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Changes to the Proof of Claim Form as of December 1, 2011

Effective December 1, 2011, the Federal Rules of Bankruptcy Procedure (FRBP) that govern filing a proof of claim will change dramatically. 

FRBP 3001 will be amended to increase the types of information required to be attached to a proof of claim.  While Rule 3001 has always required a claimant to produce a writing to support its claim, now a claimant must also attach information relative to the principal, interest, fees, and any other expenses incurred pre-petition - including arrearages. 

Effective December 1, 2011, the Federal Rules of Bankruptcy Procedure (FRBP) that govern filing a proof of claim will change dramatically. 

FRBP 3001 will be amended to increase the types of information required to be attached to a proof of claim.  While Rule 3001 has always required a claimant to produce a writing to support its claim, now a claimant 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

A.  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 not an official form for this requirement.)

B.  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 claimant has a security interest in the debtor's property. (Again, there is not an official form.)

C.  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" / B 10 - Attachment A.   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 not an official form) and filed with the attachment to the proof of claim form required by Rule 3001(c)(2)(C). The amounts included in the escrow account statement must be prepared as of the date the petition was filed. 

D.  3001(c)(2)(D)

Most notably, if the claimant fails to provide the information and documents requested, Rule 3001(c)(2)(D) now provides for sanctions against the claimant.  The court may, after a notice and hearing, award either or both of the following sanctions:  1) "preclude the holder from presenting the omitted information, in any form, as evidence in a contested matter or adversary proceeding in the case, unless the court determines that the failure was substantially justified or is harmless;" or 2) award other appropriate relief, such as "reasonable expenses and attorney's fees caused by the failure."

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." 

A.  3002.1(b)

Rule 3002.1(b) provides that a claimant 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.[1] 

In order to provide the required notice the claimant must use the new official form B 10 - Supplement 1.  This form is titled "Notice of Mortgage Payment Change."

The notice form includes four sections:  (1) "escrow account payment adjustment;" (2) "mortgage payment adjustment;" (3) "other payment change;" and (4) a signature box. 

B.  3002.1(c) and (d)

Rule 3002.1(c) requires the claimant 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 claimant 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 B 10 - 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.

C.  3002.1(e)

Within one year after service of the notice filed by the claimant regarding post-petition fees, expenses, or other charges, the debtor or trustee may file a motion challenging the validity of the post-petition fees, expenses, or charges listed in the notice required by Rule 3002.1(c). 

After the motion is filed, the court will schedule a hearing to determine whether the "payment of any claimed fee, expense, or charge is required by the underlying agreement and applicable nonbankruptcy law to cure a default or maintain payments in accordance with § 1322(b)(5) of the Code."

D.  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 that the trustee serve on the claimant, 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 claimant of its obligation to file and serve a response under 3002.1(g).  The rule further allows the debtor to file the notice of final cure payment if the debtor contends that the final cure payment has been made and all plan payments have been completed, and the trustee failed to timely serve the notice.

Rule 3002.1(g) requires an affirmative response from the claimant regarding whether the claimant agrees or disagrees that the debtor has paid in full the amount necessary to cure the default and whether claimant agrees or disagrees that the debtor is otherwise current on all payments consistent with § 1322(b)(5) of the Code.  Claimant 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 claimant contends any amount remains unpaid, the statement must include an itemization of the required cure or postpetition amounts.  The claimant is required to file the response as a supplement to the claimant's proof of claim and "is not subject to Rule 3001(f)."

E.  3002.1(h)

Rule 3002.1(h) allows a debtor or trustee to file a motion within 21 days after service of the claimant's response to the notice of final cure payment to request a hearing to determine whether the "debtor has cured the default and paid all required postpetition amounts."  A hearing will not be automatically set after the claimant files the response under 3002.1(g), but rather the debtor or the trustee must file a motion within 21 days under 3002.1(h) requesting a hearing. 

F.  3002.1(i)

Similar to amended FRCP 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).

Revisions to Official 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 and is now two pages. 

The amendments include the following:  (1) a section to allow the claimant to state a "uniform claim identifier" often used by claimants in the electronic fund transfer process involving Chapter 13 trustees; (2) a provision requiring secured claimants 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; (3) a section that relates to the new requirement of FRBP 3001(c) - that requires redacted copies of documents supporting the claim be attached to the proof of claim form; and (4) the signature box has been amended to require additional information. 

Conclusion

In conclusion, 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. 

Finally, 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 notably, creditors and creditors' counsel need to remember that the new rules provide for sanctions for non-compliance.



[1] Notably, the Eastern District of Michigan has local bankruptcy rules that conflict with the amended FRBP Rule 3001 and new FRBP Rule 3002.1.  The Eastern District rules have provisions that are not addressed by the new FRBP rules and amendments.  While a federal rule generally takes precedence over a local rule, it is unknown how the local bankruptcy rules will be treated and/or affected by the new rule FRBP rules.

Categories: Chapter 11, Chapter 13, Chapter 7

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 concentrates her practice in the areas of Bankruptcy, Finance, Collections, Real Estate, and Commercial Litigation. In the bankruptcy area she represents creditors and Chapter 7 Trustees in all aspects of bankruptcy. Patricia also represents small and mid-sized businesses to large corporations in multi-faceted litigation matters in state and federal court. Her work with financial institutions includes collections, loan workouts, foreclosures, receiverships and various complex banking and finance issues. 

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