Chapter 13 question on informing

[arrgy]

I have a question on the responsibility of informing creditors. I filed a last minute Chapter 13 to stop a foreclosure sale that was to take place next week. I received my clerk filing paperwork, and emailed it to the local court that handles the foreclosure sale. The foreclosure court acknowledged receiving my paperwork and took my property off of the foreclosure list.
The clerk of the local court then stated that I needed to inform the plaintiff who filed the foreclosure that I filed the bankruptcy paperwork, and I need to send a copy of the clerk filing to the general clerk of the court. I can understand sending the filing to the clerk. But my question is why do I have to notify the plaintiff in the foreclosure case of anything? I listed the plaintiff as a creditor in my bankruptcy filing, isn't it up to the bankruptcy court to inform them? The case has already been adjudicated, so why do I have to reach out to the other side and tell them I am in bankruptcy?

[justbroke]

Welcome to BKForum.

The issue with filing Pro Se is that you actually need to know all of the responsibilities of an attorney that filed a case. Usually that includes notification to the creditors in the case. In some bankruptcy courts/districts, the clerk's office may automatically serve the petition and the schedules on the creditors on your behalf (via the Bankruptcy Noticing Center, a/k/a the BNC). This may not be automatic in your district. YOu really need to talk to your case manager, or at least the bankruptcy court's clerk's office to see how Pro Se cases are handled.

Generally, though, you are responsible for serving the Notice of Bankruptcy (generated by the clerk's office upon the filing of a case and the setting of certain deadlines). You may also need to serve, at the same time, a blank Form B10 which is the claim form. Your specific district does have rules for Pro Se and I would hope that you watched the video and leaned on the clerk's office for "procedural" help.

Why do you need to make these notifications? Because you are the "attorney of record" when you are Pro Se (representing yourself). You are responsible just as if you were the attorney of record. That includes making service upon the creditors in the case so that they are on notice that a bankruptcy has been filed. I don't understand why you write that the "case has already been adjudicated"? Removing a foreclosure from a sale is not the end of a civil case which is a lawsuit of foreclosure. It just postpones the date.

A Chapter 13 is not something I recommend that people file on their own. If you're just using it as a tool to stop or slow down a foreclosure, well, I'll hold my tongue. You must know the processes and procedures. While the court is forgiving in some areas, they are generally not forgiving on process. The creditors have an absolute right, as it is shown in the bankruptcy code, of notice. It is not just up to the bankruptcy court to notice them. It is up to the attorney of record except in some limited cases where "some" bankruptcy court clerks will help the Pro Se. In those limited cases the bankruptcy clerk "may" send out major notices, such as the Notice of Bankruptcy. In other cases, the clerk would never send a notice of bankruptcy such as when an amendment is done.

Was this an emergency skeleton Chapter 13 filing? Do you plan to file a plan? Did you file your plan?

[despritfreya]

The clerk of the local court then stated that I needed to inform the plaintiff who filed the foreclosure that I filed the bankruptcy paperwork, and I need to send a copy of the clerk filing to the general clerk of the court. I can understand sending the filing to the clerk. But my question is why do I have to notify the plaintiff in the foreclosure case of anything? I listed the plaintiff as a creditor in my bankruptcy filing, isn't it up to the bankruptcy court to inform them? The case has already been adjudicated, so why do I have to reach out to the other side and tell them I am in bankruptcy?

Why. . . because why would you want to wait for the Bankruptcy Noticing Center to send a letter by snail mail when the roof over your head is at risk?

If you had hired an attorney the first thing that attorney would have done after the Petition was filed, would have been to download the Clerk's Notice of Bankruptcy Filing and email it to the other side putting them on clear and concise Notice that the Automatic Stay was in effect. The second thing he/she would have done was to prepare and file a Notice of Bankruptcy Filing in the State Court proceeding.

Crossing your "t's" and dotting your "i's" from day one prevents 1) mistakes that you may not be able to correct and 2) needless additional work on your part when those mistakes happen.

Des.

[flashoflight]

Call the plaintiff's attorney with the case number. They get these phone calls all the time from bankruptcy attorneys so it's no big deal to them. They'll be professional and polite. They won't scold you or yell at you. They will postpone the foreclosure sale to a new date and see if your case gets dismissed and if you file another 13.

I have to warn you that they are very fast in getting your house sold nowadays unlike the early 2010s so you get two ch13 stoppages in a year if it is not joint ownership then you will be unable to stop the foreclosure. I recommend selling the house fast before the foreclosure or doing a real 13 with a lawyer to save your house.

[justbroke]

flashoflight brings up a good point. If this is a Deed of Trust then those trustee sales can be approved rather quickly. As flashoflight also alluded, filing multiple bankruptcies within the same year can be problematic when it comes to the automatic stay.

As I wrote, I don't know your overall strategy with this, but if you want the Chapter 13 to stick, you need to do all the things that an attorney would need to do. You are going to need to actually reach out to the Chapter 13 Trustee, talk to creditor attorneys, and generally work to get your plan confirmed. Anything short of that could spell a disaster if you get a dismissal and then file again. (Depending on the dismissal, you may not be able to file another case within 180 days, or any case that you may file may not enjoy the automatic stay.)

Lots of rules.

[arrgy]

I appreciate the responses. I already informed the court of equity, so they have already received notice, and taken the property off the foreclosure list. I have already filled out my schedules, etc. for the trustee and will be sending that off shortly. I don't mind sending an email to the plaintiff's attorney with a copy of the order. I was just wondering why I had to do it. But you make complete sense justbroke, I am the attorney of record. Thanks

[justbroke]

Just a point of clarification, arrgy , they didn't take the property off the foreclosure list. They simply postponed the sale. The plaintiff in that foreclosure case would need to withdraw the complaint in order for it to be settled. In most cases a plaintiff in a foreclosure that receives a Chapter 13 Notice of Bankruptcy is smart to only postpone any further sales. That is because a good number of Chapter 13s never make it to confirmation. In fact, most Pro Se Chapter 13s do not make it to confirmation. It's cheaper for the foreclosure plaintiff (creditor) to just postpone the sale, and then wait to see what happens before moving to voluntarily dismiss their case.

[flashoflight]

arrgy

I feel like you are putting your head in the sand regarding your house. All you have is a short postponement and nothing more. There is no adjudication that says you get to keep your house.

When you get to this stage of foreclosure (I've been there too so I know what you're feeling), almost nothing will truly stop the foreclosure train. For example, the lender will pretend to look at your loss mitigation application but they are very unlikely to approve it. So I wouldn't trust any promises from the lender if they're not in writing. If not joint ownership, you have two postponements from two chapter 13 filings and then your house is gone. You are only postponing the inevitable by a short amount of time. If you were in California, they will put you back on the foreclosure calendar for only one or two months from now. This rapid scheduling is not a violation of the automatic stay. They just keep pushing it back by a month or two gambling that you will no longer have the automatic stay. Wait a week or two and you will see your house back on the foreclosure calendar again.

If you do a real 13, you can pay off the mortgage arrearage over 60 months while resuming your normal mortgage payments. The lender can no longer decline to accept your payments and they can't decline the 60 month plan. Many courts have a streamlined loan modification mediation program you can elect that the lender is forced to participate in good faith. Or you can wait a year and do a FHA refinance with manual underwriting. Your chapter 13 payment could be for the mortgage and arrears with nothing to the credit cards. If you don't have enough income to keep the house but still have equity, you will be much better off trying to sell the house on your own rather than letting it get foreclosed. This is a good time in the housing market to do a super fast quicksale before the foreclosure because you don't have to discount as much and the buyer can get financing rather than being forced to pay 100% cash at the courthouse. The pool of buyers is much bigger when you enable them to finance the purchase.

In my case, I did a real 13 and got the foreclosure postponed. My payments were almost 100% to the mortgage and arrears with nearly nothing to the credit cards. After one year, I refinanced my mortgage and got rid of the two lenders who tried to foreclose on me. Refinance, loan modification via the BK court, or completion of the 13 are the only ways to truly get off of the foreclosure calendar forever.

[justbroke]

Just adding to what has been said. Unless you, arrgy , file a plan within the next 14 days (or already filed one), the (smart) foreclosure creditor will immediately file a Motion for Relief from the Automatic Stay (RFS) so that they can continue the foreclosure. This is standard practice. That is precisely the reason why I asked why you filed a Chapter 13 and if you filed or intend to file a Plan of Reorganization.

[arrgy]

The only debt I have is towards the house. I am in arrears for $30K, I have a steady job and can make both the payments on the house and the back payments to get caught up in 60 months. I have maybe $500 of credit card debt, and owe the IRS $1000. My cars are paid for, etc. So I expect 100% to go back to the house.
I just have a really really messed up foreclosure situation, and I will be in four different courts at the same time. The situation is so complex, that no attorney within 100 miles of me wanted to touch it. I had a FHA loan with my first servicer (WF), that I was a couple of payments late on 10 years ago. WF decided instead of taking my partial payment, they would foreclose on me, they thought I wouldn't fight back. But I did, WF never did the FHA stuff you are supposed to do before foreclosing, so I sat in foreclosure for 6 years. They processed loan modification paperwork, and never gave me an answer or a modification. Finally, the local court told WF in June 2015 if you don't do something with the case they will dismiss. WF never answered, the court asked again in September. WF told the court they were ready to proceed with foreclosure and they complied with all of the necessary conditions precedent to foreclose, I objected and we had a hearing in January 2016. The day before the hearing WF tells the court and me that the loan has a new servicer, who will be doing a loan mod. I have the hearing, and the judge tells me that the loan mod looks good and legal, etc.
What the court and I am NOT told by WF is that back in May 2015 WF sent the loan to the FHA to sell in a DASP (distressed asset sale). Problem with this is, WF lied to the Federal government, and broke two federal and one state law by doing it. WF told the FHA that I refused to participate in loss mitigation, this while I am in court with my county doing loss mitigation. It also violates Federal Law to send the loan to the DASP program while in loss mitigation, it is an actual federal statute. I sign the stupid modification agreement because I thought I was still in the FHA program and the only thing that changed was the servicer, but I was mislead, the loan was actually sold to a completely new trust and was no longer FHA insured. I am never told this, I am only told of a new servicer. I received no new paperwork showing a new owner, and nothing is filed with my local Deeds office for two years. Basically WF delayed foreclosure in order to receive the full insurance payout from the FHA.
It wasn't until Covid when I called the FHA about my situation that the lady said.."uh you don't have an FHA loan". She couldn't figure out what happened, the regional manager said he couldn't talk about it and hung up on me. So I go into foreclosure with the new and current owner, because I am not paying a mortgage to someone who may not be legally entitled to the property, that's crazy. Fast forward to the foreclosure trial, I am on a zoom call, the plaintiff reads his garbage, and then I put up my defense. The attorney for the plaintiff's jaw drops, and he runs to his computer, the judge does the same thing. To make a long story short, the plaintiff's attorney said this might all be true, but we didn't do this. This was done by the previous owner and we aren't responsible. I went down every legal avenue I could think of, and the judge basically told me that he didn't have enough experience to find for me, and that I needed to file an appeal, the appellate court would be the experts who would decide this. So that is what landed me in foreclosure and bankruptcy. The best part is that I knew nothing about the DASP sale, etc. until a year ago. It took a FOIA request to the FHA and almost a year before they finally gave me the info I needed.
So I have filed a lawsuit against WF for all sorts of fraud, etc. I have an appeal with the supreme court over the actual foreclosure, I have also filed a Federal Whistleblower lawsuit on behalf of the Federal Government, since WF lied to them and received a full payout and I am in BK court. At this point I can hold out for 60 months and pay all the back payments, etc. Worse comes to worse I might just sell the property, but not until my two lawsuits against WF go through.

[justbroke]

Maybe too much information, but I am interested in where you go with the case. It sounds very complex with all sort of issues. The only problem that concerns me is the implication that WF misbehaved (to put it mildly) yet no government agency took notice.

I'm not an attorney so take this with a ton of salt. If you file a Chapter 13 and list WF as the creditor and put an amount certain, not as in-dispute or un-liquidated, could that not cause other unanticipated issues? Just wondering why the Chapter 13 if you're already in appeals and have a stay of the foreclosure action (or a temporary restraining order). I'm sure it's strategy and I see your end-game is a possible sale.

Interesting, to say the least.

[arrgy]

Basically WF delayed foreclosure, waited until the 60 month mark, collected a payout from the FHA for the full amount and then sent the note to the FHA to be sold. The current trust that is listed on my BK stuff bought the note in the DASP sale. So WF is not going to be part of my BK.

In my state, since I lost the foreclosure, if I wanted to keep the property (which I do) I would be required to either post a bond while my case makes it way through the appeals process OR file a Chapter 13. The Bond costs way more upfront then Chapter 13 does, Chapter 13 allows me to put more equity into the house and once I get caught up on the back payments, will get rid of the foreclosure. The bond doesn't do any of that, and if I lose the appeal, I lose the bond and the house.

No government agency took action on WF because the FHA assumed what WF stated was true and correct. Since I didn't have access to what WF was really doing at the time, I didn't know what was going on. So in order for the government to take action I have to file a civil suit in the name of the Federal Government, because I am the only one privy to what happened. Now on the good side, if I win (which is a no brainer) the Federal Government claims treble damages (the payout they made), and I can collect up to 30% of that. This is ON TOP of my own private lawsuit.

[justbroke]

It is completely interesting to me. So this is a strategic Chapter 13 which you'll ride through the lawsuit. Be careful, though, since you'd list the lawsuit as an asset in the Chapter 13. I'm thinking out loud and wish the best for you.

[flashoflight]

So get a PACER copy from the best BK lawyer in town with a mortgage arrears case and make a confirmable plan using that PACER case as a model since the unsecured is almost zero. No need to play games with the budget and the means test.

Then get a FHA manual underwrite refi 12 months into the 13 to wipe out the foreclosing mortgage and the arrears.

Then make one last payment to take care of the IRS and credit card so the Ch13 is discharged.

Since the creditors will be paid off in full, there theoretically isn't an issue with the lawsuit being property of the estate.

This looks like a good case.

[arrgy]

So get a PACER copy from the best BK lawyer in town with a mortgage arrears case and make a confirmable plan using that PACER case as a model since the unsecured is almost zero. No need to play games with the budget and the means test.

Then get a FHA manual underwrite refi 12 months into the 13 to wipe out the foreclosing mortgage and the arrears.

Then make one last payment to take care of the IRS and credit card so the Ch13 is discharged.

Since the creditors will be paid off in full, there theoretically isn't an issue with the lawsuit being property of the estate.

This looks like a good case.

You know I never thought about the fact that I could refi while in BK. Someone else mentioned that as well. There is also one possible issue that could monkey wrench the REFI. There is also the possibility, that if I win either or both cases against WF, I would have more than enough to cover all the arrears, especially if I settle and don't take either case to full trial. Thanks for the advice everyone.