LVNV Funding filed a claim for debt that was charged off 20 years ago

[womanonfire]

Des was speaking to your attorney caring about increased fees, to object, and not being able to recover the fee from the creditor. At least that's true in the 9th circuit.

Yeah I will just have to ask my attorney because I do not know what else to do. I looked up an objection with motion for sanctions to cover the fee under Fed. R. Bankr. P. 9011.

I think what Chapter 13 attorneys might do is actually have it written in the plan that no proofs of claims submitted that are time barred under state law will get any distribution at all whether or not objected to or not. Not sure if it needs to defined as some sort of equitable relief from time barred debt and the expenses incurred in objecting them but if this works, it could be standard in plans going forward?

We do have to file an amendment to plan so....

[justbroke]

I don't think one could just write such a condition in the plan. Most districts use a model plan which doesn't have any such language. The language that is in all Chapter 13 Plans is that the Trustee will pay "allowed" claims. Since you're in a 100% plan, it may be worth a conversation with your attorney if, and only if, this creditor represents a significant amount of money.

The proper way to get deal with an unsecured claim that is invalid, is to object to it. But, as Des writes, are you willing to pay your attorney $$$ to object to the claim. The issue is likely that being in a 100% plan means there's no money to move around. You see, in a less than 100% claim, the Trustee can just take the money in the pro rata pool and pay the attorney as an administrative claim. When you're in a 100% plan (or a 0% plan for that matter), though, the luxury doesn't exist.

(I don't think sanctions would work since it is not against the bankruptcy code for a creditor that is barred under State non-bankruptcy law from filing suit, to file a claim in a bankruptcy. That is what I learned from my specific case with my creditor.)

[flashoflight]

I had a POC that wasn't mine rather than a time barred POC, but I'm in a 1% plan. The claim was so small at 1% that it didn't reach the minimum payout amount that the trustee would be willing to cut a check so they didn't even get a dividend. It wasn't worth anybody's trouble to deal with it.

I also agree with JB that you have to be careful about incurring legal fees. You can't pick a fight on everything. Since I am a debtor who has paid $16k to his lawyer and profited far more than that, I think I have something to say about which fights are worth it. First, you need a slush fund for the upfront retainer while in a tight chapter 13 budget especially during year one. Lawyers don't work for free. I know lawyers are ticked about accepting just $4k-$6k no look and their hourly goes down as debtors demand more work rather than ghost themselves. A 1% plan doesn't give me much room for additional pro-rata for the lawyer fees and some legal fees cannot be put in the plan. So I tend to pick fights that I'm certain I will win and payout much higher than the retainer like my adversary case and avoid time wasting money losers like the junk fees on my mortgage. Being in a 100% plan means you pay the legal fees unlike those who have a 1%-99% plan who can sometimes make PRA, Midland, and Calvary pay the legal fees by slashing their dividend.

[despritfreya]

womanonfire

I just took a look at the Nevada bk court decision. Do you have a PACER account? If not, get one. Viewing an Order of the court does not cost anything.

Go to the US Bankruptcy Court, District of Nevada. Query case number 17-15277. Go to Docket Report and scroll down to docket number 113. I believe these Debtors had similar (if not identical) facts to you.

If there was a way to attach a .pdf document to this post I would attach the Order for you, but I do not think an attachment of a .pdf file is possible.

Des.

[justbroke]

I uploaded it to this message.

despritfreya does this mean that, as in many cases, they combine the State non-bankruptcy law should it have teeth to deal with this issue? (Specifically Nevada's fee shifting statute(s)?)

Kudos to the attorney(s) that saw that through to the end.

[shipo]

Wow, good stuff and a very interesting read; thanks despritfreya and justbroke for looking it up and posting it!

[despritfreya]

does this mean that, as in many cases, they combine the State non-bankruptcy law should it have teeth to deal with this issue? (Specifically Nevada's fee shifting statute(s)?)

In general, property rights ("property" is broadly defined) are determined under State law.

Des.

[womanonfire]

womanonfire

I just took a look at the Nevada bk court decision. Do you have a PACER account? If not, get one. Viewing an Order of the court does not cost anything.

Go to the US Bankruptcy Court, District of Nevada. Query case number 17-15277. Go to Docket Report and scroll down to docket number 113. I believe these Debtors had similar (if not identical) facts to you.

If there was a way to attach a .pdf document to this post I would attach the Order for you, but I do not think an attachment of a .pdf file is possible.

Des.

Thank you and thank justbroke for uploading it. I do have a pacer account. This is great but the first link that you posted looks like the fee award was reversed. See the date? Am I looking at this wrong?

https://casetext.com/case/lvnv-funding-llc-v-andrade-garcia-in-re-garcia

I know that plans are standard but you can write specific things into it under non standard provisions and once confirmed, I believe the plan rules. I do not see why writing this language into the plan itself would not work. Maybe instead of writing that "all claims filed that are non enforceable under state law that are deemed allowed under this plan will receive zero distribution."

Here is an example of using non standard provisions and the plan specifically stating "The chapter 13 trustee shall not disburse on a secured claim that is not provided for in this plan." https://www.govinfo.gov/content/pkg/...bk-03607-0.pdf

flashoflight the claim is over 4k.

[justbroke]

I can say this about non-standard provisions, at least here in Florida. They cause a lot of extra work and usually the Chapter 13 Trustee objects to many things. For example, in my district they don't let you add a "non-standard" provision if it's obvious or already covered by the law. My 2008 plan was actually one that was used as an example when the model plan was designed in my district. All the attorneys here would add a provision such as "all on-time payments made to the Trustee are to be considered an on-time payment to the secured creditors..." That was deemed "obvious" so it is no longer a standard provision.

I do like your out-of-the-box thinking. Maybe the Trustee will not blink when they see it. Our plans have a checkbox if the plan is non-standard and when that's checked, the plan gets a lot closer look.

[despritfreya]

womanonfire

The BAP decision (penned by Judge Gan - one of my judges) only dealt with that portion of the lower court ruling on the award of attorney's fees. In general, fees are not permitted in bankruptcy unless there is a specific statute/contract that allows them. See the 2007 seminal USSC case of Travelers Casualty & Surety Co. v. Pacific Gas & Electric Co.

justbroke

We routinely put non-standard provisions in our Plans typically because of the unique nature of our cases (more in line with Chapter 11 but client is below debt limits so 13 works better). The trustees and judges are use to this so they give us some latitude. Those provisions usually invite an objection by the affected creditor which ends up in a contested confirmation process, which, most of the time, ends up with a settlement between the parties.

Des.

[womanonfire]

I can say this about non-standard provisions, at least here in Florida. They cause a lot of extra work and usually the Chapter 13 Trustee objects to many things. For example, in my district they don't let you add a "non-standard" provision if it's obvious or already covered by the law. My 2008 plan was actually one that was used as an example when the model plan was designed in my district. All the attorneys here would add a provision such as "all on-time payments made to the Trustee are to be considered an on-time payment to the secured creditors..." That was deemed "obvious" so it is no longer a standard provision.

I do like your out-of-the-box thinking. Maybe the Trustee will not blink when they see it. Our plans have a checkbox if the plan is non-standard and when that's checked, the plan gets a lot closer look.

Thank you! I was reading another case and I can't remember which one but what happens if an unsecured creditor is not listed on the schedules at all and as such, the distribution would not include payment because there would not be enough to pay it anyway? I forgot what section deals with this specifically, how even if a claim is "deemed allowed" it's get paid in a 100% plan that doesn't provide for it anyway?

So what if the claim does not get discharged? They would have to wait five years to sue me and I would still have the valid defense of SOL. I mean if we can simply ignore the debt outside of bankruptcy and they can't legally collect, why can't we just ignore them in bankruptcy?

[justbroke]

despritfreya I do like the idea of the model plan. I also think that a creditor-specific provision should be allowed, although reviewed more closely. It's nice when the system works smoothly and there is not much back-and-forth with the trustee on confirmation. In my original plan (2008) I had both the Chapter 13 Trustee and a couple of creditors not liking my provisions. I laugh as I look back... "accused" of trying to modify the rights of a secured creditor whose claim was secured by principal residence... nah!

[justbroke]

...what happens if an unsecured creditor is not listed on the schedules at all and as such, the distribution would not include payment because there would not be enough to pay it anyway? I forgot what section deals with this specifically, how even if a claim is "deemed allowed" it's get paid in a 100% plan that doesn't provide for it anyway?

This didn't happen in my case, but if a creditor never received notice of the (Chapter 13) bankruptcy and did not participate in a distribution, this has usually been treated as a non-discharged debt. That is, the debt survives and so does the ability to collect. However, there are varying issues with the statute of limitation on whether or not the debt collection was tolled. At least that it was I learned on the topic in my own case.

So what if the claim does not get discharged? They would have to wait five years to sue me and I would still have the valid defense of SOL. I mean if we can simply ignore the debt outside of bankruptcy and they can't legally collect, why can't we just ignore them in bankruptcy?

See my response in the preceding paragraph. The SOL is an issue. If the SOL expired prior to you filing, then the SOL is expired and that's a defense to such a suit.

Why can't we just ignore them in bankruptcy? I think I had the light-bulb moment when my judge (back in 2008) advised me that I shouldn't try to strike their claim, and just let it be discharged. The discharge is the most powerful tool to deal with debt. The discharge comes with the backing of the U.S. Federal Bankruptcy Court and an injunction against acts to collect. That permanent discharge injunction is the most powerful weapon when it comes to debt. Knowing that a creditor is barred from collection and could face serious penalties should they try to collect, is what makes bankruptcy the safest option.

[womanonfire]

despritfreya I do like the idea of the model plan. I also think that a creditor-specific provision should be allowed, although reviewed more closely. It's nice when the system works smoothly and there is not much back-and-forth with the trustee on confirmation. In my original plan (2008) I had both the Chapter 13 Trustee and a couple of creditors not liking my provisions. I laugh as I look back... "accused" of trying to modify the rights of a secured creditor whose claim was secured by principal residence... nah!

So in reviewing the Nevada case again, there is absolutely no reason for a Trustee to objection to a non standard provision such as one that I proposed and in fact, it appears that under bankruptcy law, a Trustees job is to police these claims. Not objecting would save the Trustee the costs of doing so?

"Chapter 13 trustees must perform certain duties including the obligation to: "if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper[.]" § 704(a)(5); see § 1302(b). The record does not explain why the chapter 13 trustee did not object to these claims."

Either way then it appears that the best plan of action for a Chapter 13 in a 100% plan other than filing a costly objection to a bottom feeder claimant that has legal right to payment under applicable state law would be to put a non standard provision in the plan that addresses these claimants, references applicable state law, with directions for the Trustee "to not disburse on a non-secured creditor claim that is not scheduled and is outside the statute of limitations."

Now if the bottom feeder objects, I think we have grounds for sanctions for frivolity.

[justbroke]

Putting in the provision is what invites an objection to confirmation. It's just a different way. If you put it in as a provision, maybe they'll miss it, the plan gets confirmed, and then they are bound by the plan. I think that is what people hope for when adding additional provisions.

Just me thinking out loud and take none of this as from any practical experience.

Personally, and I say this as a Pro Se, I don't see that specific provision helping. Would the debt still be 'discharged' upon the entry of the discharge order? Or is the debt still alive? Remember, the SOL only bars using process to collect. The debt doesn't go away and they can still send you letters asking for payment. Technically debt doesn't go away from a discharge either, but personal liability to pay is removed by the discharge. For a discharged debt, the creditor can't send any dunning letters or do anything which can be seen as an attempt to collect the debt.

I think I understand my judge better, now, that we are discussing this. I can object to the claim so that it's not paid. But it stays in as both scheduled and subject to discharge. At least that's how my judge hinted at it to me (while trying not to give me specific legal advice). The discharge injunction is powerful.

I thought about your wording too, just because something is not scheduled, doesn't mean that the creditor won't file a claim. At the point of a claim, I don't think 'scheduled' would mean anything. I wonder why anyone would not schedule a known creditor (neither listed nor scheduled)?

(The interactions of State non-bankruptcy law may also be in play. I can't speak to any of that.)