Middle District of Florida Bankruptcy Courts Archives

Tag Archive for: Middle District of Florida Bankruptcy Courts

What is a Bankruptcy Meeting of Creditors?

July 12, 2019/in Articles, Bankruptcy/by Ted Hamilton

At the beginning of any Bankruptcy case, the Clerk of the Bankruptcy Court mails a written notification of a bankruptcy filing. All creditors listed in initial bankruptcy documents filed by a Debtor receive the Notice. This Notice of Bankruptcy Case sets forth the date, time and location of a Meeting of Creditors along with other information.

1.The Purpose of the Meeting of Creditors

The purpose of the Meeting of Creditors in a bankruptcy case is confusing to many creditors. Section 341 of the Bankruptcy Code (the terms are often used interchangeably) authorizes the Creditors Meeting. Thus, the Creditors Meeting is sometimes referred to as a 341 Meeting. This Section of the Bankruptcy Code requires a Meeting of Creditors in every bankruptcy case. The 341 Meeting allows the questioning the Debtor under oath pertaining to the Debtor’s assets and liabilities.

2.Who conducts the Meeting of Creditors

The Bankruptcy Trustee appointed to administer the case or the United States Trustee in a Chapter 11 case where no Trustee has been appointed holds the Meeting of Creditors. There is no court reporter present at the Meeting (unless the Creditor arranges to have a court reporter present). The Meeting is recorded digitally. A Creditor may obtain a recording of the Meeting on a CD by contacting the Office of the United States Trustee after the Meeting.

Chapter 7 Cases

At the Meeting of Creditors in a Chapter 7 bankruptcy case, the Trustee questions the debtor as follows:

1.Reviews the Debtor’s bankruptcy petition and schedules filed in the case;

2. Confirming the Debtor’s identity;

3. Attempts to locate any property or other assets that can be sold or otherwise administered for the benefit of creditors;

4. Questions the Debtor about any transfers of property or other assets made by the Debtor prior to the filing of the case. The Bankruptcy Code provides that certain transfers can be avoided (reversed) by the Trustee and the property transferred brought back into the bankruptcy case;

5. Alternatively, depending on the facts of the matter, the Trustee may seek to obtain a money judgment as to the recipient of the transfer if it is avoidable.

Chapter 13 Cases

The Standing Chapter 13 Trustee, in a case filed under Chapter 13, questions the Debtor on whether the Debtor’s Chapter 13 Plan properly addresses creditors claims and complies with the terms of the Bankruptcy Code.

Chapter 11 Cases

In a Chapter 11 case, the United States Trustee (or Chapter 11 Trustee if one is appointed) generally questions the Debtor (or the Debtor’s representative in a business case) about the Debtor’s assets, liabilities, finances and conduct. In a business case (which comprises most Chapter 11 cases) the United States Trustee will inquire as to the Debtor’s business and reasons for filing the bankruptcy case. The Trustee will also inquire as to the Debtor’s intention and anticipated proposal as to a plan for reorganization. The Trustee will also inquire as to whether the Debtor’s expected future income and anticipated future expenses are consistent with such a Plan. The United States Trustee will also question the Debtor to ensure that the Debtor understands that the Debtor must comply with specific reporting, insurance, banking and other requirements.

3.The Meeting of Creditors as an Opportunity for Creditors

In all cases, the Creditor uses the Meeting of Creditors as an opportunity to question the Debtor about the Debtor’s financial practices, the possibility of claiming a debt to be non-dischargeable due to fraud or other reasons. The Creditor might also want to determine the circumstances pertaining to when the Debtor incurred the indebtedness owing to the Creditor. For example, the Creditor would question the Debtor as to the loan (credit) application and the accuracy and completeness of information set forth in such application. All of these questions might be helpful in determining whether the claim of the creditor might not be wiped out or reduced by the bankruptcy filing.

Likewise, the Creditor might question the Debtor as to assets and property and other collateral (if any) which secures the debt, the condition of such collateral and whether the collateral had been sold or otherwise transferred prior to the filing of the case. The Creditor may also ask about the Debtor’s use of business income and payments made to insiders prior to the filing of the case. Other questions in a Chapter 11 might focus on mismanagement or fraud in the Debtor’s financial operation.

Creditors attend the Meeting of Creditors on their own behalf or through their attorney for the purpose of questioning the Debtor and providing information to the Trustee. Creditors attending a Meeting may have information about undisclosed assets or transfers made by a Debtor which are not set forth on the Debtor’s bankruptcy documents filed with the Court and made known to the Trustee. In addition, Creditors choosing to attend a Meeting of Creditors may use the opportunity to question the Debtor under oath to investigate whether there is a basis for asserting that the Debtor is not entitled to a discharge or that the debt owed to the Creditor is non-dischargeable in the bankruptcy case on account of fraud or another basis.

By Brad Hissing, Esq.

Maximizing Bankruptcy Proof of Claim, Minimizing Objections

March 5, 2018/in Articles, Bankruptcy/by Ted Hamilton

Are you a creditor in a bankruptcy case? Did you receive a Notice from the Bankruptcy Court advising you that there are funds available to pay creditors in a case and alerting you to complete and file a Proof of Claim? If so, then the Notice would have also included a blank Proof of Claim form for you to complete and file with the Bankruptcy Court. The Proof of Claim form is specific and comprehensive and may require detailed attachments depending on the type of claim you have against the Debtor. There are also time constraints involved in the process as well. The Bankruptcy Court will set a deadline for the filing of such claims. The deadline is called the “bar date”. Claims filed after the bar date are not paid except in certain very limited situations and only if the bankruptcy court expressly permits them to be paid—more about this in a bit.

In consumer bankruptcy cases (Chapter 7 and Chapter 13 cases) you must file a claim timely (by the bar date) in order to be paid. The process is somewhat different in Chapter 11 cases. A creditor does not need to file a claim if three conditions are met. First, the Debtor must not have listed the debt on its bankruptcy schedules as “disputed, contingent or unliquidated”. Second, the creditor must agree with the amount that the debtor has listed as due and owing on these bankruptcy schedules. Third, the creditor must agree with the Debtor’s classification of the type of claim—such as secured, unsecured or priority—in the bankruptcy schedules. If any (or all) of these conditions are absent in a Chapter 11 case then the creditor must file a claim for the full amount which is owed by the Debtor and set forth the appropriate classification (secured, unsecured or priority) in the claim.

I’ve been a bankruptcy attorney for over 25 years and I’m aware of several situations where creditors have left “money on the table” by not filing a claims in bankruptcy cases despite receiving notice in Chapter 7 or Chapter 13 consumer bankruptcy cases that the Bankruptcy Trustee is holding funds which are available to pay creditors. In fact, in many of these consumer cases, the Trustee ends up with a surplus case and will often seek to make contact with creditors listed in the bankruptcy schedules to solicit them to get a claim filed. Likewise, in Chapter 11 cases, I’ve seen several situations where only a small number of creditors have filed claims when the Debtor has proposed to make a significant payment to creditors with claims in a certain class set forth in the Chapter 11 Plan.

The Proof of Claim form requires creditors to choose the classification of the claim (secured, unsecured or priority) as well as the amount that the Debtor owes the creditor as of the date of the filing of the bankruptcy case. For secured accounts, such as a mortgage or lien on personal property or a vehicle, this can require some detailed accounting to property set forth interest, late charges, attorney’s fees and other charges as well as accrued escrow items. If this accounting is incorrect, then the Trustee or Debtor can object to the claim. Again, more about that in a bit. The Proof of Claim will also need to include copies of supporting documents evidencing the claim such as the loan documents (promissory notes, contracts), the security documents (security agreements, mortgages) and other documents such as judgments, garnishments and so forth. Failure to include the loan documents will likely result in an objection to the claim by an interested party so it is very important that the Proof of Claim be filed with these documents attached.

Claims that are filed after the bar date will likely draw an objection by the Trustee or the Debtor. Obviously, the best way to avoid this is to make sure that the claim is filed on time. The fact that a claim was filed late may completely invalidate it and prevent it from being paid. However, a creditor with a late-filed claim is not completely out of luck. If a creditor files a claim late and there is an objection filed to it, then the creditor can argue that the failure to timely file the claim was excusable. The burden, however, is on the creditor to show excusable neglect and it this is often a difficult burden for the creditor to meet. There are also differences in the operation of the excusable neglect standard depending on whether the bankruptcy case is a Chapter 7 or 13 consumer case or a Chapter 11 case. A creditor facing this issue will need to discuss how best to address the situation with a bankruptcy attorney.

A creditor’s claim may draw an objection from the Debtor of Trustee for any number of reasons. For example, the objection to the claim might dispute the amount that the creditor alleges is owed or dispute the creditor’s classification of the claim as secured, unsecured or priority. The objection might dispute the validity of the claim if there are no supporting documents to evidence the claim or if the debt is believed to be uncollectable due to being barred by the applicable statute of limitations for the type of claim that the creditor holds against the debtor.

A creditor can minimize the chance of an objection being filed to its claim by taking steps to ensure that the claim lists the correct amount owed, lists the correct classification of the type of claim, contains legible copies of the documents evidencing the claim and is signed and timely filed with the Bankruptcy Court. If a creditor is facing an objection to its claim then it should contact a bankruptcy attorney to develop a strategy for tackling the issue as oftentimes it is possible for a creditor to fight the objection and get its claim allowed and paid in the case.

Brad Hissing is a Bankruptcy Attorney with over 26 years of experience in representing creditors, Trustees and other parties in bankruptcy cases. He has extensive experience in Creditors Rights and Insolvency matters in both consumer and Chapter 11 commercial cases. He can be reached at BradH@whhlaw.com or by phone at (813) 676-9075.

New Official Form of Chapter 13 Plan for the Middle District of Florida Bankruptcy Courts

October 23, 2017/in Articles, Bankruptcy/by Ted Hamilton

The pending revisions to Federal Rule of Bankruptcy Procedure 3015.1 permit Bankruptcy Court Districts to “opt out” of the Official Form of Chapter 13 Plan approved by the Judicial Conference of the United States Courts. The judges of the Middle District of Florida Bankruptcy Court have elected to “opt out” and have approved a Local Form Model Chapter 13 Plan which is required to be used in all Divisions of the Middle District as of September 15, 2017. Please click HERE for a link to the Middle District Form Model Chapter 13 Plan (“Local Form Plan”).

The Local Form Plan complies with the upcoming Bankruptcy Rule changes in regards to the consistency, formatting and contents of a Form Plan. Specifically, any nonstandard provision which the Debtor includes in the Local Plan will be effective only if it is included in the section of the Plan designated for non-standard provisions. If a nonstandard provision is not included in this section then it is void. There is also a requirement that the Debtor indicate in the initial paragraph of the Local Form Plan that the Plan contains a nonstandard provision. Likewise, the Debtor must indicate in this initial paragraph whether the Plan does (or does not) limit the amount of a secured claim based on a valuation of the collateral for a claim and must also indicate whether the Debtor does (or does not) seek to avoid in its entirety a security interest or lien.
Other provisions of the Local Form Plan that are consistent with the pending revisions to the Rule 3015.1 are separate paragraphs providing for the following:

curing of any default and maintaining payments on a claim secured by the Debtor’s principal residence;
paying a domestic-support obligation;
paying a claim for debt incurred within 910 days of the filing date of the case which secured by a purchase-money security interest in a motor vehicle acquired for the Debtor’s personal use, or for any other purchase-money indebtedness incurred by the Debtor within one year of the filing date of the case.

The Local Form Plan also contains new provisions which are in addition to those required by the revisions to Rule 3015.1. One new section of the Local Form Plan more clearly provides for the designation of attorneys fees to be paid through the Plan, including fees for mortgage modification mediation and post-confirmation monitoring fees. Another new section of the Plan provides for the pre-confirmation disbursement of adequate protection to secured creditors by the Trustee, however, the Plan must propose the disbursement of adequate protection and be funded sufficiently for the Trustee to make such disbursements and the Creditor must have a claim filed in order to receive such payments. Finally, an additional section of the Local Form Plan requires the Debtor to set forth the treatment of leases and provides for the disbursement of adequate protection to lessors.

The new Local Form Plan should provide some much-needed consistency to Creditors who find themselves involved in a Chapter 13 bankruptcy case in the Middle District of Florida and assist Creditors in knowing which matters need to be directed to their attorneys for representation. If you are a Creditor and receive one of these new Local Form Plans and are unsure how the Plan could affect you then you should consult your attorney.

What is a Bankruptcy Meeting of Creditors?

Maximizing Bankruptcy Proof of Claim, Minimizing Objections

New Official Form of Chapter 13 Plan for the Middle District of Florida Bankruptcy Courts

Wetherington Hamilton, P.A.

Wetherington Hamilton, P.A.