Professional Documents
Culture Documents
13 PRACTITIONERS
Date: 2/13/08
► The Chapter 13 Trustee is not going to construe the recently enacted “rebates” to be
“refunds” for purposes of Chapter 13 Plans that require the turnover of all or part of the
debtor’s tax refunds.
► In Chapter 13 cases assigned to the Honorable Richard L. Speer, if the debtor(s) are
not current with their mortgage payments, the Plan MUST provide for conduit mortgage
payments.
While there is presently no legal mechanism for forcing a change in the terms of a
mortgage on a debtor’s primary residence that attaches to any equity, nothing prevents the
parties from changing the mortgage terms by agreement. In appropriate cases, the
mortgage companies say they are ready to provide some relief. While stopping, reversing
or lowering interest rate adjustments in adjustable rate mortgages appears to be the area
where relief is needed most, other forms of modification may also be negotiated.
We have been provided with a list of loss mitigation contacts for most of the major
mortgage lenders. If you have a case where you think direct negotiation with the
mortgage company may help your clients, our Office will be happy to provide you with
contact information. For the initial contact, it appears that the mortgage servicers are the
entity to make the first evaluation. The mortgage owners/investors may need to be
contacted by the servicers for option specific authorizations.
We are also recommending that if your clients would like to explore “loss
mitigation” negotiations with their mortgage company, the following language should be
included in your Chapter 13 Plan to provide notice that the debtors wish to explore loss
mitigation alternatives to all parties, including the mortgage company:
“During this Chapter 13 case, the debtor(s) will attempt to enter into loss
mitigation negotiations with their mortgage lender(s). This may result in an agreed
modification of the debtor(s) mortgage(s).”
It appears that tax rebates will be distributed starting in May of 2008. After
examining the purpose of the legislation and consulting with the Judges and other Chapter
13 Trustees, I have decided not to interpret our usual language calling for a turnover of all
or part of the debtors tax refunds as including the 2008 tax rebate. Thus, debtors will not
be required to turn over their tax rebates as part of their Chapter 13 Plans.
Debtors who are current, but are struggling to keep their heads above water
should be encouraged to think about using their tax rebates to bring their mortgages
current, their Plan payments current, or for some necessary expenditure that will have
lasting benefit – like auto repairs, fixing roof problems, setting aside monies for an
emergency, paying property taxes, etc.
It has been six months since Judge Speer determined that he would require conduit
mortgage payments in all case where the Chapter 13 debtor was materially behind on their
mortgage at the time of filing. Our Office continues to see Chapter 13 Plans filed without
conduit language in cases assigned to Judge Speer where there are substantial arrearages
on the mortgages. This is delaying confirmation of the Plans and requires debtor’s counsel
to do extra work – preparing an Amended Plan and noticing it out to all creditors.
PLEASE PUT THE CONDUIT LANGUAGE IN THE INITIAL PLAN!