by Joshua Menard, Preti Flaherty Bankrtupcy Attorney
After you've done a thing the same way for two years, look it over carefully. After five years, look at it with suspicion. And after ten years, throw it away and start all over.
~ Alfred Edward Perlman
Change is in the air for 2012, effective December 1, 2011, the Federal Rules of Bankruptcy Procedure (FRBP) that govern filing a proof of claim have changed dramatically. While the filing of a proof of claim in a bankruptcy proceeding may seem like a trivial task; recent changes to the FRBP have made this once seemingly simple undertaking a minefield of potential liabilities to a creditor.
Recent Amendments to the Federal Rules of Bankruptcy Procedure
FRBP 3001 has now been amended to increase the types of information required to be attached to a proof of claim. While Rule 3001 has always required a creditor produce a writing to support its claim, now a creditor must also attach information relative to the principal, interest, fees, and any other expenses incurred pre-petition - including arrearages.
FRBP 3002.1 is a brand new rule that applies to proofs of claims filed in Chapter 13 cases only and to claims secured by the debtor's principal residence. Rule 3002.1 also deals with the finality of Chapter 13 cases and curing any discrepancies in final cure payments. Most significant in the amendments are the new provisions that may award sanctions for non-compliance with the new rules.
Rule 3001
3001(C)(2)(A)
For an individual debtor only, Rule 3001(c)(2)(A) now requires an itemized statement showing all applicable interest, fees, expenses, and/or charges be filed with the proof of claim. There is no official form for this requirement.
3001(C)(2)(B)
In addition to the itemized statement, Rule 3001(c)(2)(B) requires a statement of the amount needed to cure any arrearages or defaults, as of the petition date, be filed with the proof of claim if the creditor's security interest is in the debtor's property. Again, there is no official form.
3001(C)(2)(C)
Rule 3001(c)(2)(C) applies if a security interest is claimed in the debtor's principal residence. In those instances, there is an official form that must be filled out and attached to the proof of claim. The official form is entitled "Mortgage Proof of Claim Attachment" / B10A. This form requires much of the same information as required by 3001(c)(2)(A) and (c)(2)(B) above.
Additionally, if there is an escrow account in connection with the claim on the debtor's principal residence, an "escrow account statement" must be filed in a form that is consistent with applicable non-bankruptcy law (there is no official form) and filed with the attachment to the proof of claim form required by 3001(c)(2)(C). The amounts that are included in the escrow account statement must be prepared as of the date the petition was filed.
3001(C)(2)(D)
Most notably, if the creditor fails to provide the information and documents requested, Rule 3001(c)(2)(D) now provides for sanctions against the creditor.
Rule 3002.1
The new amendments also include an entirely new provision that can be found in Rule 3002.1. This new rule applies only to Chapter 13 cases and to claims secured by the debtor's principal residence, and are "provided for under 1322(b)(5) of the Code in the debtor's plan."
3002.1(B)
Rule 3002.1(b) provides that a creditor secured by the debtor's principal residence is required to "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." This notice must be filed no later than 21 days before a payment of the new amount is due.
In order to provide the required notice the creditor must use the new official form B10S1 (Supplement 1). This form is titled "Notice of Mortgage Payment Change."
3002.1(C) AND (D)
Rule 3002.1(c) requires the creditor file and serve on the debtor, debtor's counsel, and the trustee a notice "itemizing all fees, expenses, or other charges (1) that were incurred in connection with the claim after the bankruptcy case was filed, and (2) that the holder asserts are recoverable from the debtor or against the debtor's principal residence." These fees can include inspection fees, late charges, attorney fees, appraisals, etc.
The creditor must serve the notice within 180 days after the date on which the fees, expenses, or other charges were incurred. This also requires an official form be filled out. Rule 3002.1(d) requires this notice be prepared on the official form known as B10S2 "Supplement 2" and is entitled "Notice of Postpetition Mortgage Fees, Expenses, and Charges." The form should be filed as a supplement to the proof of claim.
3002.1(F) AND (G)
Another new component of Rule 3002.1 relates to the duties of the Trustee at the end of the debtor's Chapter 13 case. Rule 3002.1(f) requires the trustee serve on the creditor, the debtor, and the 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 must be served within 30 days after the debtor completes all payments under the plan. The notice must also inform the creditor of its obligation to file and serve a response under 3002.1(g).
The creditor must respond whether the creditor agrees or disagrees with the Trustee's notice of final cure payment. The creditor must file and serve this statement on the debtor, debtor's counsel, and the trustee within 21 days after service of the notice of final cure payment.
If the creditor contends any amount remains unpaid, the statement must include an itemization of the required cure or postpetition amounts. The creditor is required to file the response as a supplement to its proof of claim.
3002.1(I)
Similar to amended Rule 3001(c)(2)(D), Rule 3002.1(i) contains a sanctions provision for noncompliance. Rule 3002.1(i) contains a sanctions provision that is identical to the new provision of Rule 3001(c)(2)(D).
Official Proof of Claim Form – Form 10
In addition to the amendments and additions to the proof of claim rules, the official claim form 10 has been modified. The most significant amendments include the following:
- a. Section 4 of Form 10 deals with secured creditors, and it has been amended to require the creditor to disclose the annual interest rate that was in effect at the time the case was filed, and to check a box indicating whether the interest rate was fixed or variable at the time of filing.
- b. Section 7 deals with the requirement of Rule 3001(c) - that requires redacted copies of documents supporting the claim be attached to the proof of claim form. Section 7 further requires the creditor to explain why documents are not available.
- c. Section 8 amended the signature box to reinforce the significance of signing the proof of claim form. The filer must state whether s/he is the creditor's agent or the creditor. If the filer is the creditor's agent, the agent must also provide an address and telephone number.
Conclusion
While the changes may seem daunting, keep in mind the amendments to Rule 3001(c) are for individual debtor cases only. Moreover, in regard to Rule 3001(c)(2)(C) if the security interest is in the debtor's principal residence, the new official form must be filed with the proof of claim, along with an escrow account statement if applicable.
The new Rule 3002.1 applies to Chapter 13 cases only with claims that are (1) secured by a security interest in the debtor's principal residence; and (2) provided for under Section 1322(b)(5) of the Code and the debtor's plan. Most notable of the new rules is that they now provide for sanctions for non-compliance.
Finally the new proof of claim form is to be used in all cases filed under the Bankruptcy Code.
Contact Bankruptcy Attorney Joshua Menard at jmenard@preti.com or 603.410.1500 with questions about these changes to the bankruptcy rules.