"The Bassel Wilcox Report"
  • PRO-RATA PAYMENTS
    9/12/2011 12:00:00 AM by Pam Bassel

        The term "pro-rata" is used in a Chapter 13 Plan to describe how a creditor will be paid. What it means is delay in getting paid as a secured creditor.  All priority claims, administrative claims and claims listed as being paid in a specific amount will be paid ahead of the pro-rata secured creditor. This could mean the debtor’s attorney’s fees, the I.R.S. and domestic support obligations, among others, could be paid in full before the secured creditor gets any disbursement post-confirmation. Except in the Southern District of Texas (see below), if you are listed to be paid pro-rata, it generally means that the debtor’s attorney will be paid, in full, before you get any disbursement at all as a secured creditor. In these difficult economic times, many debtor’s attorneys are getting little or no down payment on their fees and most of those fees are paid through the Plan, creating a lengthy delay before payments to creditors begin. You are entitled to equal payments beginning month one after the Plan is confirmed which you ...  see more at The Bassel Wilcox Report
  • COLLATERAL SURRENDERED, BUT NOT TURNED OVER
    12/2/2011 12:00:00 AM by Pam Bassel

    This is a frustrating problem for you. You get a Plan or a Plan modification that states that the debtor is going to surrender your collateral. After the Plan is confirmed or the modification is approved, you find out the vehicle was wrecked or impounded and is now worthless or that there are repair or storage charges against your vehicle and it is not cost effective to take possession of it because you won’t recoup your costs in a sale or that the debtor gave/sold your collateral to someone else and will not tell you where the vehicle is located. What do you do in this situation?

    We recommend filing an objection to the Plan or the Modification when you do not know who has your vehicle and it has not been turned over to you. The objection, pre-confirmation, is that the Plan should not be confirmed unless the vehicle is delivered to you, the creditor. Post-confirmation, object to the modification on the grounds that it should not be approved unless the debtor delivers the vehicle to you and, also, that the debtor pays you the remaining balance owed on your allowed sec...  see more at The Bassel Wilcox Report

  • The New Requirement for Proof of Claim
    12/9/2011 12:00:00 AM by Stephen Wilcox

    Generally, in order to be paid in a bankruptcy case, you have to file a proof of claim. Bankruptcy Rule 3001 sets out the specific requirements for a proof of claim. This Rule was amended effective December 1, 2011. Not only did the requirements for what must be included in a proof of claim change, but the rule also provides for bad things to happen if you don’t do it right. The new requirements apply in cases where the debtor is an individual, even in a Chapter 11 proceeding.

    First, a proof of claim "shall conform substantially to the appropriate Official Form." The official form is available at www.uscourts.gov and the official proof of claim form is form B-10. If the claim is based on a writing, then a copy of the writing (such as the note and deed of trust or certificate of title) must be attached to the proof of claim.

    If you are claiming amounts other than the principal amount of the debt, like interest or attorney...  see more at The Bassel Wilcox Report

    

Bankruptcy Basics

If you are new to bankruptcy or never had the need to figure it out before, the bankruptcies you are likely to run across have either been filed as a Chapter 7, 11, 12 or 13.

Here are the differences: A Chapter 7 case can be filed by a person or by a business entity, like a corporation or partnership. A trustee is appointed and liquidates the assets, if there are any, on behalf of creditors. The automatic stay prevents secured creditors and lessors, without court approval, from foreclosing on collateral or picking up leased assets. People who file bankruptcy are entitled to exempt or keep some property which the Trustee is not allowed to sell. In Texas, the exemption laws are liberal, but exemption of property does not effect a properly perfected, valid lien on that asset. You still have your lien. Chapter 11, 12, or 13 cases are all based on the same idea. The debtor proposes some sort of Plan to deal with the debt that is owed. The Plan can be (1) a combination of the sale of some assets while keeping and paying for other assets, (2) a repayment Plan, or (3) a straight liquidation of assets by the debtor. Any of these Plans can provide for a surrender of collateral or leased assets to the creditor/lessor. As a creditor or lessor, you have rights before the Plan is filed, rights while the Plan is moving toward court approval (a process called confirmation) and rights after the Plan is approved by the court.

Any time a bankruptcy is filed, the automatic stay goes into effect right away (except in the limited case of multiple filings). The automatic stay protects the debtor and prevents a creditor from exercising its collection rights like repossession, posting for foreclosure, demand for payment, contacting the debtor to discuss a payment plan or arrearages, and notification of default unless the bankruptcy court enters an order allowing the creditor to proceed.

Additionally, if there is a co-buyer and the debtor is in Chapter 12 or 13, you may not be able to pursue your co-buyer without a bankruptcy court order. Your co-buyer may be protected by the co-debtor stay.