"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

    

Reaffirmation Agreements

The Bankruptcy Code now provides that if a Chapter 7 debtor is a person, the debtor must either surrender your collateral, redeem your collateral or reaffirm the debt you are owed. Redemption is not very common in Texas. Reaffirmation is.

A reaffirmation agreement means that, once the debtor obtains a bankruptcy discharge, you can repossess your collateral if you are not being paid, and you can also collect any deficiency balance. In Texas, however, the real value of a reaffirmation agreement is that you can collect your debt as normal, including contacting your customers if they fall behind on payments. Many creditors have statistical information that indicates that if you can collect your debt in the normal way, including contacting your customer to work out payment arrangements, you increase the chance that your debt will be paid as promised.

Another advantage of reaffirmation agreements is that the debtor is personally liable on the debt you are owed. The general idea is that people take better care of assets when they have some liability than when they do not. It is common sense that people are less likely to let collateral go uninsured or fail to maintain collateral if they have personal liability if something goes wrong.

Reaffirmation agreements have to comply with the provisions of the Bankruptcy Code. There is an official form with some very specific and detailed requirements. Merely filing a reaffirmation agreement does not mean it is over. Some reaffirmation agreements have to be approved by the bankruptcy court and all debtors have 60 days to change their minds about reaffirming and rescind the agreement.