Padgett Law Group
Menu

PLG NEWS

News + updates + recent press

Categories

All
ALABAMA
Arkansas
Bankruptcy
Case Law
Closings
Compliance
Evictions
FDCPA
FHA
Florida
Foreclosure
Georgia
Illinois
Indiana
Kentucky
Legislative
Michigan
Moratoriums
New Jersey
Ohio
PANDIFFERENT
Pennsylvania
Personnel
Real Estate
Regulatory
REO
Tennessee
Texas
Title
Trending Cases
USDA
WASHINGTON

Archives

April 2025
March 2025
February 2025
January 2025
December 2024
October 2024
August 2024
July 2024
June 2024
May 2024
March 2024
February 2024
August 2023
May 2023
April 2023
January 2023
November 2022
September 2022
August 2022
June 2022
April 2022
March 2022
September 2021
August 2021
July 2021
June 2021
May 2021
April 2021
March 2021
February 2021
January 2021
December 2020
October 2020
September 2020
August 2020
July 2020
June 2020
May 2020
April 2020
March 2020
February 2020
January 2020
December 2019
November 2019
October 2019
August 2019
June 2019
May 2019
April 2019
February 2019
January 2019
November 2018
October 2018
September 2018
August 2018
July 2018
June 2018
May 2018
March 2018
January 2018
December 2017
October 2017
September 2017
August 2017
July 2017

Do You Need to Change Your Monthly Statements? A Recent Ruling May Impact Monthly Statement Formatting

8/9/2023

 
While the Orlansky v. Quicken Loans, LLC, No. NV-22-1181-GCB, 2023 WL 2947616, at *1 (B.A.P. 9th Cir.) (not for publication) case is not published, the Court’s decision is important. The fact that it is not published means that it cannot be cited as precedent. However, that does not mean that debtors will not reference it in an attempt to influence court decisions.
​
As with many cases that impact the contents of a mortgage monthly statement, this case has very specific facts. After filing a Proof of Claim, Rocket fka Quicken Loans, filed Notice of Post-Petition Fees for the fees associated with the filing of the Proof of Claim and reviewing the Chapter 13 Plan.
In addition, Rocket sent monthly statements which contained the requisite bankruptcy disclaimer language. The remainder of the contents of the monthly statements are the key to the Court’s ruling. The arrears which had been included in the Proof of Claim were included on the statement in a section entitled “Amounts Past Due Before Banrkuptcy Filing.” The Court highlighted additional language in this section advising that other fees and costs might appear here as well as the fact that payments were being received from the Trustee which were separate from the regular monthly payments. The fees from the Notice of Post-Petition fees appeared in a section entitled “Advances on Your Behalf” which was a subsection under “Next Payment Breakdown (Post-Petition Payment).” The amounts from “Next Payment Breakdown (Post-Petition Payment)” were also included in the “Total Payment Amount.”

Debtors paid the fees from the Notice of Post-Petition Fees. That amount then continued to appear in the “Advances on Your Behalf” section and the “Partial payment (Unapplied)” which resulted in the “Total Payment Amount” returning to the regular monthly payment amount.

Then, Debtors filed an Objection to Proof of Claim and Notice of Post-Petition Fees. The Proof of Claim was eventually amended, and the Notice of Post-Petition Fees withdrawn. Shortly thereafter, Debtors filed a Motion for Contempt for violation of the automatic stay by including the attorneys’ fees in the monthly statements and accepting and keeping the payment for same. The Bankruptcy Court determined that Rocket had not violated the automatic stay because the statements were permitted communications. Further, the Bankruptcy Court determined that Debtors had notice of the fees but did not immediately dispute them. In addition, the Bankruptcy Court held that the Debtors paid the fees voluntarily and not due to pressure from the monthly statements. The Debtors appealed to the 9th Circuit BAP.

The BAP reviewed what is and is not a violation of the automatic stay. Of importance, monthly statements are not violations of the stay by simply providing information to the debtor. However, communications or monthly statements which pressure a debtor to pay are prohibited. In order to determine if the monthly statements here were violations, the BAP noted that the issue was fact driven requiring a review of the substance and context.

In the analysis, the BAP credited Rocket for the disclaimer language. Despite including the appropriate disclaimer language, the BAP held that the substance and context negated it because they were intent upon collecting the attorneys’ fees. If the attorneys fees had been included with the pre-petition arrears in the “Amounts Past Due Before Bankruptcy Filing”, they would have been informational because that section specifically indicated those amounts were to be paid through the Plan. By including the fees in the section related to the payment of the regular monthly payment, Rocket was demanding immediate payment to be included with the regular payment.

From there, the BAP shifted to the mental state of a debtor. It noted that debtors understand the negative consequences for failing to make payments, and debtors understand they are expected to make monthly payments to ensure the mortgage is current. However, the inclusion of the fees in the amount due amounted to pressure to pay the fees. While Rocket was obligated to file the Notice of Post-Petition Fees, doing so does not protect Rocket from later attempts to collect the fees directly from Debtors. Further, the Nevada Chapter 13 Plan specifically provides that fees from a Notice of Post-Petition Fees will be paid by the Trustee. Lastly, characterizing the fees in the statement separately from other pre-petition claims eliminated the informational purpose aspect of the monthly statement because those fees had become different.
Of the upmost importance in its ruling, the BAP cautioned creditors that any communications with debtors must be clear that the creditor is not attempting to collect a pre-petition debt. Disclaimers can be contradicted by demands for payment.

Based upon the BAP’s warning, all creditors should carefully review the format of their monthly statements to ensure that they do not accidentally cause the inclusion of fees from a Notice of Post-Petition Fees to become a demand for payment of those fees.

​This post was prepared by Kristin A. Zilberstein, Esq.

Comments are closed.
    PLG BLOG DISCLAIMER
    ​The information contained on this blog shall not constitute legal advice or a legal opinion. The existence of or review and/or use of this blog or any information hereon does not and is not intended to create an attorney-client relationship. Further, no information on this blog should be construed as investment advice. Independent legal and financial advice should be sought before using any information obtained from this blog. It is important to note that the cases are subject to change with future court decisions or other changes in the law. For the most up-to-date information, please contact Padgett Law Group (“PLG”). PLG shall have no liability whatsoever to any user of this blog or any information contained hereon, for any claim(s) related in any way to the use of this blog.  Users hereby release and hold harmless PLG of and from any and all liability for any claim(s), whether based in contract or in tort, including, but not limited to, claims for lost profits or consequential, exemplary, incidental, indirect, special, or punitive damages arising from or related to their use of the information contained on this blog or their inability to use this blog. This Blog is provided on an "as is" basis without warranties of any kind, either express or implied, including, but not limited to, warranties of title or implied warranties of merchantability or fitness for a particular purpose. 
HOME
ABOUT
PRACTICE AREAS
CAREERS
CONTACT US
Picture
Picture

Padgett Law Group and Padgett Law Group EP are D/B/As of Timothy D. Padgett, P.A. Timothy D. Padgett, P.A.'s practice areas include creditors' rights, estate planning and probate, real estate transactions and litigation. Not all practices or services are available in all states in which Timothy D. Padgett, P.A. practices.
PRIVACY STATEMENT | WEBSITE DESIGN BY SQFT.MANAGEMENT
  • HOME
  • ABOUT PADGETT
    • THE DIFFERENCE
    • AFFILIATIONS
  • STATES OF SERVICE
    • FLORIDA
    • GEORGIA
    • TENNESSEE
    • ARKANSAS
    • TEXAS
    • OHIO
    • INDIANA
    • PENNSYLVANIA
    • NEW JERSEY
    • ALABAMA
    • MISSISSIPPI
  • PRACTICE AREAS
    • NATIONAL
    • FORECLOSURE
    • BANKRUPTCY
    • REGULATORY AFFAIRS
    • LITIGATION
    • REO, TITLE, & EVICTIONS
    • CLOSINGS
  • PLG NEWS
  • CAREERS
  • CLOSINGS
  • CONTACT US
  • HOME
  • ABOUT PADGETT
    • THE DIFFERENCE
    • AFFILIATIONS
  • STATES OF SERVICE
    • FLORIDA
    • GEORGIA
    • TENNESSEE
    • ARKANSAS
    • TEXAS
    • OHIO
    • INDIANA
    • PENNSYLVANIA
    • NEW JERSEY
    • ALABAMA
    • MISSISSIPPI
  • PRACTICE AREAS
    • NATIONAL
    • FORECLOSURE
    • BANKRUPTCY
    • REGULATORY AFFAIRS
    • LITIGATION
    • REO, TITLE, & EVICTIONS
    • CLOSINGS
  • PLG NEWS
  • CAREERS
  • CLOSINGS
  • CONTACT US