This post includes a little bit of information on several topics:
- the most recent increase in the prime rate of interest:
- bar dates in cases that convert to chapter 13;
- estimated trustee fees in the plan;
- problems with 522(f) lien avoidance calculations in the plan.
Prime Rate
The prime rate of interest increased to 4.5% effective December 14, 2017. Click here for a previous article on interest rates on secured claims.
Bar Dates for Filing Proofs of Claims in Converted Cases
The amended bankruptcy rules that became effective on December 1 apparently apply in a case that was filed as a chapter 7 case before December 1 but that converted to chapter 13 after December 1. Therefore, creditors have only 70 days from the date of conversion within which to file claims in a case converted to chapter 13 after December 1, regardless of when the case was initially commenced.
Governmental creditors apparently now have LESS time within which to file a claim in a converted case under the amended rules than they had previously. The bar date for governmental units had been 180 days after the date of the order for relief (which would include a conversion).
I did not think the amended rules changed the bar date for governmental creditors, but apparently I was wrong. According to the 341 notice in a recent converted case, the 180-day bar date appears to be measured from the petition date, even in a converted case.
Creditors, pay attention to the deadlines set forth in the 341 notices. Debtors’ attorneys, do the same thing, and remember that you have only 30 days after the creditors’ bar date to file a claim on behalf of a creditor who fails to timely file its own claim.
Estimated Trustee Fees
One section of the new plan requires the debtor to list an estimate of the trustee’s percentage fee and to show a dollar amount for the estimated amount of fees that the debtor must pay.
A few plans that have been filed since December 1 are leaving the fields for the trustee’s fee blank. I can tell at a glance that those plans are underfunded as a result.
8% is a safe number to use as my percentage fee. For more information, read my post on The Trustee’s Fee and Plan Feasibility. In the meantime, proofread the plan and make sure it is adequately funded to cover my percentage fee.
Section 522(f) Lien Avoidance
I’ve seen 3 or 4 plans proposing to avoid liens under section 522(f) of the Code. The plans say that the liens are avoidable, but the math part is just wrong.
For example, one plan shows a judgment lien of $20,000 on property worth $100,000 (I am using easy, round numbers in this example). The plan says there are $0 other liens against the property, and the debtor is claiming an exemption of $0, and therefore the judgment lien is avoidable. Huh? I don’t have to do any calculation to tell you that the judgment lien under this scenario is fully secured. There is no exemption to impair; there are no other liens, so the judgment lien can attach to all of the equity in the property. The plan is wrong when it says the lien is avoidable using the amounts listed in the plan.
Problem is, the numbers on the plan don’t match the numbers in the schedules. There are other liens against the property, and the debtor did claim the full homestead exemption. The judgment lien is avoidable, but not when you do the math per the plan using incomplete or erroneous information.
Same result in a case with a non-PMSI in household goods. No exemption is listed in the plan, so the lien does not impair an exemption and does not appear to be avoidable. But the lien would be avoidable if the exemption were listed in the space provided on the plan.
Debtors’ attorneys, this is going to be problematic whether you avoid a lien in the plan or in a separate motion. You have to “show your math,” so make sure the information listed in the plan or motion reflects the relevant information from the schedules (or claims, after the claims are filed).
