Do you remain on watch in your client’s Chapter 13 after confirmation?
The attorney for the couple in my office yesterday apparently thought she was off duty after confirmation.
As a result, the debtors paid more than $30,000 to the wrong creditor, the mortgage arrears weren’t paid, and their case is on the verge of dismissal four years into the case.
What went wrong
What counsel didn’t monitor was the filing of claims.
The mortgage creditor with the$33,000 in arrearages, failed to file a proof of claim. No claim, no distribution by the trustee.
The strippable junior lien holder did file a claim. Counsel hadn’t taken the necessary steps to value the lien.
A filed claim, asserting secured status, was entitled to payment. So, the trustee paid the worthless junior lien the money intended to cure the mortgage arrears and to save the house.
The tragedy in this story is the information that counsel needed to catch the problem early was easily available.
PACER lists the claims filed in the case.