Plan Validations: Recent Findings

Per attorney communication, in Virginia, the trustees in both the Western and Eastern Districts will pay according to the POC, the majority of the time.

For Florida, I have been told that if the difference between the Plan and the POC is more than $1000 and the claim is being paid in the Plan, an Objection is warranted.

Objections are warranted if the Plan calls for BAC’s claim to be paid pro rata. The exception is Texas where pro rata is the norm: The only claim that has priority to Bank of America's is the debtors' attorney fees which based on the plan should be paid in the first 2 months leaving Bank of America to start getting paid pro-rata in the 3rd month and as Bank of America holds the first lien on the house your share of the payment will be bigger than the 2nd lienholder and the car and the HOA. Technically, other than the first couple of months it is better than if the borrower spreads the payments out evenly over 60 months. Further, adequate protection payments are required starting month 1 (since it is in a trustee pay all district those payments will start being disbursed by the trustee in month 5 or 6 but the debtor is still required to pay them)

There was a U. S. Supreme Court case that impacted the Central District of California specifically and could have an effect on other districts. Amy is looking into the matter. Essentially, a Plan was filed and confirmed in which the Debtor stated his student loan would be paid when the principle was paid at the end of the Plan. When he started receiving collections calls for the remainder, he sued.

Some attorneys will recommend an Objection, even if the POC controls, if the difference in arrearages is significant. (Much larger than Florida’s $1000 threshold.) Others use a greater than two payment rule.

As far as the POC controlling, that only pertains to the amount of arrearages. If there is anything else in the Plan or the Plan is infeasible, an Objection is generally warranted.