In re Ronald Lloyd Robbins Tori Dawn Robbins

• Decision Date: 14 July 2014
• Docket Number: Case No. 13-21116
• Court: U.S. Bankruptcy Court — District of Wyoming
• Parties: In re RONALD LLOYD ROBBINS TORI DAWN ROBBINS Debtors.

In re RONALD LLOYD ROBBINS TORI DAWN ROBBINS Debtors.

Case No. 13-21116

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF WYOMING

Dated: July 14, 2014

Chapter 13

OPINION ON TRUSTEE'S OBJECTION TO CLAIM NO. 6

FILED BY WELLS FARGO HOME MORTGAGE

This matter came before the court for a telephonic hearing on June 26, 2014 regarding the Trustee's Objection to Claim No. 6 filed by Wells Fargo Home Mortgage and the response filed by HSBC Bank USA, National Association as Trustee for Wells Fargo Home Equity Asset-backed Security 2005-1 Trust, Home Equity Asset-Backed Certificates, Series 2005-1, it assigns and successors ("Wells Fargo"). Debtors did not file a response, but was asked, by the court, to participate at the hearing. Debtors joined the Trustee's objection.

Jurisdiction

The court has jurisdiction over this matter under 28 U.S.C. §§ 157 and 1334. This is a core proceeding within the definition of 28 U.S.C. § 157(b)(2)(B).¹

Facts

Ronald Lloyd Robbins and Tori Dawn Robbins ("Debtors") filed their chapter 13bankruptcy petition and schedules on December 3, 2013. Debtors filed their chapter 13 plan on December 6, 2013. The Notice of Chapter 13 Confirmation Hearing and Opportunity to Object and Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, & Deadlines (collectively known as "Notices") were entered on the court's docket on December 3, 2013. The Notices reflect: (1) the confirmation hearing was scheduled for January 21, 2014 with objections due "not later than 7 (seven) calendar days" before the date of the confirmation hearing; (2) the § 341 meeting of creditors was scheduled for December 30, 2013; and, (3) the deadline for creditors to file a proof of claim (except a governmental unit) was March 31, 2014.

Debtors' plan proposed to cure the default on their mortgage to Wells Fargo in the amount of $3,500.00. The Trustee objected to confirmation of the plan. At the confirmation hearing on January 21, 2014, the court denied confirmation of the initial proposed plan as Debtors failed to provide the Trustee requested information. Wells Fargo did not object to confirmation of the plan.

Wells Fargo timely filed its proof of claim on March 11, 2014 indicating the "amount of arrearage and other charges, as of the time the case was filed included in the secured claim" was $9,103.00 for real estate located at 205 Clover Court South, Lyman, Wyoming. This is a mortgage secured by debtors' principal residence.

On April 17, 2014, Trustee withdrew his objection to the confirmation of the plan. The court entered its Order Vacating Order Denying Confirmation of Chapter 13 Plan.On April 21, 2014, the Order Confirming Chapter 13 Plan was entered.

Discussion

Trustee objects to Wells Fargo's proof of claim in the amount of $9,103.00 arguing that the confirmed plan provides for payment of Debtors' arrearage in the amount of $3,500.00 and the confirmed plan binds both the debtor and creditor.

The Court re-states the issue: Does the chapter 13 plan confirmation process trump the claim procedure preempting a secured creditor's timely filed proof of claim on debtors' residence. The court reviewed the Bankruptcy Code, Rules, Wyoming Local Bankruptcy Rules ("Wyo. LBR"), Wyoming Local Form "B," and case law.

Within the Tenth Circuit, the District of Colorado Bankruptcy Court entered orders regarding this issue.² The Colorado Bankruptcy Court, in In re Butcher, describes and analyzes the issue and included different positions of various courts. This Court adopts the analysis of the Butcher order.

As stated in Butcher, the Bankruptcy Code and Federal Rules of Bankruptcy Procedure contain a number of provisions regarding the processes for plan confirmation and allowance of claims:

"1. 11 U.S.C. § 1322. This section contains a list of provisions that must becontained in a chapter 13 plan.³ It also lists provisions that may appear in a chapter 14 plan.⁴ Among the key provisions that are relevant here are § 1322(b)(2), which prohibits a debtor from modifying the rights of a creditor who holds a security interest in the debtor's principal residence, and § 1322(e), which require a plan proposing to cure a default to provide for payment of a cure amount determined under the underlying agreement and nonbankruptcy law.

2. 11 U.S.C. § 1324(b) requires chapter 13 confirmation hearings to be held between 20 and 45 days after the § 341 meeting date. It gives the Court discretion to hold the confirmation hearing sooner but not later. Those time frames were added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA").⁵ The apparent policy reflected in that amendment is to insure a speedy chapter 13 plan confirmation.⁶

3. 11 U.S.C. § 1325. This section contains the requirements for confirmation of a proposed chapter 13 plan. Among the other, more specific requirements, a chapter 13 plan must comply with the provisions of chapter 13 and with other applicable provisions of the Bankruptcy Code.⁷ In addition, the plan must have "been proposed in good faith and not by any means forbidden by law.⁸ The Supreme Court has stated that § 1325(a) places an independent duty on the court to 'address and correct a defect in a debtor's proposed plan even if no creditor raises the issue.'⁹

4. 11 U.S.C. § 1327(a) states that 'the plan provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such a creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.'

5. 11 U.S.C. § 1328 provides generally for the discharge of 'all debtors provided for by the plan or disallowed under section 502....' A notable exception to discharge is a long-term debt provided for under § 1322(b)(5). Most real-property mortgages fall under this exception to discharge.

6. 11 U.S.C. § 502 provides that a claim filed by a creditor is presumed allowed unless the debtor or other party in interest objects to the claim and the Court sustains the objection. It also sets the standards for the Court's allowance or disallowance of a claim as to which an objection is filed.

7. Fed. R. Bankr. P. 3002(c) provides that a proof of claim is timely if filed within 90 days after the first date set for the § 341 meeting of creditors but that governmental entities are allowed up to 180 days from the date of the order for relief.

8. Fed. R. Bankr. P. 9006(c)(2) provides that the court may not reduce the time for taking action under Rule...3002(c)...."

9. Fed. R. Bankr. P. 3007 provides the procedure for filing objections to proofs of claim and for the adjudication of those objections."¹⁰

Wyo. L.B. Form B ("Form B")

Wyoming LBR 3015-3 requires chapter 13 debtors to file a plan which "must conform with Local Bankruptcy Form B..." Form B provides:

"Claim Treatment: only filed and allowed claims will be paid. If a discrepancy exists between the amount of a secured claim as filed and the amount of the secured claim set forth in this plan, the plan will control."

and,

"4. Defaults Cured. The trustee will pay these claims pro rata to cure a default or arrearage, and the Debtor shall timely pay the postpetition monthly payments to the credit due under the contract. Full payment of the amount specified will cure the arrearage and cause anydefault to be waived notwithstanding the terms of any agreement between the parties to the contrary. In the absence of a written objection, the amount necessary to cure an arrearage and obtain waiver of default will be determined to be the amounts stated."

The Colorado Bankruptcy Court in Butler states, "It is a court's duty to construe different provisions of the Bankruptcy Code in harmony with one another and not in contradiction. The two provisions under review in this case involve the chapter 13 plan confirmation and the claims process.

(1) Plan confirmation.

Upon the enactment of BAPCPA, the chapter 13 plan confirmation process was "fast-tracked." A debtor must file a plan with the petition or within 14 days after the bankruptcy petition is filed.¹¹ The plan confirmation hearing "may be held not earlier than 20 days after and not later than 45 days after the § 341 meeting of creditors."¹²

(2) Claims Process

The claims process used in all bankruptcy chapters gives creditors the right to file a claim against a debtor's estate.¹³ After a claim is filed, it is deemed allowed unless a party in interest objects.¹⁴ The court resolves any objections.¹⁵ Creditors with allowedclaims are entitled to distribution under a confirmed chapter 13 plan. The claims process was not "fast tracked" under BAPCPA.

The deadline to file a proof of claim is 90 days after the first meeting of creditors for all creditors except governmental units.¹⁶ Bankruptcy courts may not shorten the deadline for filing a proof of claim.¹⁷ This may result in a chapter 13 plan being confirmed before the deadline for filing proofs of claims expires.

It is this Court's experience that the majority of chapter 13 confirmation hearings held within the time frames required under §1324(b) do not result in a confirmed plan. In this District, the court confirmed 46 initial plans from 164 cases filed in 2012. In 2013, the Court confirmed 22 plans during the initial confirmation hearing of the 127 cases filed.

The court finds that one reason that debtors file for chapter 13 bankruptcy protection is to "save the house." Debtors default on monthly mortgage payments, file for bankruptcy protection, address the arrears in a plan, maintain the mortgage payments of the underlying contract and exit bankruptcy having "saved" their residence from foreclosure and acquire a "fresh start." Debtors often file amended chapter 13 plans as the correct arrears amount is unknown at the time the time the debtor files the bankruptcy petition, schedules and plan. Therefore, debtors estimate the amount necessary to curethe default in the initially filed plan, then subsequently amend their plan to pay the full default...