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Local Bankruptcy Rule Updates for the Eastern District of Michigan Effective February 1, 2016

cutting-moneyBy Marcy Ford and Kim Rattet

Effective February 1, 2016, Local Bankruptcy Rules for the Eastern District of Michigan were extensively amended.  Several substantive changes that directly impact local practice in consumer bankruptcy cases include the following highlights; however, for a full breakdown of changes, please contact Marcy Ford at [email protected] or Kim Rattet at [email protected]

General Requirements

  • All transfers of claim must include the claim number (E.D. Mich. L.B.R. 3001-1).
  • Stipulations for Relief From the Automatic Stay (E.D. Mich. L.B.R. 4001-1) must be signed by all interested parties (i.e., the Debtor, Trustee and any other party with an interest in the property) or a  Motion to approve the stipulation must be filed. As a result, there will be no advantage in terms of the time frames to file a motion for relief vs. a stipulation.
  • There is now an established procedure for Ex-Parte Motions seeking to redact protected private information. Under E.D. Mich. L.B.R. 9037, access to the pleading will be restricted while the motion is pending. A properly redacted replacement document must be filed within 7 days of the motion being granted.

Chapter 7

  • Reaffirmation agreement coversheets. E.D. Mich. L.B.R. 4008-1 requires that a reaffirmation agreement be accompanied by a coversheet, Offical Form B427. A copy may be found here.

Chapter 11

  • Where the Debtor has filed a combined plan and disclosure statement, the deadline for an 111(b) election is 7 days prior to the first scheduled date of the confirmation hearing (E.D. Mich. L.B.R. 3014-1).

Chapter 13

  • Procedures upon Chapter 13 Plan Completion (E.D. Mich. L.B.R. 2015-3)
    • Section (a)(3) previously, included language in the discharge order that “any pre-petition or post-petition defaults have been cured and the claim is in all respects current, with no escrow balance, late charges, costs or attorney fees owing.” That language has been changed to read only that “any pre-petition or post-petition defaults have been cured.”
    • Section (a)(7) that provides the debtor is not discharged from any obligation on any continuing secured debt payments that came due after the last contractually due payment to which the trustee’s last disbursement is applied.
    • E.D. Mich. L.B.R. 2015-3(a)(4) clarifies that the requirement of a response to a notice of final cure under F.R. Bankr. P. 3002.1 no longer applies where the stay has been terminated as to a creditor.
  • Payment changes (E.D. Mich. L.B.R. 3001-2(d)) was added that allows for a Notice of Inability to Comply with Timing Requirements. This applies to a creditor whose claim is secured by a mortgage for which the amount of the debtor’s payment obligation is subject to change more frequently than once every 60 days. Such a creditor may file a “Notice of Inability To Comply With Local Rule 3001-2(a) Deadline” as an attachment to any statement of proposed payment change filed under subpart (a) of this Local Rule. Upon the filing of a notice under this subpart (d), unless there is an objection filed within 14 days or the court orders otherwise, the trustee must effectuate the payment change stated in the notice of payment change rather than 21 days after service of the notice.
  • Any pre- or post-petition plan that provides for surrender of property (E.D. Mich. L.B.R. 3015-1 and 3015-2) must include a statement that the requirements of Local Rule 3001-2 are terminated upon confirmation of the plan and that the co-debtor stay, as applicable, must be terminated.

About Author: Kim Rattet

Kim Rattet has been with Trott since May 2002, where she served as a staff attorney before being promoted to supervising attorney in 2003. Rattet graduated with a Bachelor of Science in biology from Eastern Connecticut State University and received her Master of Science in forensic science from the University of New Haven. She earned her Juris Doctor from the Thomas M. Cooley Law School, where she graduated magna cum laude with a concentration in litigation.

About Author: Marcy Ford

Marcy J. Ford is the executive vice president and a partner of Trott and Trott, PC, and serves as the chairperson of the firm's executive committee. She is a member of the State Bar of Michigan, the Federal Bar Association, the Oakland County Bar Association, the American Bankruptcy Institute, the National Association of Chapter 13 Trustees, and the Consumer Bankruptcy Association of the Eastern District of Michigan. Ms. Ford is also a board member and vice president of the USFN - America's Mortgage Banking Attorneys, which is a 50-state trade association serving the mortgage banking industry. She is a frequent lecturer and writer on foreclosure and bankruptcy issues in mortgage servicing.

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