Attorneys Manhart and Libby Publish Article that Explores the Rule 3002.1 Minefield

ABI Journal

In an article published recently in ABI Journal (subscription required), Tony Manhart and Matt Libby explore the implications of a September 2016 decision by the U.S. Bankruptcy Court for the District of Vermont that ordered a mortgage servicer to pay a $375,000 sanction to a nonprofit legal aid organization for failing to comply with Rule 3002.1 of the Federal Rules of Bankruptcy Procedure. The article outlines how this rule presents a number of potential pitfalls for the unwary creditor (despite its well-intentioned rationale) and describes the creditor’s conduct in In re Gravel as well as the lessons to be learned from this case.

In sum, the authors warn that counsel representing mortgage servicers in chapter 13 cases must diligently advise clients on the importance of complying with Bankruptcy Rule 3002.1. Failure to do so will risk being subject to significant sanctions.

Rule 3002.1 Minefield: Mortgagees in Chapter 13 Face Substantial Sanctions for Noncompliance (ABI Journal, January 2017. Subscription required)