Secured Creditor Proof Of Claim Issue

[CupcakeIcing]

Hi There!

I have a small question dealing with secured creditors in The Southern District of Ohio.

Can the alleged secured creditor file an objection to confirmation without filing a proof of claim? Their complaint is that they are not provided for within the plan. They are NOT listed in the plan and should not be listed in the plan, but they are identifying themselves as secured. Possibly to circumvent the filing of a claim.

Local rules state:

(d) Chapter 12 and 13 Cases. Any unsecured creditor and any creditor asserting
secured status as to property of the debtor or the estate, shall, in order to receive payments under a confirmed plan, file a proof of claim. A secured creditor’s proof of claim shall include appropriate documentation evidencing the creditor’s secured status.

(1) Mortgage Claims. If regular monthly payments to a mortgage creditor are to
be disbursed by the trustee, or there is an arrearage as of the petition filing date, the
mortgage proof of claim shall include a completed LBR Form 3001-1 as an
attachment.

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Wouldn't this mean if they wanted to be paid (which is why they are objecting) they should have filed a proof of claim? Wouldn't it also be mandatory for their pre-petition claimed arrearages?

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Thank you for looking!~~

[despritfreya]

Can't comment on your local rule but generally a secured creditor does not have to file a proof of claim since any lien the creditor would have would survive the bk discharge unless it was formally avoided (stripped). It could be that your local rule applies if the creditor is to be paid through the Plan such as mortgage arrears or a vehicle. In theory a Trustee can't pay a claim if the creditor fails to file one, but the failure to file a claim is not going to invalidate a lien.

So, the questions are. . .

1. Has the claims bar date passed? If not, filing the objection would be ok. If it has passed then maybe the objection is moot since no payment would be forthcoming from the Trustee based upon the local rule.
2. Why do you believe the creditor is unsecured if it is claiming it is secured?

Des.

[newbie2]

Since you included the reference to the mortgage claims, it sounds like you are trying to say that your mortgage is unsecured (underwater?). If you could expand on what it is exactly that the creditor is objecting to, and you are objecting to, we may be able to help. Are you doing this pro se?

[catleg]

Did you list them as unsecured on your schedules?
Sure they can file an objection, as long as they are a party in interest in your case.
Sounds like they are not happy at being treated as unsecured or being secured but paid out over an extended time period.

[CupcakeIcing]

They were not listed anywhere in the plan. The mortgage was put under the servicer/original account numbers, not the bank who filed this objection. The mortgage is secured on the schedules, listed as value disputed. The creditor filing in is not my lender or the holder/owner of the note.

They do not reference how much money they are owed and are claiming arrears, also not with a disclosed amount. They also did not attach anything as to how they are now suddenly a creditor to me.

I would think, from what the local rules say, they would have to file a proof of claim.

I appreciate the responses so far guys!

[justbroke]

In my District and according to the Rule (FRBP), they do not need to file a proof of claim. Remember, that filing a proof of claim submits the filer (creditor) the the jurisdiction of the Court. I have read at least several cases where the filing of an objection is enough for a secured creditor.

As to the "not holding the note"... how do you know that? While many mortgages were sold/transferred, the actual Promissory Notes (and Security Instruments) were just warehoused. They are "bearer" instruments in the overwhelming majority of cases (indorsed in blank).

My question is, what are you trying to do?

[despritfreya]

I will address your comments below but you still have not answered whether or not the claims bar date has passed. In addition, now that we know there is a servicer, did anyone file a claim as it relates to this debt?

They were not listed anywhere in the plan. The mortgage was put under the servicer/original account numbers, not the bank who filed this objection. The mortgage is secured on the schedules, listed as value disputed. The creditor filing in is not my lender or the holder/owner of the note. They do not reference how much money they are owed and are claiming arrears, also not with a disclosed amount. They also did not attach anything as to how they are now suddenly a creditor to me.

In response:

1. The servicer is not your lender. It is servicing the lender/investor.

2. Assuming you were in arrears, since you listed the debt on Schedule D why did you not indicate in the Plan how you are going to treat the claim? If you are delinquent (assuming this is a 1st mortgage or a 2nd that is not totally underwater and the property is your principal residence) your Plan must provide for the curing of the arrears and the maintaining of post petition payments.

3. While it is good that you are questioning who the entity is that filed the objection, please do not go down that “show me the note” path. It is a loser. Chances are the entity who filed the objection is either the current servicer or somehow connected with the servicer you think should be involved or the actual lender/investor. You should continue to explore this just to satisfy your curiosity.

4. If this is a wholly unsecured junior lien holder you need to file a 506 complaint. You cannot just list it as “disputed” and think the lien will disappear.

Des.

[CupcakeIcing]

No one has filed a claim for the debt. There is still time for someone to do so.

I know for a fact thatbthe people filing the claim aren't my bank and have even admitted as much if correspondence.

The reason the servicer is listed was at my attorneys recommendation. Trust me, I'm well Aware they aren't my lender.

As for what I'm trying do...I want to know how the objection should be dealt with. They aren't listed, they aren't a creditor. As stated prior, I'm asking about the local rules above, which expand on the regular frbp. It seems within 3001 they locally require claims in order to be paid, including secured. I was just looking or clarification. I would ask my attorney, but he is away for a week right now.

As for the other questions, I am not in arrears. The mortgage is listed as disputed as it deals with some issues about the valuation of the debt that's left. Our accounting on both sides is not matching up. Nothing sinister or anything. Those issues are already been haggled over.

[justbroke]

If you have genuine issues, start a formal complaint (adversary proceeding -- AP) to flush it out in the bankruptcy court. A secured credit is not required to file a claim in a Bankruptcy case. You can file one for them.

Now, if you're filing an opposition to the objection to confirmation, then you would do so on standing. If they are not a party in interest, then they can't object to your confirmation. Your attorney would go about filing the opposition and claiming that they should not be allowed to object. There will be at least one non-evidentiary hearing and a final evidentiary hearing where your attorney presents evidence showing that they are not the real party to object to your confirmation. If you are successful, their objection will be overruled. So long as the Trustee hasn't objected to confirmation and/or you overcame the Trustee's objection (or other objections) then you go on to Confirmation.

However, known of this removes the right of the "real" party in interest on a secured debt! I think you are confusing right-to-be-paid when it comes to secured and unsecured creditors. For unsecured creditors, they are out of luck if they do not file a claim prior to the claims bar date or their the claim is otherwise disallowed. For secured creditors, while they may not be included in the plan and may not even have a claim filed... that does not diminish their rights to seek relief from stay, have it granted, and then foreclose upon the collateral. This is why debtors will file a claim on behalf of a secured creditor so that they CAN pay them in the Plan.

If your plan is not providing for this secured creditor, they may object to confirmation... even without filing a claim! Filing an objection is said to be putting you on notice that they have a claim. Since the deadline to file a claim hasn't yet passed, this is all moot as to filing the claim.