Chapter 13 Bankruptcy Reform Update

Per O. Max Gardner, North Carolina bankruptcy lawyer extraordinaire:
John Logan and the NACTT objected to the proposed Mortgage Bankruptcy
Bill because it mandated direct payments on the modified mortgage. I
have been a big supporter of Conduit Payments for years and we are
working on a new Conduit Payment Rule for the WDNC. I am pleased to
report that NACBA and NACTT have met and resolved their differences on
the Bill. The NACTT has now agreed to support the Bill with these

1) The direct payment language in 1322(b)(11)(D) would be change to: by
providing for payments of such modified loan either directly to the
holder of the claim or during the term of the plan, through the trustee
as disbursing agent, in the discretion of the court.

2) Section 586 would be amended to cap trustee fees on 1322(b)(11)
payments disbursed by trustees at 4%.

3) Section 586 would also be amended to state that the 4% fee may be
waived by the court for debtors below 150% of poverty if it would render
the plan in feasible.

The Bad News for the Bill is that based on a request from President
Obama the Bankruptcy Reform Bill has been removed from the $825 billion
Emergency Stimulus bill.

Chapter 13 Bankruptcy Reform Update

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