New Administrative Order and Chapter 13 Plan in Middle District of Florida

On July 9, 2020, the United States Bankruptcy Court for the Middle District of Florida entered
Administrative order FLMB 2020-7 Proscribing Procedures for Chapter 13 Cases Filed on or After August 1, 2020 and Revised Model Chapter 13 Plan, effective August 1, 2020.

What has changed?
​One of the most fundamental changes that will impact creditors is paragraph 10 (ten) titled
Reimposition of the Automatic Stay. It reads as follows: “If Debtor files an amended or modified Plan
that includes payments to a secured creditor or lessor in the Plan payments, the automatic stay is
reimposed as to that secured creditor or lessor automatically upon the filing of the amended or
modified Plan unless the secured creditor or lessor has concluded its state law foreclosure or
repossession remedies. Debtor must serve the amended or modified Plan upon the affected creditor or lessor.”

Analysis of the changes
This provision is particularly troubling for a number of reasons. For one, pursuant to §362(c)(3)(A), if the debtor had 1 or more prior cases pending within the preceding year, the automatic stay terminates on the 30th day unless a motion is filed and hearing held prior to day 30. By contrast, §362(c)(4)(B) provides that if the debtor had 2 or more prior cases pending within the preceding year, the automatic stay does not go into effect upon the filing of the later case unless a motion is filed within 30 days after the order for relief is entered (i.e. the case filing). Thus, in these “serial filing” cases, a motion must be filed and hearing held. It is unknown how, if at all, this new administrative order and model chapter 13 plan will impact this. 

Nonetheless, assuming the debtor is not a serial filer and §362(c)(3) and (4) do not apply, the debtor will not be required to file a Motion to Reimpose Automatic Stay. Rather, the debtor is only required to file and serve the amended or modified plan, which has the effect of reimposing the automatic stay upon being filed. 

Other jurisdictions abide by Bankruptcy Rule 7001 which requires the filing of an adversary proceeding in order to reimpose the automatic stay. For instance, Rule 7001(7) states “a proceeding to obtain an injunction or other equitable relief, except when a chapter 9, chapter 11, chapter 12, or chapter 13 plan provides for the relief.” Asking that the automatic stay be reimposed is seeking injunctive relief. Yet, FLMB 2020-7 and the Revised Model Chapter 13 Plan may circumvent this provision since the chapter 13 plan does provide for the relief (i.e the automatic stay being reimposed). 

Co-Debtor Stay?
FLMB 2020-7 and the Revised Model Chapter 13 Plan are silent as to the co-debtor stay. It should be noted that §362 which governs the automatic stay and §1301 which governs the co-debtor stay are not mutually exclusive. Therefore, although the automatic stay may be in place, the co-debtor stay may not be.

Impact moving forward 
It is imperative that counsel review all amended and modified plans to determine whether or not the automatic stay is in place and if so, immediately place the foreclosure or replevin on hold while reviewing its available legal remedies. This may include opposing the amended/modified plan as well as seeking further clarification from the court. 

Proposed Local Rule Change Southern District of Florida
The United States Bankruptcy Court for the Southern District of Florida has proposed changes to its local rules. One of those in particular being Local Rule 3070, which deals with chapter 13 payments.  Of importance, is the proposed change that incorporates the Mortgage Modification Mediation (“MMM”) program and makes clear that 3002.1 Notices are for notice purpose only during the mediation process, and the debtor is not required to file an objection due to the pending mediation. 
Other proposed changes include the debtor being required to respond to all 3002.1 payment change notices within 30 days.