641 B.R. 717
Bankr. S.D. Ga.2022Background:
- Debtor Shalonda M. White filed Chapter 13 on July 9, 2021; largest creditor Shellpoint holds a retail-installment claim secured only by a 1997 manufactured home.
- Debtor’s schedules valued the home at $7,300 and plan bifurcated Shellpoint’s claim under 11 U.S.C. § 506(a); Shellpoint filed a proof of claim for $26,528.77 and objected to confirmation.
- Parties entered a consent order (Oct. 5, 2021) fixing the secured portion at $8,268.73 with payments funded through the confirmed plan (confirmed Nov. 8, 2021).
- Shellpoint filed a Rule 3002.1 Notice (Feb. 18, 2022) listing $1,275 in postpetition attorney fees; Debtor moved under Rule 3002.1(e) to disallow those fees (Mar. 31, 2022).
- Court held Rule 3002.1 does not apply because the confirmed plan (bifurcation under § 506(a)) replaced the original contractual installment terms, and thus the motion to determine/disallow fees under Rule 3002.1 is not authorized and is denied as moot.
Issues:
| Issue | Debtor's Argument | Shellpoint's Argument | Held |
|---|---|---|---|
| Whether Bankruptcy Rule 3002.1 applies to Shellpoint’s claim | Rule 3002.1 does not apply because the confirmed plan pays a bifurcated secured claim under §506(a), so plan payments are not "contractual installment payments" | (Implicit) Rule 3002.1 applies because claim is secured by debtor's principal residence and a notice was timely filed | Rule 3002.1 does not apply: confirmed plan replaced original contract, so plan payments are not contractual installments for Rule 3002.1(a) purposes |
| Whether the court may disallow Shellpoint’s asserted postpetition fees under Rule 3002.1(e) | Requests full disallowance for lack of proof/documentation and because Rule 3002.1 shouldn’t apply | (Implicit) If rule applies, court can determine validity of fees under (c)/(e) | Court cannot disallow under Rule 3002.1 because the rule is inapplicable here; motion denied as moot |
| Whether Shellpoint can recover the fees post-discharge or under §506(b) | Seeks judicial assurance fees will not be collectable after discharge; asks for disallowance now | Shellpoint could seek allowance under §506(b) only if oversecured | Court: post-discharge collection would be improper as to discharged debt; Shellpoint is not oversecured here and did not move under §506(b), so §506(b) relief not before the court |
| Effect of dismissal or lack of discharge on fees | Wants to prevent later collection | Shellpoint could litigate in nonbankruptcy forum if case dismissed | If case dismissed without discharge, prepetition rights are restored under §349(b) and parties may litigate fees outside bankruptcy; confirmed plan controls while in effect |
Key Cases Cited
- Micro/LLC v. Cumbess, 960 F.3d 1325 (11th Cir. 2020) (confirmed Chapter 13 plan binds debtor and creditors)
- PHH Mortg. Corp. v. Sensenich (In re Gravel), 6 F.4th 503 (2d Cir. 2021) (discussing hidden postpetition mortgage charges and Rule 3002.1’s remedial purpose)
- Bullard, 475 B.R. 304 (Bankr. D. Mass. 2012) (describes distinct Chapter 13 options for treating secured claims)
- Nobelman v. American Sav. Bank, 508 U.S. 324 (U.S. 1993) (anti-modification rule for mortgage claims on principal residence)
- In re Davenport, 627 B.R. 705 (Bankr. D.D.C. 2020) (plan modification can eliminate creditor’s entitlement to contractual installment payments for Rule 3002.1)
- In re Thongta, 480 B.R. 317 (Bankr. E.D. Wis. 2012) (creditor filing an unnecessary Rule 3002.1 notice gains no effect)
- In re LeGare-Doctor, 634 B.R. 453 (Bankr. D.S.C. 2021) (mortgage creditor bears burden to prove postpetition fees are appropriate under Rule 3002.1)