim or interest to be allowed, except as provided in Rules 1019(3), 3003, 3004, and (b) Place of Filing. A proof of claim or interest shall be filed in accordance with Rule (c) Time for Filing. In a chapter 7 liquidation, chapter 12 family farmer's debt adjustment, or chapter 13 individual's debt adjustment case, a proof of claim is timely filed if it is filed not later than 90 days after the first date set for the meeting of creditors called under 341(a) of the Code, except as follows: (1) A proof of claim filed by a governmental unit, other than for a claim resulting from a tax return filed under 1308, is timely filed if it is filed not later than 180 days after the date of the order for relief. A proof of claim filed by a governmental unit for a claim resulting from a tax return filed under 1308 is timely filed if it is filed no later than 180 days after the date of the order for relief or 60 days after the date of the filing of the tax return. The court may, for cause, enlarge the time for a governmental unit to file a proof of claim only upon motion of the governmental unit made before expiration of the period for filing a timely proof of claim. (2) In the interest of justice and if it will not unduly delay the administration of the case, the court may extend the time for filing a proof of claim by an infant or incompetent person or the representative of either. (3) An unsecured claim which arises in favor of an entity or becomes allowable as a result of a judgment may be filed within 30 days after the judgment becomes final if the judgment is for the recovery of money or property from that entity or denies or avoids the entity's interest in property. If the judgment imposes a liability which is not satisfied, or a duty which is not performed within such period or such further time as the court may permit, the claim shall not be allowed. (4) A claim arising from the rejection of an executory contract or unexpired lease of the debtor may be filed within such time as the court may direct. (5) If notice of insufficient assets to pay a dividend was given to -5-

9 creditors under Rule 2002(e), and subsequently the trustee notifies the court that payment of a dividend appears possible, the clerk shall give at least 90 days' notice by mail to creditors of that fact and of the date by which proofs of claim must be filed. (6) If notice of the time to file a proof of claim has been mailed to a creditor at a foreign address, on motion filed by the creditor before or after the expiration of the time, the court may extend the time by not more than 60 days if the court finds that the notice was insufficient under the circumstances to give the creditor a reasonable time to file a proof of claim. Rule Filing Proof of Claim or Equity Security Interest in Chapter 9 Municipality or Chapter 11 Reorganization Cases (a) (b) Applicability of Rule. This rule applies in chapter 9 and 11 cases. Schedule of Liabilities and List of Equity Security Holders. (1) Schedule of Liabilities. The schedule of liabilities filed pursuant to 521(1) of the Code shall constitute prima facie evidence of the validity and amount of the claims of creditors, unless they are scheduled as disputed, contingent, or unliquidated. It shall not be necessary for a creditor or equity security holder to file a proof of claim or interest except as provided in subdivision (c)(2) of this rule. (2) List of Equity Security Holders. The list of equity security holders filed pursuant to Rule 1007(a)(3) shall constitute prima facie evidence of the validity and amount of the equity security interests and it shall not be necessary for the holders of such interests to file a proof of interest. (c) Filing of Proof of Claim. (1) Who may file. Any creditor or indenture trustee may file a proof of claim within the time prescribed by subdivision (c)(3) of this rule. (2) Who Must File. Any creditor or equity security holder whose claim or interest is not scheduled or scheduled as disputed, contingent, or unliquidated shall file a proof of claim or interest within the time prescribed by subdivision (c)(3) of this rule; any creditor who fails to do so shall not be treated as a creditor with respect to such claim for the purposes of voting and distribution. (3) Time for Filing. The court shall fix and for cause shown may extend the time within which proofs of claim or interest may be filed. Notwithstanding the expiration of such time, a proof of claim may be filed to the extent and under the conditions stated in Rule 3002(c)(2), (c)(3), (c)(4), and (c)(6). -6-

10 (4) Effect of Filing Claim or Interest. A proof of claim or interest executed and filed in accordance with this subdivision shall supersede any scheduling of that claim or interest pursuant to 521(a)(1) of the Code. (5) Filing by Indenture Trustee. An indenture trustee may file a claim on behalf of all known or unknown holders of securities issued pursuant to the trust instrument under which it is trustee. (d) Proof of Right to Record Status. For the purposes of Rules 3017, 3018 and 3021 and for receiving notices, an entity who is not the record holder of a security may file a statement setting forth facts which entitle that entity to be treated as the record holder. An objection to the statement may be filed by any party in interest. Rule Filing of Claims by Debtor or Trustee If a creditor does not timely file a proof of claim under Rule 3002(c) or 3003(c), the debtor or trustee may file a proof of the claim within 30 days after the expiration of the time for filing claims prescribed by Rule 3002(c) or 3003(c), whichever is applicable. The clerk shall forthwith give notice of the filing to the creditor, the debtor and the trustee. Rule Filing of Claim, Acceptance, or Rejection By Guarantor, Surety, Indorser, or Other Codebtor (a) Filing of Claim. If a creditor does not timely file a proof of claim under Rule 3002(c) or 3003(c), any entity that is or may be liable with the debtor to that creditor, or who has secured that creditor, may file a proof of the claim within 30 days after the expiration of the time for filing claims prescribed by Rule 3002(c) or Rule 3003(c) whichever is applicable. No distribution shall be made on the claim except on satisfactory proof that the original debt will be diminished by the amount of distribution. (b) Filing of Acceptance or Rejection; Substitution of Creditor. An entity which has filed a claim pursuant to the first sentence of subdivision (a) of this rule may file an acceptance or rejection of a plan in the name of the creditor, if known, or if unknown, in the entity's own name but if the creditor files a proof of claim within the time permitted by Rule 3003(c) or files a notice prior to confirmation of a plan of the creditor's intention to act in the creditor's own behalf, the creditor shall be substituted for the obligor with respect to that claim. -7-

11 3. Applicable Local Bankruptcy Rules in the Northern, Western, Southern, and Eastern Districts of Texas a. Northern District of Texas L.B.R Filing Proofs of Claim or Interest in a Chapter 9 or 11 Case. In a chapter 9 or 11 case, where no bar date has otherwise been specifically set, an unsecured creditor or equity security holder whose claim or interest is not scheduled or is scheduled as disputed, contingent, or unliquidated, has a proof of claim timely filed if it is filed not later than 90 days after the first date set for the meeting of creditors pursuant to 11 U.S.C. 341, except that a proof of claim filed by a governmental unit is timely filed if it is filed not later than 180 days after the date of the order for relief. b. Western District of Texas L. Rule FILING PROOF OF CLAIM OR INTEREST. (a) Service of Claim. A copy of every proof of claim or interest in all cases shall be served with any attachments on the debtor' s attorney (or on the debtor, if the debtor is pro se) and any trustee appointed in the case. (b) Secured Proofs of Claim. A secured creditor (or the debtor) in Chapter 12 and Chapter 13 must file a proof of claim or interest for the claim or interest to be allowed. Such proof of claim must be filed within the time frame set forth in FRBP 3002(c). L. Rule TIME FOR FILING PROOF OF CLAIM OR EQUITY SECURITY INTEREST IN CHAPTER 9 MUNICIPALITY OR CHAPTER 11 REORGANIZATION CASE; CLAIMS PROCEDURE FOR ADMINISTRATIVE CLAIMS. (a) Bar Date for Proof of Claim or Interest in Notice of First Meeting Proofs of claim or interests in Chapter 11 cases shall be filed by the date established in the Notice of the Meeting of Creditors pursuant to 11 U.S.C. 341, unless the Court, upon motion and after notice and an opportunity for hearing, orders otherwise. (b) Bar Date for Administrative Claims -8-

12 The Court, after notice and an opportunity for hearing, may establish a bar date for filing an application for allowance and payment of an administrative claim, either on its own motion or on motion of a party in interest, filed pursuant to L. Rules 9013 and c. Southern District of Texas Local Rule PROOFS OF CLAIM ON HOME MORTGAGES. [THIS RULE IS EFFECTIVE FOR CASES FILED ON OR AFTER APRIL 1, 2010]. (a) A proof of claim in a chapter 13 bankruptcy case that asserts a claim secured by a mortgage or deed of trust on a home owned by a chapter 13 debtor must contain a Loan History Form, in a form approved by the Court. This Rule does not apply to a claim (i) that is filed by a person that owns, holds or services four or fewer loans secured by a home; (ii) that is filed by a property owners' association; (iii) that is filed by a governmental unit for ad valorem taxes; or (iv) for which no arrearage is asserted. Persons who are excepted from this Rule on the basis that the person owns, holds, or services four or fewer loans secured by a home must attach a complete, legible and self-explanatory history form reflecting amounts charged against the debtor and paid by the debtor. (b) The Court will approve Loan History Forms and publish them on the Court s website, in spreadsheet form with all formulae. (c) Any person may request the approval of an additional form by submitting a request for approval, with a copy of the proposed form, to the Clerk of the Court. The Clerk will present the request for approval to the Court not later than the Court s next regularly scheduled meeting. In determining whether to approve a proposed form, the Court will consider whether (a) the form is readily understandable; (b) the form contains information that is substantially equivalent to the information contained in the Loan History Form published on the Court s website; and (c) the form sets forth loan data that is substantially equivalent to the loan data contained in the Loan History Form published on the Court s website. Local Rule DEADLINE FOR FILING PROOFS OF CLAIM AND PROOFS OF INTEREST IN CHAPTER 9 AND CHAPTER 11 CASES. (a) In chapter 9 and chapter 11 cases, unless otherwise ordered by the court or governed by BLR (b), proofs of claim and proofs of interest must be filed within 90 days after the first date set for the meeting of creditors under section 341(a), except that a proof of claim filed by a governmental unit must be filed within 180 days after the order for relief. (b) BLR (a) does not apply to chapter 11 cases that (1) are ordered -9-

13 treated as complex cases, or (2) transferred from another judicial district. d. Eastern District of Texas Local Rule of Bankruptcy Procedure FILING PROOF OF CLAIM OR INTEREST. (a) Redaction of Personal Identifiers. The requirements of LBR 9013(d) regarding the redaction of personal identifiers applies to proofs of claim, and attachments thereto, filed with the Court. (b) Service. A copy of a proof of claim or interest, with attachments, must be served on the debtor, evidenced by a certificate of service filed with the Court. Service upon the debtor's counsel shall be accomplished by electronic means through the transmission facilities of the Court. Local Rule of Bankruptcy Procedure FILING OF PROOF OF CLAIM OR EQUITY SECURITY INTEREST IN CHAPTER 9 OR CHAPTER 11 REORGANIZATION CASES. (a) Time for Filing. A proof of claim is timely filed in a Chapter 9 case if it is filed not later than 120 days after the entry of the order for relief, or is timely filed in a Chapter 11 case if it is filed not later than 90 days after the first date set for the meeting of creditors called under 341(a) of the Code, except as follows: 1. A proof of claim by a governmental unit is timely filed if it is filed not later than180 days after the date of the order for relief; or 2. The Court may set a different bar date for a creditor or creditors. Notice of a different bar date for all creditors must comply with Fed. R. Bankr. P (b) Bar Date Notice. 1. The Clerk is authorized and directed to stamp the Court s signature and notify creditors of the Chapter 11 bar dates set forth in subsection (a) of this Rule. 2. If the Court orders a different bar date for filing proofs of claim or interest, then the order will conspicuously reflect that a new date has been set and that the new date differs from the deadline established in subsection (a) of this Rule. -10-

14 B. Noteworthy Case Law Involving Proofs of Claim 1. Timing Issues Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd., P'ship, 507 U.S. 380 (1993) The Court held that [t]he excusable neglect standard of Rule 9006(b)(1) governs late filings of proofs of claim in Chapter 11 cases, but not in Chapter 7 cases due to the fact that Rule 3002(c) was excluded from the operation of the excusable neglect standard Specifically, the time-computation and time-extension provision of Rule are generally applicable to any time requirement found elsewhere in the rules unless expressly excepted. Subsections (b)(2) and (b)(3) of Rule 9006 enumerate those time requirements excluded from the operation of the excusable neglect standard. One of the time requirements listed as excepted in Rule 9006(b)(3) is that governing the filing of proofs of claim in Chapter 7 cases. Specifically, such filings are governed exclusively by Rule 3002(c). By contrast, Rule 9006(b) does not make a similar exception for Rule 3003(c), which... establishes the time requirements for proofs of claim in Chapter 11 cases. Accordingly, Rule 9006(b)(1) must be construed to govern the permissibility of late filings in Chapter 11 bankruptcies. Finally, determination of whether neglect is excusable, warranting allowing of late filing of claim, is at bottom an equitable one, taking account of all relevant circumstances surrounding party's omission; these include danger of prejudice to debtor, length of delay and its potential impact on judicial proceedings, reason for delay, including whether it was within reasonable control of movant, and whether movant acted in good faith). In re Hogan, 346 B.R. 715 (Bankr. N.D. Tex. 2006) (J. Jernigan) Court held that secured creditors had to timely file proofs of claim in order to receive payments under debtors' confirmed Chapter 13 plans, and where they failed to do so, court had no discretion to allow their late-filed claims over trustee's objection to enable them to receive distributions under plans, even if they had presented some evidence of excusable neglect under Rule 9006(b) due to fact that Rule 3002(c) (which governs the filing of claims in a chapter 13 case) is excluded from the operation of the excusable neglect standard. Court additionally noted, however, that it appeared that a debtor or -11-

15 trustee may come in, pursuant to Rule 9006(b), and ask for permission to file a late filed proof of claim on the creditor's behalf in a Chapter 13 case, pursuant to Rule 3004, if the debtor or trustee can show some sort of excusable neglect for missing the Rule 3004 deadline for debtors and trustees. United States v. Kolstad (In re Kolstad), 928 F.2d 171 (5th Cir. 1991) IRS sought to amend a proof of claim filed on its behalf by the debtor, and the debtor contended that the IRS lost its right to amend when the bar date passed. The Fifth Circuit ultimately allowed the amendment and found that "[W]hile bar dates establish the universe of participants in the debtor's case, they have little correlation to the final relative amounts in which creditors will share in any distribution. The goal of claims adjudication, on the other hand, is to assure that each creditor which is part of that universe ultimately participates in the voting and distribution from the estate in the proper amount determined by the priority and nature of its claim and bankruptcy's bargaining process." However, the Fifth Circuit also noted that courts that authorize amendments must ensure that corrections or adjustments do not set forth wholly new grounds of liability. 2. Class Proofs of Claim Teta v. Chow (In re TWL Corp.), No , 2013 WL (5th Cir. March 29, 2013) Former employee of a Chapter 11 debtor sought class certification for the employee's allegation that the debtor violated the Worker Adjustment and Retraining Notification (WARN) Act by failing to give its employees 60 days' notice of their termination. In denying class certification, the bankruptcy court held that the numerosity and superiority requirements were not met, holding that class certification would negate the bar date by allowing those class members who had missed the deadline to interpose claims without establishing excusable neglect, and that the employee had not established that a class action would be a superior method of adjudication. The Fifth Circuit held that there is no definite standard of what size class satisfies the numerosity requirement (that "the class is so numerous that joinder of all members is impracticable," under Fed. R. Civ. P. 23(a)(1)). However, because the bankruptcy court did not delineate all the factors it considered, the Fifth Circuit could not affirm on that ground. Finally, as to the superiority requirement (that "the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class -12-

16 action is superior to other available methods for fairly and efficiently adjudicating the controversy," under Fed. R. Civ. P. 23(b)(3)), the Bankruptcy Court could consider bankruptcy-related factors. Ultimately the Fifth Circuit remanded to the bankruptcy court for entry of findings and conclusions consistent with the holdings summarized above. 3. Prima Facie Validity Wilson v. Huffman (In re Missionary Baptist Found. of Am., Inc.), 712 F.2d 206 (5th Cir. 1983) A claim filed pursuant to 501 enjoys prima facie validity which may be overcome by a trustee's presentation of evidence Jacobsen v. Sramek (In re Jacobsen), 362 Fed. Appx. 413 (5th Cir. 2010) Claimant filed a proof of claim, with documents attached describing the progress of litigation against the debtor and REJ Properties, Inc. While the supporting documents attached to the proof of claim reference REJ Properties, Inc. rather than debtor, the documents clearly referred to a pending real estate fraud lawsuit against the debtor and REJ Properties, Inc. The proof of claim was executed and filed in accordance with the Bankruptcy Rules and Official Form 10. As such, the court found that the proof of claim constituted prima facie evidence of the validity and amount of the claim. While, the debtor argued that the proof of claim stated a claim against REJ, not the debtor himself, the court disagreed and held that the debtor failed to rebut the prima facie validity of the proof of claim, and, thus, the claim was allowed. In re Armistead, 2012 WL (Bankr. S.D. Tex. 2012) (J. Isgur) Noncompliance with Local Rule (requiring use of the loan history form) did not affect the prima facie validity of a proof of claim executed and filed in accordance with the national rules, but Bankruptcy Rule 3001 (which requires a different form of attachment to the proof of claim) did not preempt Local Rule , because the local form required substantial information not included on the national form. 4. Jury Trial Issues Langenkamp v. C.A. Culp, 498 U.S. 42 (1990) & Granfinanciera v. Nordberg (In re Granfinanciera, S.A.), 492 U.S. 33 (1989) In the context of avoidance action litigation, the court held that when a creditor files a claim against a bankruptcy estate, it loses its Seventh Amendment right to jury trial and submits itself to the equitable jurisdiction of the bankruptcy court 5. Violations of the Automatic Stay Campbell v. Countrywide Home Loans, Inc., 545 F.3d 348 (5th Cir. 2008) -13-

17 While the debtor contended that loan servicer willfully violated the automatic stay by filing a proof of claim which asserted a right to increased mortgage payments, the Fifth Circuit held that the filing of a proof of claim does not violate the automatic stay. 6. Non-Dischargeability IRS v. Taylor (In re Taylor), 132 F.3d 256 (5th Cir. 1998) IRS had option to not file proof of claim and remain outside of the bankruptcy case, since IRS s claim was non-dischargeable 7. Informal Proofs of Claim Garza v. JD Foods Inc. (In re Garza), 222 Fed. Appx. 350 (5th Cir. 2007) Creditor filed a motion for relief from stay, to allow litigation to liquidate its claim. The stay was lifted, and a judgment was entered by the state court. However, the creditor did not timely file a proof of claim, but asserted its 362 motion should be considered by the court as an informal proof of claim and to permit amendment. The debtor objected, arguing that section 502(b)(9) abrogated the informal proof of claim doctrine. The court held that section 502(b)(9) did not abrogate the informal proof of claim doctrine and allowed the creditor to amend what it held to be an informal proof of claim. 8. Standing In re Thalmann, 469 B.R. 677 (Bankr. S.D. Tex. 2012) (J. Bohm) State court turnover receiver lacked standing to file a proof of claim on behalf of a judgment creditor. The court held that a receiver does not act as an agent of creditors or any other parties, but rather acts as an officer of the court. III. SPECIAL CONSIDERATIONS FOR PROOFS OF CLAIM FILED BY CLAIMANTS WITH SECURITY INTERESTS IN A DEBTOR S PRINCIPAL RESIDENCE. A. New National Bankruptcy Rule Rule Notice Relating to Claims Secured by Security Interest in the Debtor's Principal Residence (a) In General. This rule applies in a chapter 13 case to claims that are (1) secured by a security interest in the debtor's principal residence, and (2) provided for under 1322(b)(5) of the Code in the debtor's plan. (b) Notice of Payment Changes. The holder of the claim shall file and serve on the debtor, debtor's counsel, and the trustee a notice of any change in the payment amount, including any change that results from an interest rate or escrow account adjustment, no later than 21 days before a payment in the new amount is due. -14-

18 (c) Notice of Fees, Expenses, and Charges. The holder of the claim shall file and serve on the debtor, debtor's counsel, and the trustee a notice itemizing all fees, expenses, or charges (1) that were incurred in connection with the claim after the bankruptcy case was filed, and (2) that the holder asserts are recoverable against the debtor or against the debtor's principal residence. The notice shall be served within 180 days after the date on which the fees, expenses, or charges are incurred. (d) Form and Content. A notice filed and served under subdivision (b) or (c) of this rule shall be prepared as prescribed by the appropriate Official Form, and filed as a supplement to the holder's proof of claim. The notice is not subject to Rule 3001(f). (e) Determination of Fees, Expenses, or Charges. On motion of the debtor or trustee filed within one year after service of a notice under subdivision (c) of this rule, the court shall, after notice and hearing, determine whether payment of any claimed fee, expense, or charge is required by the underlying agreement and applicable nonbankruptcy law to cure a default or maintain payments in accordance with 1322(b)(5) of the Code. (f) Notice of Final Cure Payment. Within 30 days after the debtor completes all payments under the plan, the trustee shall file and serve on the holder of the claim, the debtor, and debtor's counsel a notice stating that the debtor has paid in full the amount required to cure any default on the claim. The notice shall also inform the holder of its obligation to file and serve a response under subdivision (g). If the debtor contends that final cure payment has been made and all plan payments have been completed, and the trustee does not timely file and serve the notice required by this subdivision, the debtor may file and serve the notice. (g) Response to Notice of Final Cure Payment. Within 21 days after service of the notice under subdivision (f) of this rule, the holder shall file and serve on the debtor, debtor's counsel, and the trustee a statement indicating (1) whether it agrees that the debtor has paid in full the amount required to cure the default on the claim, and (2) whether the debtor is otherwise current on all payments consistent with 1322(b)(5) of the Code. The statement shall itemize the required cure or postpetition amounts, if any, that the holder contends remain unpaid as of the date of the statement. The statement shall be filed as a supplement to the holder's proof of claim and is not subject to Rule 3001(f). (h) Determination of Final Cure and Payment. On motion of the debtor or trustee filed within 21 days after service of the statement under subdivision (g) of this rule, the court shall, after notice and hearing, determine whether the debtor has cured the default and paid all required postpetition amounts. (i) Failure to Notify. 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 -15-

19 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. B. Applicable Local Bankruptcy Rules in the Northern, Western, Southern, and Eastern Districts of Texas 1. Northern District of Texas L.B.R Proof of Claim Attachment Required for Claims Secured by Security Interest in the Debtor s Principal Residence. (a) In General. This rule applies in all cases and with regard to claims that are secured by a security interest in the individual debtor s principal residence. For chapter 13 cases, this rule applies in addition to the requirements of Rules 3002 and (b) Mortgage Proof of Claim Attachment. The holder of a claim secured by a security interest in the debtor s principal residence shall attach to its proof of claim an exhibit reflecting at least the following details regarding the prepetition claim being asserted: (a) all prepetition interest amounts due and owing, itemized such that the applicable interest rate is shown, as well as the start and end dates for accrual of interest at such interest rate; (b) all prepetition fees, expenses, and charges due and owing, itemized to show specific categories (e.g., appraisals, foreclosure expenses, etc.) and the dates incurred; (c) any escrow amount included in the monthly payment and, if there is an escrow account, a supplemental attachment of an escrow statement prepared as of the petition date; and (d) a statement reflecting the total amount necessary to cure any default as of the petition date (which statement must show (i) the number of missed payments, (ii) plus the aggregate amount of any fees, expenses, and charges due and owing, (iii) less any funds the creditor has received but not yet applied). (c) Form and Content. The proof of claim attachment described in this rule shall be prepared as prescribed by the Official Form B10, Attachment A. -16-

20 L.B.R Mid-Case Audit Procedures with Regard to Claims Secured by Security Interest in the Debtor s Principal Residence (a) In General. This rule applies in a chapter 13 case to claims that are (1) secured by a security interest in the debtor s principal residence, and (2) provided for under 1322(b)(5) of the Code in the debtor s plan. This rule is in addition to the requirements of Rule (b) Mid-Case Notice by Chapter 13 Trustee. For cases filed on or after December 1, 2011, the Chapter 13 Trustee shall (during the periods month 18 to month 22, and month 42 to month 46 of the case) file and serve on the holder of the claim and its counsel and the debtor and debtor s counsel a Notice to Deem Mortgage Current or, alternatively, a Notice of Amount Deemed Necessary to Cure, stating whether or not, to the trustee s knowledge, the debtor is current on his plan and mortgage, and, if not, the amount believed necessary to cure any default on the plan and mortgage claim. The notice shall also contain negative notice language, informing the holder of its obligation to file and serve a response within 60 days, or else the information contained in the notice will be deemed unopposed and/or undisputed. If the trustee does not timely file and serve the notice required by this subdivision, the debtor may file and serve the notice. (c) Response to Mid-Case Notice. Within 60 days after service of a Notice to Deem Mortgage Current or, alternatively, a Notice of Amount Deemed Necessary to Cure, the holder shall file and serve on the debtor, debtor s counsel, and the trustee a response indicating whether it disputes the information in such Notice. The response shall itemize any cure amounts or postpetition arrearages that the holder contends exist as of the date of the response. (d) Determination of Mid-Case Notice/Response by Court. Whenever there is a response to a mid-case Notice to Deem Mortgage Current or, alternatively, a Notice of Amount Deemed Necessary to Cure, on request by the debtor, trustee, or claim holder, the court shall, after notice and hearing, determine whether the debtor is current on all required postpetition amounts. An order shall be issued reflecting any determination by the court. (e) Failure to Respond to a Mid-Case Notice. -17-

21 If the holder of a claim fails to respond as set forth in subdivisions (b) and above, the court shall issue an Order by default, finding the mortgage to be current as of the date of the Notice to Deem Mortgage Current, or alternatively, deeming the mortgage to be delinquent in the amount set forth in the Trustee s Notice of Amount Deemed Necessary to Cure, (f) Effect of Order on Mid-Case Notice. Any Order issued on a Notice to Deem Mortgage Current or, alternatively, on a Notice of Amount Deemed Necessary to Cure, (whether by default or after a response) shall preclude the holder from asserting cure amounts or postpetition arrearages that allegedly accrued before the date of Notice to Deem Mortgage Current or the Notice of Amount Deemed Necessary to Cure, in any contested matter or adversary proceeding in the case, or in any other manner or forum after a discharge in the case, unless the court determines, after notice and a hearing, that the failure was substantially justified or is harmless. Effective 4/1/12 19 (g) Reconciliation of this Rule with National Bankruptcy Rule Nothing in this Local Bankruptcy Rule shall be interpreted to conflict with National Bankruptcy Rule For example, the requirement that the holder of a claim secured by a security interest in the debtor s principal residence file a Notice of Postpetition Mortgage Fees, Expenses and Charges (Official Form B10, Supplement 2), to reflect postpetition charges, pursuant to National Bankruptcy Rules (c) and (d), is not superseded by this rule, nor is the procedure and timing for a debtor or trustee to file a motion pursuant to subsection (e) of that rule, to challenge the propriety of amounts set forth in such Notice, superseded. This Rule is intended to provide an additional mechanism for parties to identify and resolve disputes regarding postpetition mortgage arrearages (including alleged missed payments of postpetition principal and interest, as well as asserted postpetition fees and charges) at different checkpoints during a Chapter 13 case. 2. Western District of Texas NO LOCAL RULE HAS BEEN ADOPTED 3. Southern District of Texas Local Rule CONFIRMATION OF CHAPTER 13 PLANS. * * * (b) Mortgage Payments Through the Chapter 13 Trustee. Home mortgage payments will be made through the chapter 13 trustee, in accordance with Home -18-

22 Mortgage Payment Procedures. Home Mortgage Payment Procedures shall be procedures adopted by the chapter 13 trustees and approved by the court. Also see attached Addendum: (See separate attached PDF). 4. Eastern District of Texas NO LOCAL HAS BEEN ADOPTED C. Relevant Case Law Addressing Mortgage Claimants Proofs of Claim 1. Jones v. Wells Fargo Home Mortgage (In re Jones), 366 B.R. 584 (Bankr. E.D. La. 2007) ("Jones I") Debtor missed three Chapter 13 plan payments due to a heart attack. After the debtor modified the plan to cure the arrearage, the debtor arranged refinancing of his mortgage. Debtor requested a payoff balance from the creditor. After the closing of the refinancing, the debtor requested an accounting of the amounts the creditor asserted were due to payoff the debt. Only after commencement of an adversary proceeding, did the creditor provide an accounting. Debtor disputed the accounting, including postpetition inspection fees, attorney's fees, and prepetition Sheriff's commissions. The court found that the creditor's accounting did not reflect its agreement that four installments and attorney's fees would be paid through an agreed figure, and that prepetition charges were to be paid through the plan and did not bear interest. The court found that the creditor had paid itself without disclosing those payments to the debtor. Ultimately, the court held that the attorney fees were disallowed, because they were not shown to be reasonable. Additionally, the court held that the creditor's postpetition charges violated the automatic stay, but denied the damages requested by the Debtor. However, the court left open the question of whether to impose sanctions against the creditor. a. Subsequent History Following Decision in Jones I Jones v. Wells Fargo Home Mortgage (In re Jones), 2007 WL (Bankr. E.D. La. 2007) ("Jones II") On consideration of sanctions against Wells Fargo due to actions articulated in Jones I, the bankruptcy court awarded the debtor compensatory damages and sanctions, and also ordered the creditor to reform its accounting procedures in accordance with the opinion, in lieu of punitive damages. -19-

23 In re Stewart, 391 B.R. 327 (Bankr. E.D. La. 2008) ("Stewart I") The court found that Wells Fargo's proprietary software was set up to automatically apply payments to fees (including late fees and property inspection fees) as well as order broker price opinions from a division of the creditor at a profit, all without notice to the debtor. The court found that the creditor miscalculated the amounts due, and misled the court as to the fees charged postpetition. The court imposed monetary sanctions (noting its findings and conclusions in Jones I and Jones II), and ordered the creditor to audit every proof of claim it had filed in that district, in any case pending on or filed after April 13, Wells Fargo Bank, N.A. v. Jones (In re Jones), 391 B.R. 577 (E.D. La. 2008) ("Jones III") The court affirmed and increased the award of monetary sanctions, but (after the creditor, which had originally proposed the accounting procedures, withdrew its consent to the accounting procedures) vacated the order to reform accounting procedures, on grounds the bankruptcy court had not considered the absence of a legal remedy or the other factors of the four-part test for injunctive relief, in creating its order. In re Stewart, 2008 WL (Bankr. E.D. La. 2008) ("Stewart II") On the creditor's motion re-urging its motion for stay pending appeal, in light of the district court's order in Jones III, the court addressed the factors for injunctive relief, and denied the motion for stay pending appeal. Jones v. Wells Fargo Home Mortgage (In re Jones), 418 B.R. 687 (Bankr. E.D. La. 2009) ("Jones IV") On remand from Jones III, the court addressed the factors for injunctive relief, and again ordered a slightly-amended reform of accounting procedures. Jones v. Wells Fargo Home Mortgage (In re Jones), 2010 WL (E.D. La. 2010) ("Jones V") The District Court affirmed the Bankruptcy Court's order in Jones IV. In re Stewart, 2009 WL (E.D. La. 2009) ("Stewart III") The District Court, finding that the bankruptcy court had applied the factors for injunctive relief, affirmed. In re Stewart, 647 F.3d 553 (5th Cir. 2011)("Stewart IV") The Fifth Circuit held that 1) the debtor lacked standing to -20-

24 support injunctive relief, because there was no real or immediate threat of injury to the debtor in the future; and 2) the injunction requiring auditing of cases other than the one before the court was not supported by the debtor's objection to the creditor's claim, or the inherent authority of the court to protect its jurisdiction and judgments and control its docket. In re Jones, 439 Fed. Appx. 330 (5th Cir. 2011) ("Jones VI") The Fifth Circuit reversed, based on its opinion in Stewart IV Jones v. Wells Fargo Home Mortgage (In re Jones), 2012 WL (Bankr. E.D. La. 2012) ("Jones VII") With the higher courts having rejected the injunctive relief ordered, the court awarded punitive damages of $3.171 million against the creditor, finding that such an amount was necessary to deter future repetition of the conduct found in Jones I. Jones v. Wells Fargo Home Mortgage (In re Jones), C.A. No (Slip Op. 3/21/2013) The District Court affirmed the award of $3.171 million in punitive damages. 2. Other Cases Involving Mortgage Lenders Proofs of Claim In re Lopez, No , 2012 WL (Bankr. S.D. Tex. Dec. 31, 2012)(J. Paul) Creditor filed a notice of postpetition mortgage fees, expenses, and charges, including attorney fees, proof of claim fees, appraisal/broker price opinion fees, property inspection fees, insurance, interest on fees, miscellaneous, and publication cost." Debtor objected, asserting that the fees could not be allowed without an application complying with Bankruptcy Rule Debtor also sought an award of attorney s fees. The creditor did not file a response or appear at the hearing. The court held that the fees, expenses, and charges did not enjoy a presumption of validity due to the claimants failure to respond to the debtor s objection or to appear in support of its Notice of Post-petition Mortgage Fees, Expenses and Charges. However, the Debtor's request for attorney fees was not granted, in light of the fact that the proof of claim predated the requirement to use the official form for an attachment to a mortgage proof of claim. -21-

25 In re Creggett, No , 2012 WL (Bankr. S.D. Tex. Dec, 28, 2012) (J. Paul) Creditor filed a notice of mortgage payment change. The Debtor objected asserting that the amount of the escrow asserted in the notice was inaccurate and sought sanctions under Rule (b). The court held that the notice of mortgage payment change did not enjoy a presumption of validity due to the claimants failure to respond to the debtor s objection or to appear in support of its notice of mortgage payment change. However, the Debtor's request for attorney s fees was not granted, in light of the fact that the proof of claim predated the requirement to use the official form for an attachment to a mortgage proof of claim. In re Garza, No , 2012 WL (Bankr. S.D. Tex. Oct. 1, 2012) (J. Jones) Creditor filed two notices of mortgage payment change. Debtors objected, asserting that the amount was incorrect, and requesting attorney s fees under Bankruptcy Rule (i)(2). The court held that prior to the effective date of Rule (i)(2), the creditor waived its right to postpetition charges by failing to respond to the trustee's notice of a bar date to assert charges. Additionally, after the effective date, the creditor failed to comply with Bankruptcy Rule , and thus was awarded attorney s fees. In re Tuneberg, No , 2012 WL (Bankr. S.D. Tex. Aug. 28, 2012) (J. Paul) Debtors objected to a notice of postpetition fees, expenses, and charges. The notice was signed by the attorney for the creditor. However, the debtors served the objection on the creditor, but not on its counsel. The court would not grant default relief where counsel had appeared, but was not served. However, the debtor s objection was denied without prejudice to refiling. In re Boyd, No , 2013 WL (Bankr. S.D. Tex. May 1, 2013) (J. Paul) Debtors filed a motion to determine post-petition fees, expenses or charges due per Rule in response to a notice of postpetition fees, expenses, and charges filed by secured creditor. Specifically, the debtors motion alleged that the claimed fees, expenses and charges (totaling $875) were not required by the underlying agreement and nonbankruptcy law to cure a default or maintain payments -22-

26 in accordance with section 1322(b)(5) of the Bankruptcy Code. Alternatively, the debtors argued that the amounts of the charges were unreasonable and excessive. The court granted the debtors motion, in part, finding that only $625 of the requested $875 in fees were recoverable against the debtors and their principal residence. IV. CLAIM OBJECTIONS A. Applicable Bankruptcy Code Section and National Rule 1. Applicable Bankruptcy Code Section 502. Allowance of claims or interests (a) A claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest, including a creditor of a general partner in a partnership that is a debtor in a case under chapter 7 of this title, objects. (b) Except as provided in subsections (e)(2), (f), (g), (h) and (i) of this section, if such objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that-- (1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured; (2) such claim is for unmatured interest; (3) if such claim is for a tax assessed against property of the estate, such claim exceeds the value of the interest of the estate in such property; (4) if such claim is for services of an insider or attorney of the debtor, such claim exceeds the reasonable value of such services; (5) such claim is for a debt that is unmatured on the date of the filing of the petition and that is excepted from discharge under section 523(a)(5) of this title; (6) if such claim is the claim of a lessor for damages resulting from the termination of a lease of real property, such claim exceeds-- (A) the rent reserved by such lease, without acceleration, for the -23-

27 greater of one year, or 15 percent, not to exceed three years, of the remaining term of such lease, following the earlier of-- (i) the date of the filing of the petition; and (ii) the date on which such lessor repossessed, or the lessee surrendered, the leased property; plus (B) any unpaid rent due under such lease, without acceleration, on the earlier of such dates; (7) if such claim is the claim of an employee for damages resulting from the termination of an employment contract, such claim exceeds-- (A) the compensation provided by such contract, without acceleration, for one year following the earlier of-- (i) the date of the filing of the petition; or (ii) the date on which the employer directed the employee to terminate, or such employee terminated, performance under such contract; plus (B) any unpaid compensation due under such contract, without acceleration, on the earlier of such dates; (8) such claim results from a reduction, due to late payment, in the amount of an otherwise applicable credit available to the debtor in connection with an employment tax on wages, salaries, or commissions earned from the debtor; or (9) proof of such claim is not timely filed, except to the extent tardily filed as permitted under paragraph (1), (2), or (3) of section 726(a) of this title or under the Federal Rules of Bankruptcy Procedure, except that a claim of a governmental unit shall be timely filed if it is filed before 180 days after the date of the order for relief or such later time as the Federal Rules of Bankruptcy Procedure may provide, and except that in a case under chapter 13, a claim of a governmental unit for a tax with respect to a return filed under section 1308 shall be timely if the claim is filed on or before the date that is 60 days after the date on which such return was filed as required. (c) There shall be estimated for purpose of allowance under this section-- (1) any contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case; or (2) any right to payment arising from a right to an equitable remedy for -24-

28 breach of performance. (d) Notwithstanding subsections (a) and (b) of this section, the court shall disallow any claim of any entity from which property is recoverable under section 542, 543, 550, or 553 of this title or that is a transferee of a transfer avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549, or 724(a) of this title, unless such entity or transferee has paid the amount, or turned over any such property, for which such entity or transferee is liable under section 522(i), 542, 543, 550, or 553 of this title. (e)(1) Notwithstanding subsections (a), (b), and (c) of this section and paragraph (2) of this subsection, the court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on or has secured the claim of a creditor, to the extent that-- (A) such creditor's claim against the estate is disallowed; (B) such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance of such claim for reimbursement or contribution; or (C) such entity asserts a right of subrogation to the rights of such creditor under section 509 of this title. (2) A claim for reimbursement or contribution of such an entity that becomes fixed after the commencement of the case shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) of this section, the same as if such claim had become fixed before the date of the filing of the petition. (f) In an involuntary case, a claim arising in the ordinary course of the debtor's business or financial affairs after the commencement of the case but before the earlier of the appointment of a trustee and the order for relief shall be determined as of the date such claim arises, and shall be allowed under subsection (a), (b), or (c) of this section or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (g)(1) A claim arising from the rejection, under section 365 of this title or under a plan under chapter 9, 11, 12, or 13 of this title, of an executory contract or unexpired lease of the debtor that has not been assumed shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (2) A claim for damages calculated in accordance with section 562 shall -25-

29 be allowed under subsection (a), (b), or (c), or disallowed under subsection (d) or (e), as if such claim had arisen before the date of the filing of the petition. (h) A claim arising from the recovery of property under section 522, 550, or 553 of this title shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (i) A claim that does not arise until after the commencement of the case for a tax entitled to priority under section 507(a)(8) of this title shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (j) A claim that has been allowed or disallowed may be reconsidered for cause. A reconsidered claim may be allowed or disallowed according to the equities of the case. Reconsideration of a claim under this subsection does not affect the validity of any payment or transfer from the estate made to a holder of an allowed claim on account of such allowed claim that is not reconsidered, but if a reconsidered claim is allowed and is of the same class as such holder's claim, such holder may not receive any additional payment or transfer from the estate on account of such holder's allowed claim until the holder of such reconsidered and allowed claim receives payment on account of such claim proportionate in value to that already received by such other holder. This subsection does not alter or modify the trustee's right to recover from a creditor any excess payment or transfer made to such creditor. (k)(1) The court, on the motion of the debtor and after a hearing, may reduce a claim filed under this section based in whole on an unsecured consumer debt by not more than 20 percent of the claim, if-- (A) the claim was filed by a creditor who unreasonably refused to negotiate a reasonable alternative repayment schedule proposed on behalf of the debtor by an approved nonprofit budget and credit counseling agency described in section 111; (B) the offer of the debtor under subparagraph (A)-- the petition; and (i) was made at least 60 days before the date of the filing of (ii) provided for payment of at least 60 percent of the amount of the debt over a period not to exceed the repayment period of the loan, or a reasonable extension thereof; and -26-

30 nondischargeable. (C) no part of the debt under the alternative repayment schedule is (2) The debtor shall have the burden of proving, by clear and convincing evidence, that-- proposal; and (A) the creditor unreasonably refused to consider the debtor's (B) the proposed alternative repayment schedule was made prior to expiration of the 60-day period specified in paragraph (1)(B)(i). 2. Applicable National Bankruptcy Rule Rule Objections to Claims (a) Objections to Claims. An objection to the allowance of a claim shall be in writing and filed. A copy of the objection with notice of the hearing thereon shall be mailed or otherwise delivered to the claimant, the debtor or debtor in possession, and the trustee at least 30 days prior to the hearing. (b) Demand for Relief Requiring an Adversary Proceeding. A party in interest shall not include a demand for relief of a kind specified in Rule 7001 in an objection to the allowance of a claim, but may include the objection in an adversary proceeding. (c) Limitation on Joinder of Claims Objections. Unless otherwise ordered by the court or permitted by subdivision (d), objections to more than one claim shall not be joined in a single objection. (d) Omnibus Objection. Subject to subdivision (e), objections to more than one claim may be joined in an omnibus objection if all the claims were filed by the same entity, or the objections are based solely on the grounds that the claims should be disallowed, in whole or in part, because: (1) they duplicate other claims; (2) they have been filed in the wrong case; (3) they have been amended by subsequently filed proofs of claim; (4) they were not timely filed; (5) they have been satisfied or released during the case in accordance -27-

31 with the Code, applicable rules, or a court order; (6) they were presented in a form that does not comply with applicable rules, and the objection states that the objector is unable to determine the validity of the claim because of the noncompliance; (7) they are interests, rather than claims; or (8) they assert priority in an amount that exceeds the maximum amount under 507 of the Code. (e) Requirements For Omnibus Objection. An omnibus objection shall: (1) state in a conspicuous place that claimants receiving the objection should locate their names and claims in the objection; (2) list claimants alphabetically, provide a cross-reference to claim numbers, and, if appropriate, list claimants by category of claims; (3) state the grounds of the objection to each claim and provide a cross-reference to the pages in the omnibus objection pertinent to the stated grounds; objections; (4) state in the title the identity of the objector and the grounds for the (5) be numbered consecutively with other omnibus objections filed by the same objector; and (6) contain objections to no more than 100 claims. (f) Finality of Objection. The finality of any order regarding a claim objection included in an omnibus objection shall be determined as though the claim had been subject to an individual objection. 3. Applicable Local Bankruptcy Rules in the Northern, Western, Southern, and Eastern Districts of Texas a. Northern District of Texas L.B.R Claim Objections. (a) Contents of the Objection. -28-

32 Every objection to claim shall identify the claim by claim number, claimant and date filed. If the amount or classification of the claim is being disputed, the objection to claim shall state the amount of the claim, if any, that is not in dispute and the classification considered proper by the objecting party. The objection shall state with particularity the basis for the objection. (b) Service. At a minimum, the objecting party shall serve any claim objection and the notice of hearing thereon, if applicable, on the claimant at the address provided on the proof of claim, and if applicable, on the claimant s attorney. Pursuant to Bankruptcy Rule 7005, the objecting party shall file with the Bankruptcy Clerk a certificate of service, attached to the objection, evidencing the date and mode of service and the names and addresses of the parties served. L.B.R Omnibus Claim Objections. (a) Omnibus Claim Objection Procedures. When making an omnibus claim objection, the following procedures shall be followed: (1) The objector shall object to no more than 100 proofs of claim in one pleading; (2) Copies of the claims need not be attached to the omnibus claim objection. However, the objector shall notify the claimant that a copy of the claim may be obtained from the objector upon request; (3) The notice of hearing and objection shall be served on the person whose name appears in the signature block on the proof of claim and in accordance with Bankruptcy Rule 7004; (4) A hearing on each objection shall be held at least 40 days after service of the objection, and the date of such hearing, as well as whether the objector intends for the court to conduct an evidentiary hearing or a status conference, shall be clearly set forth in the notice of hearing. The objector is permitted to file a reply, including evidence, to any response at least 3 days prior to a hearing on the objection; and (5) After the hearing on each omnibus claim objection, the objector may submit to the court a form order sustaining each objection as to which the claimant has defaulted. -29-

33 (b) Omnibus Claim Objection Hearings. All pending objections to claims included in an omnibus objection shall follow the same hearing schedule, unless otherwise ordered by the court. When multiple claims subject to an omnibus claim objection are reset, all claims from that objection shall be reset to the same hearing date. A party resetting a hearing on an omnibus claim objection shall provide to the court, no fewer than 2 days prior to the reset hearing date, a list or chart setting forth the claim objections which remain to be determined on the reset hearing date, specifying which of those the party believes will be defaulted or settled. L.B.R Response to Claim Objections. As indicated in L.B.R (c) and (g)(5), except in chapter 7, 12 and 13 cases, where a claim objection may be served subject to negative notice language, no response is required to a claim objection. Nevertheless, the Presiding Judge may order otherwise, in other cases, on request of a party. L.B.R Estimation of Claims. (a) (b) (c) (d) (e) If a claim is objected to or is filed in an unliquidated amount, the objecting party, the claimant, the trustee, the debtor in possession or any plan proponent may file a motion requesting that the claim be estimated in accordance with 11 U.S.C. 502(c). Filing a motion to estimate commences a contested matter. The motion to estimate shall include those purposes (e.g., voting, allowance, etc.) for which estimation is sought, and an explanation of why estimation, as opposed to full trial of the claim objection, is appropriate. The movant, as soon as practicable following filing of the motion to estimate, shall consult with the claimant and the objecting party to determine whether either opposes the motion. If the movant, the claimant and the objecting party agree that the claim should be estimated, they shall attempt to agree upon and submit to the court procedures applicable to estimation of the claim. If they are unable to agree upon procedures, each party may submit proposed procedures. Proposed procedures shall be filed with the court at least 4 days prior to the hearing on the motion to estimate. If the claimant or the objecting party contests the motion to estimate, such entity shall file a response to the motion at least 4 days prior to the hearing on the motion. If the motion to estimate is granted, following such additional steps as the -30-

34 Presiding Judge may direct, the Presiding Judge shall enter such orders as are appropriate establishing procedures and schedules for estimating the claim. b. Western District of Texas L. Rule OBJECTIONS TO CLAIM Objections to claims are contested matters and may be made on negative notice as set forth in L. Rule If negative notice is not used or if a timely response to the objection is filed, a hearing on the objection will be set in accordance with FRBP c. Southern District of Texas Local Rule OBJECTIONS TO CLAIMS. (a) A proof of claim filed under the court s electronic procedures has the same evidentiary effect as one filed under FED. R. BANKR. P. Rule (b) An objection to claim must identify the claim by claimant, date filed, amount, secured or unsecured, and priority. The legal and factual basis must be clear from the face of the objection. (c) The objection must include a scheduling conference hearing date from the judge s web page or from the case manager and must state immediately below the title: This is an objection to your claim. The objecting party is asking the court to disallow the claim that you filed in this bankruptcy case. You should immediately contact the objecting party to resolve the dispute. If you do not reach an agreement, you must file a response to this objection and send a copy of your response to the objecting party within 21 days after the objection was served on you. Your response must state why the objection is not valid. If you do not file a response within 21 days after the objection was served on you, your claim may be disallowed. A hearing has been set on this matter on [date] at [time] in courtroom, [address]. (d) The objecting party must serve the objection on the claimant, the claimant s counsel, the debtor, the debtor s counsel, and the trustee at least 30 days before the hearing date. (e) Failure of either party to appear at the initial hearing may result in summary -31-

35 disposition of the objection. If no defense to the objection is raised, the court may adjudicate the claim at the initial hearing on affidavits filed by the objecting party. Agreed orders must be submitted in court when the case is called or earlier. If a defense is raised, an evidentiary hearing will be scheduled at the initial hearing, unless the parties consent to an immediate hearing. (f) Omnibus objections to claims are permitted with prior court approval. A motion should be filed with a proposed procedure for the handling of omnibus objections. (g) Objections to certain claims in chapter 13 cases are governed by BLR Objections governed by BLR are not governed by this rule. Local Rule Confirmation of Chapter 13 plans. (a) Uniform Plan and Motion for Valuation of Collateral. From time-to-time, the Bankruptcy Court will promulgate a uniform form of Chapter 13 Plan and Motion for Valuation of Collateral and a uniform Chapter 13 Plan Summary. (1) The motion for valuation for collateral will be incorporated into the title and the substance of any proposed plan. (2) Except as set forth in the following sentence, use of the form of plan and plan summary are mandatory. Any debtor wishing to use a plan and plan summary that vary from the uniform plan and uniform plan summary must file a motion along with the petition seeking leave from this requirement. The court will conduct a hearing on the motion at the next chapter 13 panel. Absent exceptional circumstances related to the particular chapter 13 case, leave will not be granted. (3) If a debtor fails to file plan or a completed plan summary within the time allowed by the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, the trustee must file a motion to dismiss the case for delay that is unreasonable to creditors pursuant to BLR (4) The uniform plan is structured to pay based on allowed claims rather than on claims as set forth in the plan. Accordingly, if a claim is allowed in an amount greater than the amount set forth in the plan, no plan modification will be required unless the allowance of a larger claim leaves the plan with insufficient funds to pay claims. (5) The following provisions of the plan will be binding, notwithstanding any provision in a proof of claim to the contrary: (i) the interest rate to be paid on claims; (ii) the valuation of collateral; (iii) the priority of payment of claims under the plan. (6) Valuation issues must be noticed for and resolved at confirmation. -32-

36 (b) Mortgage Payments Through the Chapter 13 Trustee. Home mortgage payments will be made through the chapter 13 trustee, in accordance with Home Mortgage Payment Procedures. Home Mortgage Payment Procedures shall be procedures adopted by the chapter 13 trustees and approved by the court. (c) Confirmation Hearings. Confirmation will be set with a uniform notice, in the form promulgated from time to time by the Bankruptcy Court. The notice will provide that the court will consider confirmation and will also consider valuation of security pursuant to FED. R. BANK. P If confirmation is denied, the court will consider whether to dismiss or convert the case or to enter other appropriate orders in the case. If a plan is confirmed, the court will use (i) the uniform form promulgated from time-to-time by the Bankruptcy Court; or (ii) a form proposed by the trustee in a particular case that requires the use of a nonuniform confirmation order. (d) Plan Modifications. Debtor s motions to modify a confirmed plan must include: (1) A revised plan, in the form of the uniform plan. (2) A revised plan summary, in the form of the uniform plan summary. (3) A side-by-side comparison of payments under the prior plan and the proposed plan. (4) A description of the following: (A) The reason why the debtor s current plan must be modified. (B) If the debtor s plan must be modified because of a payment default to the trustee or to a creditor, a description of the reason why the payment default occurred. (C) If the reason was a temporary loss of employment, the motion must describe whether new employment was obtained. (D) The changes in the debtor s fixed expenses (e.g., whether an asset has been abandoned, a less expensive car has been purchased, or other events have occurred that affect the feasibility of the proposed modification). (E) A copy of the debtor s current Schedules I and J must be attached to the motion to modify the plan. (F) At the time of the filing of a motion to modify a plan, the Debtor must either (i) file an amended wage order that is consistent with the proposed -33-

37 modification; or (ii) amend the Debtor s electronic payment mechanism with the Trustee to be consistent with the proposed modification. (e) This rule applies only to chapter 13 plan amendments that (i) are filed after a plan is confirmed and before the expiration of 6 months after the claims bar date; and (ii) propose to amend a confirmed plan solely to treat or pay for claims filed prior to the claims bar date that make the confirmed plan deficient. (1) From time-to-time, the Court will promulgate a Uniform Motion To Amend Confirmed Chapter 13 Plan to Satisfy Recently Filed, Timely Proofs of Claim. (2) Use of the promulgated form is mandatory. The form may not be altered except with leave of Court. (3) The motion to amend the plan must be set for hearing on a date scheduled for Chapter 13 hearings and on not less than 35 days notice. Notice of the amendment and hearing date must be provided by the Debtor to all creditors and all parties requesting notice. motion. (4) The deadline for the filing of objections is 30 days after service of the (5) If no timely objection is filed, the Court may grant the relief without an actual hearing. (6) Along with the filing of the motion to amend, the Debtor(s) must file an amended wage order or must amend their electronic payment to reflect t he increased payment required by the amendment. (7) Any party in interest may object to the use of a chapter 13 plan amendment in lieu of a chapter 13 plan modification based on a Debtor s change in circumstances or for other good cause shown. d. Eastern District of Texas Local Rule of Bankruptcy Procedure OBJECTIONS TO CLAIMS. (a) Contents. A claims objection must comply with the requirements of LBR 9013 and must contain the following: pertains; (1) a copy of the proof of claim (without exhibits) to which the objection (2) an affidavit and/or other documentary proof in support of the objection which is sufficient to overcome the presumption of validity imposed by Fed. R. Bankr. P. -34-

38 3001(f) and, if pertaining to the valuation of collateral, a clear identification of the basis of any valuation opinion asserted; and (3) a certificate of service evidencing service of the claims objection upon the claimant at the address disclosed by the claimant in its proof of claim and upon all other parties entitled to notice under other applicable service rules; and (4) a proposed order substantially conforming to TXEB Local Form (b) Hearings. A party filing an objection to claim, other than an objection for which the filing of an adversary proceeding is required, may utilize the 21-day negative notice language described in LBR 9007(a). If the objection meets the requirements mandated by subsection (a) of this rule and no response to the claim objection is timely filed under the terms of the negative notice, the objection may be sustained by the Court without further notice or hearing. If a response to the claim objection is timely filed, the claim objection shall be set for hearing on not less than 30 days notice. If a claim objection does not contain the 21-day negative notice language, then the claim objection shall be immediately set for hearing on not less than 30 days notice. (c) Omnibus Claim Objections Prohibited. Except as authorized by Fed. R. Bankr. P or unless otherwise authorized by the Court, omnibus claim objections to groups of claims are not allowed. Each claims objection must deal with one specific claim. (d) Claim Procedures in Chapter 13 Cases. The procedure for adjudication of claims in Chapter 13 cases, including the establishment of a bar date for the filing of claim objections in Chapter 13 cases, is governed by LBR 3015(g). Local Rule of Bankruptcy Procedure FILING, OBJECTION TO CONFIRMATION, AND MODIFICATION OF A PLAN IN A CHAPTER 12 FAMILY FARMER S DEBT ADJUSTMENT OR A CHAPTER 13 INDIVIDUAL S DEBT ADJUSTMENT CASE. (a) Plan and Confirmation Order Format - Chapter 13. Every Chapter 13 debtor shall file a proposed Chapter 13 plan in a format which substantially conforms to TXEB Local Form 3015-a. Any proposed confirmation order must substantially conform to TXEB Local Form 3015-b. (b) Service and Notice. A debtor filing an original or modified Chapter 12 or 13 plan must serve such plan upon the master mailing list (matrix) as constituted by the Court on the date of service, including the standing trustee. A certificate of service evidencing the proper service of the plan on the matrix must be filed with the Court or such plan will be stricken. If a plan summary is not filed concurrently with a proposed plan, the plan -35-

39 summary must clearly identify by date of filing the proposed plan which it summarizes. (c) Plan Payments. 1. Except to the extent that a proposed Chapter 13 plan provides for retention of collateral and direct payments by the debtor to the holder of a claim secured thereby or is otherwise authorized by the Court, no Chapter 13 debtor may provide adequate protection payments directly to a holder of a secured claim under the provisions of 1326(a)(1)(C) but shall instead tender required adequate protection payments to the Chapter 13 Trustee in an amount to be established in the debtor s proposed Chapter 13 plan or as otherwise ordered by the Court. 2. Any adequate protection payment tendered to the Chapter 13 Trustee pursuant to this rule shall be held solely for the benefit of the affected secured creditor to the exclusion of the debtor and shall be tendered to that secured creditor by the Chapter 13 Trustee upon the earlier of plan confirmation, or the dismissal or the conversion of the Chapter 13 case, notwithstanding any failure of a debtor to confirm a Chapter 13 plan. (d) Chapter 12 - Initial Confirmation Process. 1. In a Chapter 12 case, the initial confirmation hearing date will be established by separate order. 2. An objection to confirmation by a creditor or party-in-interest must be filed no later than seven (7) days prior to confirmation, and untimely objections may not be considered by the Court. 3. The Chapter 12 Trustee must submit a confirmation recommendation and report, in which the Trustee must set forth all objections to the confirmation of the proposed Chapter 12 plan. This report must be filed with the Court and served on the debtor and the debtor s attorney at least seven (7) days prior to the scheduled confirmation hearing. (e) Chapter 13 - Initial Confirmation Process 1. The notice of the initial 341 meeting of creditors in a Chapter 13 case contains notice of the initial hearing to consider confirmation of a proposed Chapter 13 plan. 2. An objection to confirmation by a creditor or party-in-interest, other than the Chapter 13 Trustee, must be filed no later than fourteen (14) days prior to the scheduled hearing to consider confirmation of the plan, and untimely objections may not be considered by the Court. -36-

40 3. No later than seven (7) days prior to the scheduled hearing to consider confirmation of the plan, a debtor shall tender to the Chapter 13 Trustee: (A) a proposed confirmation order in a format which substantially conforms to TXEB Local Form 3015-b; (B) a declaration under penalty of perjury from the Debtors regarding the status of post-petition mortgage obligations which substantially conforms to TXEB Local Form 3015-c; 4. No later than seven (7) days prior to the scheduled hearing on confirmation of the plan, the Chapter 13 Trustee must determine whether to recommend confirmation of the proposed plan to the Court: (A) if the Chapter 13 Trustee wishes to object to the confirmation of a proposed plan, a confirmation report must be filed in which the Trustee must set forth all objections to the confirmation of the proposed Chapter 13 plan. This report must be filed with the Court and served on the debtor and the debtor s attorney at least seven (7) days prior to the scheduled confirmation hearing; (B) if the Chapter 13 Trustee wishes to recommend confirmation of the proposed plan and if all objections have been resolved, the Chapter 13 Trustee may upload an approved proposed confirmation order to the Court and such action will constitute a recommendation by the Trustee for confirmation of the proposed plan without the necessity of presenting additional documentation. 5. Upon the upload of an approved confirmation order by the Chapter 13 Trustee, the confirmation of the plan shall be considered unopposed, the attendance of the Debtor and the Debtor s counsel at the scheduled confirmation hearing shall be excused, and the Court may enter the submitted confirmation order without further hearing. Upon its review of the proposed plan and confirmation order, the Court reserves the right to reschedule the confirmation hearing with notice to all parties. 6. Upon the denial of any original or modified Chapter 13 plan by the Court, any objection previously filed to that plan is resolved for all purposes and any objection by a creditor or party-in-interest to the confirmation of a subsequentlyproposed Chapter 13 plan must be filed no later than seven (7) days prior to the scheduled hearing to consider that subsequently-proposed plan. (f) Pre-Confirmation Modification Process 1. If a Chapter 12 or Chapter 13 plan is modified in the pre-confirmation period with less than 35 days notice before the confirmation hearing, the confirmation hearing will proceed only if the Court determines that: -37-

41 (a) the modification does not adversely affect any creditors; (b) any adversely affected creditor has consented; or minimis. (c) the adverse impact of the modification on creditors is de If a pre-confirmation modification does not meet one of the three preceding requirements and additional notice of the modified plan is therefore required, a new confirmation hearing shall be scheduled, the deadline for filing an objection to the modified plan shall be extended to seven (7) days prior to the new confirmation hearing date, and the debtor shall provide notice of the new confirmation hearing date and the corresponding new 7-day objection deadline to the master mailing list (matrix) as constituted by the Court on the date of service. A certificate of service evidencing that proper notice has been given must be filed with the Court. 2. In the event that a new confirmation hearing is required to be scheduled due to a pre-confirmation modification of the plan, and unless the Court orders otherwise, the continuation of the confirmation hearing in that context shall establish a final dismissal deadline for achieving confirmation of the proposed plan without the necessity of the entry of an independent order and, in the event that the debtor fails to confirm such a modified plan upon consideration by the Court at the rescheduled confirmation hearing, the underlying bankruptcy case shall be immediately dismissed, pursuant to 349(a) of the Bankruptcy Code, without further notice or hearing and with prejudice to the rights of the debtor to file a subsequent petition under any chapter of Title 11, United States Code, for a period of 120 days from the entry of the order of dismissal. (g) Claims Adjudication in Chapter 13 Cases 1. A Trustee's Recommendation Concerning Claims ( TRCC ) shall be filed by the Chapter 13 Trustee within 45 days following the latter of: (a) the expiration of the time allowed for the filing of a proof of claim by a governmental unit; (b) the entry of an order confirming the Chapter 13 plan. The Chapter 13 Trustee is authorized to extend the TRCC deadline to a specified future date without leave of court on one occasion in any case by filing a notification with the Court which outlines the necessity for such an extension. 2. A TRCC shall contain the following 28-day negative notice language and notice of bar date for filing objections to claim: Notice Regarding Trustee s Recommendation Concerning Claims: THIS DOCUMENT SHALL CONSTITUTE AN OBJECTION TO YOUR CLAIM UNLESS THE RECOMMENDATION IN THIS DOCUMENT -38-

42 CONCERNING YOUR CLAIM ACCEPTS YOUR PROOF OF CLAIM PRECISELY AS FILED. NO HEARING WILL BE CONDUCTED ON THE TRUSTEE S RECOMMENDATION CONCERNING CLAIMS UNLESS A WRITTEN OBJECTION IS FILED WITH THE CLERK OF THE UNITED STATES BANKRUPTCY COURT AND SERVED UPON THE TRUSTEE WITHIN TWENTY-EIGHT (28) DAYS FROM DATE OF SERVICE UNLESS THE COURT SHORTENS OR EXTENDS THE TIME FOR FILING SUCH OBJECTION. IF NO OBJECTION IS TIMELY SERVED AND FILED TO THIS DOCUMENT, THE TRUSTEE S RECOMMENDATION CONCERNING YOUR CLAIM SHALL BE SUSTAINED AS UNOPPOSED AND YOUR CLAIM SHALL BE ALLOWED ONLY AS SET FORTH IN THIS DOCUMENT. IF AN OBJECTION IS FILED AND SERVED IN A TIMELY MANNER, THE COURT WILL THEREAFTER SET A HEARING. IF YOU FAIL TO APPEAR AT THE HEARING, YOUR OBJECTION MAY BE STRICKEN. THE COURT RESERVES THE RIGHT TO SET A HEARING ON ANY MATTER. Notice of Deadline for Filing Objections to Claim: YOU ARE FURTHER NOTIFIED that the deadline for filing an objection to the allowance of any proof of claim filed in this case, or to avoid or otherwise challenge the validity of any security interest claimed in any proof of claim in this case, is the twenty-first (21st) day following the date of service of this document. A TRCC shall be accompanied by a proposed order and shall be served upon the master mailing list (matrix) as constituted by the Court on the date of service. A TRCC recommendation concerning a filed proof of claim shall constitute a valid objection to the allowance of such claim as filed (a challenged claim ) if the recommendation: (A) clearly identifies the basis upon which the claim is being challenged; (B) contains proof in support of the objection, which may include references to any entry upon the Court s docket or claim registry of which the Court can properly take judicial notice under Fed. R. Evid. 201, which is sufficient to overcome the presumption of validity imposed by Fed. R. Bankr. P. 3001(f); and (C) is served upon the affected claimant at the address disclosed by such claimant in its proof of claim. 5. If no objection is timely filed to the TRCC by the holder of a challenged -39-

43 claim and the TRCC recommendation constitutes the only pending objection to the allowance of that claim, the objection reflected by the TRCC recommendation shall be sustained, such claim shall be allowed only in the amount set forth in the TRCC recommendation, and such determination shall be binding upon the holder of the challenged claim. Under such circumstances, the Chapter 13 Trustee is authorized to make disbursements on such claim according to the provisions of the TRCC without further order of the Court. 6. If an objection is timely filed to the TRCC by the holder of a challenged claim, the claim objection contained in the TRCC shall be set for hearing on not less than 30 days notice. In such event, subject to the resolution of any claim objection filed by another party-in-interest and any payment reserve requirements imposed by this LBR, the Chapter 13 Trustee is authorized to make disbursements on all other claims according to the unopposed recommendations of the TRCC without further order of the Court. 7. The bar date for any party-in-interest to object to the allowance of any proof of claim filed in a Chapter 13 case, or to avoid or otherwise challenge the validity of any security interest claimed in any proof of claim filed in a Chapter 13 case, shall be established as the 21st day following the date of service of the TRCC and such bar date shall be prominently displayed in the TRCC as set forth in this rule. 8. Any claim objection filed by a party-in-interest in a Chapter 13 case must comply with the requirements of LBR The Chapter 13 Trustee shall reserve funds attributable to any challenged claim until the dispute regarding such claim has been resolved. If the claim resolution results in an increase of money available for distribution to any class of creditors under the confirmed plan, the Chapter 13 Trustee may accordingly adjust payments to be made on allowed claims without the necessity of filing an additional TRCC. (h) Post Confirmation Modification 1. A proponent requesting the post-confirmation modification of a Chapter 12 or Chapter 13 plan must file the modified plan as an attachment to a motion seeking confirmation of the modified plan which specifies the precise changes sought by the modification including, but not limited to, the following: (A) the purpose of or the necessity for the modification; (B) the changes being made as to the plan payment, the term of the plan; the proposed distribution to any class, or any other substantive provision; and (C) the amount of additional attorneys fees requested for services -40-

44 pertaining to the modification, subject to the provisions and limitations of LBR 2016(h)(5). 2. A proponent of a Chapter 12 or Chapter 13 post-confirmation modification must serve the proposed modification and the accompanying motion to the master mailing list (matrix) as constituted by the Court on the date of service as required by Fed. R. Bankr. P. 3015(g) and file a certificate of service evidencing such service. The motion must also contain the following 28-day negative notice language: NO HEARING WILL BE CONDUCTED ON THIS MOTION UNLESS AN OBJECTION IS FILED WITH THE CLERK OF THE UNITED STATES BANKRUPTCY COURT AND SERVED UPON THE PARTY FILING THIS PLEADING WITHIN TWENTY-EIGHT (28) DAYS FROM DATE OF SERVICE UNLESS THE COURT SHORTENS OR EXTENDS THE TIME FOR FILING SUCH OBJECTION. IF NO OBJECTION IS TIMELY SERVED AND FILED, THIS PLEADING SHALL BE DEEMED TO BE UNOPPOSED, AND THE COURT MAY ENTER AN ORDER GRANTING THE RELIEF SOUGHT. IF AN OBJECTION IS FILED AND SERVED IN A TIMELY MANNER, THE COURT WILL THEREAFTER SET A HEARING. IF YOU FAIL TO APPEAR AT THE HEARING, YOUR OBJECTION MAY BE STRICKEN. THE COURT RESERVES THE RIGHT TO SET A HEARING ON ANY MATTER. 3. With the exception of the expanded response time, modifications shall be handled in accordance with the Court s usual motion procedures. B. Noteworthy Case Law Involving Claim Objections Kleibrink v. Kleibring (In re Kleibrink), 621 F.3d 370 (5th Cir. 2010) The debtor, in his second Chapter 13 case, objected to the claim of the creditor, using a form which did not adequately provide notice that the debtor was challenging the validity of the lien. In the debtor's third case, the creditor filed a motion for relief from stay in order to foreclose on the debtor s property. The court held that the notice given to the creditor in the debtor s second Chapter 13 case via the debtor s claim objection did not satisfy the due process standard for notice set forth in Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950)), and, thus, could not have extinguished creditor s lien. In re Grayson, No , 2012 WL (Bankr. S.D. Tex. Sept. 18, 2012) (J. Isgur) Debtor objected to the claim of a loan broker, on grounds the claim was unenforceable against the debtor. The court held that the lender acted as an agent for the loan broker, and -41-

45 because the loan broker did not comply with the Texas Credit Services Organizations (CSO) Act, the claim was disallowed. Additionally, the court held that the debtor could assert the failure to comply with the CSO Act in defense to the claim, in a claim objection, but would be required to file an adversary proceeding to seek affirmative recovery against either the lender or the loan broker. In re Stout, 474 B.R. 803 (Bankr. S.D. Tex. 2012) (J. Bohm) Chapter 7 Trustee objected to a proof of claim filed by a creditor, asserting that the debtor executed the note in his representative capacity and was not individually liable. The court ultimately allowed the claim. Finding that Texas law creates a rebuttable presumption that a representative is not personally liable if the form of the signature shows unambiguously that the signature is made on behalf of the represented party, the court held that the presumption was rebutted by testimony of both the debtor and the creditor that the loan was to be made to the debtor individually, and the money was wired to the debtor's personal bank account. In re Ruth, 473 B.R. 152 (Bankr. S.D. Tex. 2012) (J. Bohm) Sixteen months after confirmation of the plan, the debtors objected to the creditor's claim, and sought sanctions for vexatious litigation, which the debtors asserted consisted of filing thousands of proofs of claim without supporting documentation. The court held that although Local Rule (c) deemed the claim allowed, the claim objection could be construed as a timely motion for reconsideration of allowance of the claim under Section 502(j). However, because the debtors failed to demonstrate cause for reconsideration, in light of the testimony of the debtors' counsel that he unilaterally decided to object to the claim, and could not explain the 16 month delay, the request for reconsideration and the requested sanctions were both denied. In re DePugh, 409 B.R. 84 (Bankr. S.D. Tex. 2009) (J. Bohm) Creditor filed proofs of claim without supporting documentation. The creditor amended its claims to provide the documents, 12 days after the bar date, and 28 days after the debtor had objected to the claims. The court held that leave to amend the claims nunc pro tunc was denied and the claims were disallowed. The court had previously issued a notice determining that Fed. R. Civ. P. 15(a) would be applied after a claim objection was filed, and the court found that the creditor failed to adequately explain the delay in filing the amended proofs of claim. In re Davis, No , 2011 WL (Bankr. E.D. Tex. March 31, 2011) (J. Rhoades) Debtor submitted substantially identical affidavits in objecting to every credit card claim filed in her bankruptcy case. The affidavits each stated: "I cannot determine that the amount stated on the claim is accurate because there are no ledgers or other accounting records attached to the -42-

46 proof of claim." The court ultimately allowed the claims because the disputed claims substantially conformed to Bankruptcy Rule 3001 and the affidavits submitted by the debtor did not constitute evidence equal in probative force to the proofs of claim. In re Dronebarger, No , 2011 WL (Bankr. W.D. Tex. Jan. 31, 2011) (J. Mott) Debtors objected to two proofs of claim, arguing that both claims were based on 11 U.S.C. 502(b)(6), a Bankruptcy Code provision which caps (or limits) damage claims against a bankruptcy estate resulting from termination of a real property lease. The court held that the preclusive effect of a prior Final Judgment of State Court did not prevent the bankruptcy court from limiting the amount of damages set forth in the Final Judgment of the State Court under 502(b)(6) of the Bankruptcy Code In re Wilkinson, 457 B.R. 530 (Bankr. W.D. Tex. 2011) (J. Clark) Court held that objections to proofs of claim need not be served in accordance with Bankruptcy Rule 9014 (and, consequently, Rule 7004), but rather Rule 3007 governs service of a proof of claim. However, even if Rule 7004 did apply to service of claim objections, the Trustee complied with such rule when it served its claim objection upon the creditor generally as well as the attorneys the creditor designated on its proof of claim. V. ETHICAL CONSIDERATIONS WHEN OBJECTING TO PROOFS OF CLAIM A. Questions to Keep in Mind Is it Ethical to Object to Every Proof of Claim in a Bankruptcy Case? What are a Debtor s Ethical and Fiduciary Duties? Is It All a Matter of Degree or Is it Simply Good Faith/Bad Faith? B. Recent Case Law on Ethical Considerations When Objecting to Proofs of Claim In re Brunson, 486 B.R. 759 (Bankr. N.D. Tex. 2013) (J. Houser) Before the court were debtor s fifteen objections to proofs of claims related to unsecured credit card debt. Debtor s objections asserted that the proofs of claim failed to attach supporting documentation and, thus, should be disallowed. None of the creditors responded to the debtor s objections, and the debtor sought a default judgment sustaining its objections and disallowing the claims. Court held that a credit card issuers' failure to attach sufficient supporting documentation to proofs of claim that they filed in debtors' Chapter 13 case, or to respond when debtors objected to this lack of supporting -43-

47 documentation, was not permissible ground for the court to disallow a claim under section 502(b) of the Bankruptcy Code. Court noted that to the extent the Armstrong decision (summarized below) may be read to permit such an objection, it would no longer be followed and that the court's subsequent decision in In re Rochester, No WL (Bankr.N.D.Tex. May 24, 2005) was overruled. In re Armstrong, 320 B.R. 97 (Bankr. N.D. Tex. 2005) (J. Felsenthal, J. Houser, and J. Hale) Chapter 13 trustee objected to confirmation of several Chapter 13 plans in different bankruptcy cases, and asserted that each of the debtors in those cases were not acting in good faith in filing blanket objections to all or most unsecured claims based on lack of supporting documentation for claims. Court held that debtors had acted in good faith in filing objections to creditors' proofs of claim as lacking the supporting documentation required by Bankruptcy Rules, and no Rule 9011 sanctions would be imposed on debtors' attorneys, though debtors had in many instances scheduled debts in amounts equal, or roughly equal, to creditors' proofs of claim. Moreover, the court held that a proof of claim that lacks the documentation required under the Bankruptcy Rules would not enjoy the prima facie assumption of validity accorded by Bankruptcy Rule 3001(f). Thus, in response to an objection to the claim, the claimant would have to establish the claim by a preponderance of the evidence. In re Davis, 2011 WL (Bankr. E.D. Tex. 2011) (J. Rhoades) aff'd sub nom. In re Armstrong, 487 B.R. 764 (E.D. Tex. 2012) Debtor's counsel violated Bankruptcy Rule 9011 by filing baseless claim objections to credit card claims. The court found that debtor's counsel facilitated the filing of schedules containing false or manufactured disputes as to each of the credit card claims and misused the claim objection process by filing lack of documentation objections to claims while having the documentation in hand. The court imposed a monetary sanction of $500 on debtor s counsel, noting that the attorney had already been put to the expense of hiring an attorney on the sanctions matter, and suffered the embarrassment of having a public hearing regarding whether he acted improperly and a finding that he, in fact, committed the improper acts. -44-

48 ADDENDUM -45-

49 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: Chapter 13 Trustee Procedures for Administration of Home Mortgage Payments Chapter 13 Trustee Procedures for Administration of Home Mortgage Payments Adopted by the Court on September 29, 2005 (Last Amended Effective March 1, 2012) 1. If there is a default as of (i) the petition date, (ii) the date of plan confirmation, or (iii) the date of the filing of a plan modification on a claim secured by a security interest in real property that is the debtor s principal residence pursuant to the terms of 11 U.S.C. 1322(b)(5) (the Ongoing Mortgage ), then the chapter 13 plan must provide for regular monthly payments of the Ongoing Mortgage, including applicable escrow amounts, through the chapter 13 trustee. This paragraph does not preclude the use of paragraph 4(B) of the Uniform Plan and Motion for Valuation of Collateral adopted by this Court if a default on the Ongoing Mortgage has been cured by a consensual loan modification. 2. If there is no default as of (i) the petition date, (ii) the date of plan confirmation, or (iii) the date of the filing of a plan modification on an Ongoing Mortgage, then the chapter 13 plan shall provide for either (a) regular monthly payments of the Ongoing Mortgage, including applicable escrow amounts, to be made through the chapter 13 trustee, or (b) direct payments by the Debtor of the regular monthly mortgage payment due under the Ongoing Mortgage, including applicable escrow amounts. 3. In all cases in which the chapter 13 plan provides for payment of the Ongoing Mortgage through the chapter 13 trustee: A. Not later than 3 business days following the date a case is filed, the Debtor shall provide the chapter 13 trustee with the following information in writing concerning all claims to which these procedures apply: i. The complete name and payment address of the creditor. ii. iii. iv. The account number assigned to the claim. The exact amount of the contractual installment payment and the date each payment is due. A telephone number for the creditor.

50 v. A copy of the current payment coupon. B. The chapter 13 trustee is not required to disburse funds hereunder to a claimant unless the chapter 13 trustee is satisfied that good funds have been received from the Debtor. C. Subject to these procedures, the chapter 13 trustee is authorized to disburse funds in payment of all regular contractual installment payments due under the Ongoing Mortgage and all post-petition charges, each in the amounts as provided by FED. R. BANKR. P and these procedures. Disbursements should commence as soon as is practicable. If the chapter 13 trustee has available funds, the initial disbursement should precede the hearing on plan confirmation. 4. Changes to payments on an Ongoing Mortgage are governed by FED. R. BANKR. P , which rule is incorporated into these procedures. A. A Notice of Payment Change filed in accordance with FED. R. BANKR. P shall be served on the Debtor and Debtor s counsel not later than the first business day after the Notice of Payment Change is filed. The claimant must file a certificate of service with the Clerk, with a copy of the Notice of Payment Change attached, within 5 days of service. B. Subject to paragraph 4C hereof, if a Notice of Payment Change is filed in accordance with FED. R. BANKR. P and if there has been compliance with paragraph 4A hereof, the chapter 13 trustee shall commence payments on the Ongoing Mortgagee in the changed amount beginning with the next payment due under the Ongoing Mortgage at least 21 days after the filing of the notice. C. The chapter 13 trustee shall not make payments on the Ongoing Mortgage at the changed amount if: i. A timely objection to the Notice of Payment Change is filed, and the chapter 13 trustee has filed a motion seeking a stay of the Notice of Payment Change; or ii. The Debtor has sought and obtained a stay of the Notice of Payment Change. D. If a Notice of Payment Change is stayed, but later determined to have been correct, then the Debtor shall be required to make all additional payments that accrued during the period of the stay within 30 days of the date the stay is terminated with interest on such amounts at the non-default contract rate under the Ongoing Mortgage.

51 E. If a Notice of Payment Change is implemented, but later determined to have been incorrect, then the Debtor shall be allowed to recoup any excess payment that was made plus interest on such amounts at the contract rate under the Ongoing Mortgage. 5. If a chapter 13 plan is made deficient or not feasible as a result of a payment change or an expense reimbursement requirement, then the chapter 13 trustee or the Debtor may seek a modification of the plan pursuant to 11 U.S.C. 1329, or file a motion to dismiss or convert the case. 6. In each case in which the chapter 13 trustee alleges that all payments required to be made to the chapter 13 trustee under the plan have been received: A. For claims secured by a mortgage on a debtor s principal residence that were paid through the chapter 13 trustee pursuant to the confirmed plan, the chapter 13 trustee shall file a Notice of Final Cure Payment and Motion to Deem Mortgage Current pursuant to FED. R. BANKR. P (f) which motion and proposed form of order shall be in the form of Exhibit 1. B. A response to a Notice of Final Cure Payment that is filed in accordance with FED. R. BANKR. P (g) must: i. Attach a mortgage loan history form, current through the date of the chapter 13 trustee s notice, in the form required on the Court s website by Bankruptcy Local Rule ii. iii. Be served on the Debtor and Debtor s counsel with a notice stating that the amount set forth in the response will be allowed unless an objection is filed within 21 days. Be set for hearing on the last hearing date allowed for motions filed under 362 that is within 21 days after the filing of the response. C. If an entity filing a response to a Notice of Final Cure Payment fails to attach the required mortgage loan history form or fails to set the hearing required by paragraph 6B(iii) hereof, then the entity shall have irrevocably waived the 21- day limit for the filing of a motion under FED. R. BANKR. P (h). 7. In a case where a claim secured by a mortgage on a debtor s principal residence is paid direct by the Debtor under the confirmed plan and in which the Debtor alleges that all payments required to be made to such claimant have been made, the Debtor may file a Motion to Deem Mortgage Current which motion and proposed form of order shall be in the form of Exhibit The recovery of fees and expenses by the holder of a claim secured solely by a security interest in the Debtor s principal residence is governed by FED. R. BANKR. P If the payments on such a claim are paid through the chapter 13 trustee, then the chapter 13 trustee

52 shall pay the fees, expenses or other charges that are governed by FED. R. BANKR. P in compliance with this paragraph 8. If the payments on such a claim are paid directly by the Debtor, then the Debtor shall directly pay the fees, expenses or other charges that are governed by FED. R. BANKR. P in compliance with this paragraph 8. A. If an objection challenging a fee, expense or other charge is filed within 30 days of a notice filed pursuant to FED. R. BANKR. P (c), then the fee, expense or other charge shall be paid only after the entry of an order allowing such fee, expense or other charge. Any allowed amounts shall be paid commencing with the chapter 13 trustee s next scheduled distribution, with equal monthly installments paid over the shorter of (i) twelve months; or (ii) the remainder of the plan term. B. If no objection is filed pursuant to paragraph 8(A) hereof, then the fee, expense or other charge shall be paid beginning on the date of the chapter 13 trustee s next scheduled distribution, with equal monthly installments paid over the shorter of (i) twelve months; or (ii) the remainder of the plan term. C. If payments are made under Paragraph 8(B), but the fees, expenses or charges are later not allowed, then the Debtor shall be allowed to recoup any excess payment that was made plus interest on such amounts at the contract rate under the Ongoing Mortgage. D. Nothing in this Paragraph 8 governs the period over which fees, expenses or other charges that are governed by FED. R. BANKR. P may be paid under a modified plan. 9. Amounts received by the holder of the Ongoing Mortgage prior to confirmation must be applied by the holder to the next payment due without penalty under the terms of the note; or the holder must notify the chapter 13 trustee in writing within 30 days of the date that a plan is confirmed that it waives all late charges that accrue after the order for relief in this case. Amounts received by the holder of the Ongoing Mortgage after confirmation must be applied in accordance with the plan. 10. These procedures may be varied in a particular case only by order of the Court.

53 EXHIBIT 1

54 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: SOME DEBTOR, Case No (Chapter ) Debtor. JUDGE [NAME OF JUDGE] TRUSTEE S NOTICE OF FINAL CURE PAYMENT AND MOTION TO DEEM MORTGAGE CURRENT THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. To the Honorable United States Bankruptcy Judge:, chapter 13 trustee (the Trustee ), files this Notice of Final Cure Payment and Motion to Deem Mortgage Current. NOTICE OF FINAL CURE PAYMENT 1. Based on the Trustee s records, the Debtor has completed all payments to the Trustee due under the confirmed plan in this case. Pursuant to FED. R. BANKR. P (f), you are hereby notified that the Debtor has paid in full the amounts required to cure any default (both pre- and post-petition) on all claims secured by a security interest in the Debtor s principal residence. You are further notified pursuant to FED. R. BANKR. P (f), that within twentyone (21) days after service of this notice, each holder of a claim secured by a security interest in the Debtor s principal residence is required to file and serve on the Debtor, the Debtor s counsel, and the trustee a statement indicating (1) whether the holder agrees that the Debtor has paid in full the amount required to cure any default on its claim, and (2) whether the Debtor is otherwise current on all payments consistent with 11 U.S.C. 1322(b)(5). The statement must itemize the required cure or post-petition amounts, if any, that the holder contends remain unpaid as of the

55 date of the statement. The statement shall be filed as a supplement to the holder s proof of claim and is not subject to FED. R. BANKR. P. 3001(f). Motion to Deem Mortgage Current and Direct Debtor to Begin Making Direct Payments 2. Based on the Trustee s records, the Debtor has completed all payments to the Trustee required under the confirmed plan in this case to the following creditors whose claims are secured by a security interest in the Debtor s principal residence: [List specific creditor(s)] 3. The Trustee requests an order determining that (i) that the claim(s) of the aboveidentified creditor(s) are current; (ii) all escrow deficiencies, if any, have been cured; and (iii) all legal fees, inspection fees and other charges imposed by the creditor, if any, have been satisfied in full. 4. The Debtor should begin making direct payments to the following creditors whose claims are secured by a security interest in the Debtor s principal residence: Creditor Name & Address Amount Next Payment Due Date Accordingly, the Trustee requests that the Court grant relief consistent with the foregoing and such other relief as is just. Dated:. Respectfully submitted, /s/ [Trustee] [Name], Trustee [Address 1] [City, State Zip] [Telephone Number] Telephone [Facsimile Number] Facsimile CERTIFICATE OF SERVICE I hereby certify that this instrument was served by United States first class mail, with proper postage affixed, addressed to the parties set forth on the attached Service List on this day of, 20. [Name of Trustee] Chapter 13 Trustee

56 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: SOME DEBTOR, Case No (Chapter ) Debtor. JUDGE [NAME OF JUDGE] ORDER DEEMING MORTGAGE CURRENT AND DIRECTING DEBTOR TO RESUME PAYMENTS (Docket No. ) The Court has considered the Trustee s Notice of Final Cure Payment and Motion to Deem Mortgage Current. The Court finds that notice is proper and that the requested relief is proper. Accordingly, it is ORDERED THAT: 1. Based on the Trustee s records, the Debtor has completed all payments to the Trustee required under the confirmed plan in this case to the following creditors whose claims are secured by a security interest in the Debtor s principal residence: [List specific creditor(s)] 2. The claims of the above-listed creditor(s) are deemed current as of the entry date of this Order. All escrow deficiencies, if any, are deemed cured. All legal fees, inspection fees and other charges imposed by the creditor, if any, are deemed satisfied in full. The creditor shall be solely responsible for any shortfall or failure to respond to the Trustee s notice and motion. 3. The Debtor should begin making direct payments to the following creditors whose claims are secured by a security interest in the Debtor s principal residence: Creditor Name & Address Amount Next Payment Due Date SIGNED this day of, 20. THE HONORABLE [NAME OF JUDGE], UNITED STATES BANKRUPTCY JUDGE

57 EXHIBIT 2

58 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: SOME DEBTOR, Case No (Chapter ) Debtor. JUDGE [NAME OF JUDGE] DEBTOR S MOTION TO DEEM MORTGAGE CURRENT THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. To the Honorable United States Bankruptcy Judge: (the Debtor ), files this Motion to Deem Mortgage Current. Motion to Deem Mortgage Current 1. As set forth in the attached certification, the Debtor has completed all payments required under the confirmed plan to be paid directly to the following creditors whose claims are secured by a security interest in the Debtor s principal residence: [List specific creditor(s)] 2. The Debtor requests an order determining that (i) that the claim(s) of the aboveidentified creditor(s) are current; (ii) all escrow deficiencies, if any, have been cured; and (iii) all legal fees, inspection fees and other charges imposed by the creditor, if any, have been satisfied in full. Accordingly, the Debtor requests that the Court grant relief consistent with the foregoing and such other relief as is just.

59 Dated:. Respectfully submitted, [Name] [Address 1] [City, State Zip] [Telephone Number] Telephone [Facsimile Number] Facsimile CERTIFICATE OF SERVICE I hereby certify that this instrument was served by United States first class mail, with proper postage affixed, addressed to the parties set forth on the attached Service List on this day of, 20. DEBTOR S CERTIFICATION [to be completed by each debtor] [Name] Pursuant to 28 U.S.C. 1746, I hereby declare, certify, verify and state under penalty of perjury under the laws of the United States of America that the foregoing statements are true and correct. I further certify that I have completed all payments required under the confirmed plan in this case to be paid directly to the creditors identified above whose claims are secured by a security interest in my principal residence, that all escrow deficiencies have been cured and all legal fees, inspection fees and other charges have been paid. Signed this day of, 20. [Name]

60 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: SOME DEBTOR, Case No (Chapter ) Debtor. JUDGE [NAME OF JUDGE] ORDER DEEMING MORTGAGE CURRENT (Docket No. ) The Court has considered the Debtor s Motion to Deem Mortgage Current. The Court finds that notice is proper and that the requested relief is proper. Accordingly, it is ORDERED THAT: 1. Based on the Debtor s certification, the Debtor has completed all payments to be made directly under the confirmed plan in this case to the following creditors whose claims are secured by a security interest in the Debtor s principal residence: [List specific creditor(s)] 2. The claims of the above-listed creditor(s) are deemed current as of the entry date of this Order. All escrow deficiencies, if any, are deemed cured. All legal fees, inspection fees and other charges imposed by the creditor, if any, are deemed satisfied in full. The creditor shall be solely responsible for any shortfall or failure to respond to the Debtor s motion. SIGNED this day of, 20. THE HONORABLE [NAME OF JUDGE], UNITED STATES BANKRUPTCY JUDGE