Lenders Must Strictly Comply with Chapter 13 Noticing Procedures to Avoid Possible Motion Seeking Sanctions for Inadvertent Stay Violation

By Richard E. Weltman

The Federal Rules of Bankruptcy Procedure were amended late in 2011 to include Rule 3002.1, entitled Notice Relating to Claims Secured by Security Interest in the Debtor’s Principal Residence. Simply put, a mortgage lender must provide to the debtor, debtor’s counsel, and the chapter 13 bankruptcy trustee, notice of any fees, expenses or charges incurred by lender in connection with its claim, following commencement of the chapter 13 case. The lender must use Official Form B10, Supplement 2, found here.  A deviation from the use of this official form and its noticing procedure can result in an unwanted motion seeking damages for technical violation of the bankruptcy stay. The lesson here for lenders is to be careful and adhere to strict protocols.

Partner Michael L. Moskowitz and Associate Melissa A. Guseynov co-authored an article published in the December 2014 issue of Nassau Lawyer. They discussed the Supreme Court decision that inherited IRAs are not protected in bankruptcy, a timely topic Weltman and Moskowitz has been following and reporting on regularly.

Read an excerpt of the article below.

Supreme Court Rules Inherited IRAs are Not Protected in Bankruptcy 

By Michael L. Moskowitz and Melissa A. Guseynov

On June 12, 2014, in a unanimous 9-0 decision in Clark v. Rameker, the United States Supreme Court ruled that inherited individual retirement accounts(IRAs) are not retirement funds within the meaning of the Bankruptcy Code.1 This decision resolves a split among the federal appellate courts about the status of IRAs that parents leave to their children and others.