Motion to value collateral denied?

[Danglin]

Had our confirmation hearing today as well as a hearing on our motion to value collateral for our lien strip.

We were told we didn't need to show for either hearing, and neither did the attorney.

Checked PACER tonight and saw this on the lien strip:

"The motion was denied without prejudice. The motion requests relief (extinguishment of a consensual lien against real property), which will require an adversary proceeding after the successful completion of the chapter 13 plan. The proof of service fails to comply with Local Bankruptcy Rule 9014-1 (d) & (e)."

Does this mean that we have to wait the 5 years to find out if we got the lien strip, and this, only after a court fight? If it doesn't mean that, then what does it mean? Do we have any recourse?

I've e-mailed the attorney, but I'm dying to know if we're going to get our strip or not.

Any info would be greatly appreciated!

[justbroke]

Wow, it sounds like the service of the motion was defective (proof of service invalid). I've never heard of a hearing in which no one that is a party to the hearing shows up... but that may be a local procedural thing in California. IN any event, it also appears that lien stripping may be by complaint (adversary processing -- AP) in your District. In my District and Circuit, lien stripping can be done by motion, such as what your attorney filed. (The way to strip a lien in California seems to be conflicting anyhow with some Judges/Districts allowing them to be stripped by motion and others by complaint.)

You will need to work with your attorney to determine what's going on. From what I know, you can't confirm a Chapter 13 Plan unless you know the treatment of the secured property. In this case, stripping or not stripping a junior mortgage would affect your payment to the Trustee and this is important to know.

Now, I'm totally guessing, but the procedure in your District may be that you request a Motion to Determine Secured Status as part of plan confirmation. Once that's granted, the lien is valued at $0 secured. Then, at the end of the Plan, you file a complaint to strip the lien. This would all be procedural and I don't know the procedure in your District, but that's how it reads. It reads as though the service of the Motion to Determine Secured Status was botched and hence the denial.

[Pandora]

Checked PACER tonight and saw this on the lien strip:

"The motion was denied without prejudice. The motion requests relief (extinguishment of a consensual lien against real property), which will require an adversary proceeding after the successful completion of the chapter 13 plan. The proof of service fails to comply with Local Bankruptcy Rule 9014-1 (d) & (e)."



Any info would be greatly appreciated!

I'm wondering why the AP is supposed to be done AFTER the completion of your Ch. 13 plan? Thats usually done beforehand.... I can understand the lien being stripped upon completion of the plan, but the actual request / motion to do so should be before...

????

[HHM]

I agree, the part about "after completion of the plan" doesn't make sense. But as for the rest, just sounds like your attorney is either very "green" or made a mistake since judges can have different procedures and sometimes it can be hard to keep track in larger districts with many judges.

[Pandora]

http://www.canb.uscourts.gov/rules/dist/bankruptcy-local-rules#_Toc267554501

here is 9014-1 so it appears that your trustee is seeking to sell the property? (d)

there is no (e) unless its deferring to 9014-1 (b)(1)(E)... ??

[momofthree]

I'm also in the eastern district of CA. Just double checked pacer, and our history is as follows:

filed 1/19/11 -- motion/application to value collateral
filed 1/19/11 -- notice of hearing
filed 1/19/11 -- declaration (this is the one we signed declaring the value to be true and correct and how we arrived at such value)
filed 1/19/11 -- certificate/proof of service
filed 2/2/11 -- hearing held/concluded (ours was un-opposed so it was an automatic win. )
filed 4/11/11 -- certificate/proof of service
filed 4/11/11 -- order on motion/application to value collateral (this is the one the judge signed; it took my attorney over 2 months to actually draft the order for the judge to sign off on)

As you can see, this is all recent, so I can't imagine the procedure to have changed in the last couple of months...Personally, there is no way in HELL I would complete a ch.13 not knowing if the strip would go thru or not. No freakin' way!

[Danglin]

I agree, the part about "after completion of the plan" doesn't make sense. But as for the rest, just sounds like your attorney is either very "green" or made a mistake since judges can have different procedures and sometimes it can be hard to keep track in larger districts with many judges.

Yes, it certainly appears he made a mistake. I looked up Local Rules 9014-1 (d) & (e) for the Eastern District of CA and they have to do with formatting and evidence with regards to the motion to value.

Since the motion was denied without prejudice, does this mean that we can refile it prior to filing the proposed confirmation order?

[Danglin]

http://www.canb.uscourts.gov/rules/d...#_Toc267554501

here is 9014-1 so it appears that your trustee is seeking to sell the property? (d)

there is no (e) unless its deferring to 9014-1 (b)(1)(E)... ??

These local rules have to do with service in our district. Apparently, not all of the "i's" were dotted when my attorney filed the motion.

[justbroke]

Since the motion was denied without prejudice, does this mean that we can refile it prior to filing the proposed confirmation order?

Yes, your attorney can re-file so long as he addresses the deficiencies.

[Danglin]

Yes, your attorney can re-file so long as he addresses the deficiencies.

And he can do it, even though judge granted confirmation yesterday?

[justbroke]

And he can do it, even though judge granted confirmation yesterday?

Yes. Depending what's in the confirmation Order, you may have to amend the plan and the order confirming the plan. This is standard practice for any Chapter 13 attorney. The key is whether that secured debt payment is in the Chapter 13 plan and going to the creditor.

[Danglin]

Yes. Depending what's in the confirmation Order, you may have to amend the plan and the order confirming the plan. This is standard practice for any Chapter 13 attorney. The key is whether that secured debt payment is in the Chapter 13 plan and going to the creditor.

Well, we were told by the trustee's attorney at the 341 meeting on 4/6 that we had to do the lien strip, as weren't planning on that originally. So our attorney told us to stop paying on our 2nd, calculated the new payment based on the fact that we would not have that loan, and filed a motion to amend the plan. We've been making the new, higher payment for two months now, and I'm certain the plan confirmed yesterday treats the 2nd as unsecured.

What scares me is the verbiage in the hearing minutes about adversary proceeding, etc.

[AngelinaCat]

Since the motion was denied without prejudice, does this mean that we can refile it prior to filing the proposed confirmation order?

Yes, you can refile it. When the statement says "WITH predjudice", then no it cannot be refiled.

Good luck to you!

[LadyInTheRed]

"The motion was denied without prejudice. The motion requests relief (extinguishment of a consensual lien against real property), which will require an adversary proceeding after the successful completion of the chapter 13 plan. The proof of service fails to comply with Local Bankruptcy Rule 9014-1 (d) & (e)."

It sounds to me that the motion is not only a request for an order valuing the lien, but also a motion for an order removing lien. Your plan has to be completed before the lien is actually removed. Maybe that's the reason for that part of the ruling. If the motion had been properly served, maybe the court would have entered an order valuing the lien but denied the motion to remove the lien. Let us know what you find out.

[Danglin]

Thank you everyone. I feel better about this now. I'll update the thread when I find out more.