Yolanda Maria Harris
This matter is before the Court on the (i) Debtor‘s Motion for Determination of Postpetition Mortgage Fees, Expenses and Charges Under
In the Motion and the Objection to Claim, the Debtor objects to aspects of Proof of Claim No. 7 filed on March 4, 2026 (“Claim No. 7“) and related Official Form 410S2 - Notice of Postpetition Mortgage Fees, Expenses, and Charges, filed by the Respondent on March 13, 2026 (Docket, passim)(the “Fees Notice“). In the Motion, she objects to the $1,225 of post-petition attorneys’ fees claimed by the Respondent in the Fees Notice - $600 for “Plan Review” and $625 for “Proof of Claim,” under Federal Rule of Bankruptcy Procedure (“FRBP“) 3002.1 - filed on March 13, 2026. The Debtor compares these amounts to amounts charged in this case by separate counsel that represents the Respondent regarding a different loan on different property.
In the Objection to Claim, the Debtor objects to the inclusion of any escrow shortfall in the arrearage required to be cured in this case. In support of that objection, she attached documents from the Respondent that she says show there is no such arrearage. She also objects to the inclusion of any late fees in the prepetition arrearage, as she asserts the Respondent‘s practice is not to insist of payment of same but instead it adds those amounts to the balance owed such that payment of those amounts during this case is not necessary to cure her prepetition defaults.
In the Fee Response, the Respondent describes in detail the work it asserts was needed to file Claim No. 7 and otherwise get familiar with the case. The Respondent also highlights the need to assure its rights are not modified based on the classification of the property securing its loan as the Debtor‘s principal residence. The Respondent also asserts that any comparison with the fees charged by separate counsel is not valid given the fact that they rely on separate loan documents that lead to different consequences in bankruptcy since the collateral for that other loan is not Debtor‘s principal residence. Further, the Respondent points out that the “plan review” fee also includes attorney review throughout this case, which is more involved based on the voluminous pleadings filed by the Debtor. In the Claim Objection Response, the Respondent explains why an escrow shortage is included in the Proof of Claim although the escrow analysis does not show one. It also asserts that the accrued late fees are properly part of the arrearage.
In the Debtor‘s Reply, after first clarifying that she is relying on
With respect to the Respondent‘s claim for attorneys’ fees within Claim No. 7, the Debtor counters that although such fees may be authorized, they must be in amount reasonable and customary, justified by proper documentation, and based on work actually performed by counsel. According to the Debtor, the Respondent has not properly supported its claim for fees under the applicable standard.1 Further, the Debtor reiterates that the Respondent cannot claim that she owes an arrearage for February of 2026 and that the underlying loan is due for March, when, as the parties acknowledge, the Debtor did make a payment in late February.
All the foregoing pleadings came before the Court for hearing on June 25, 2026, at 10:15 a.m. (the “Hearing“).2 The Debtor appeared pro se.3 Anita Khosla appeared for the Respondent and counsel for the Chapter 13 Trustee also appeared. At the Hearing, and as stated in her Reply, the Debtor withdrew her Objection to Claim to the extent it sought the removal of the escrow shortage from Claim No. 7. The Debtor also added to the mix an issue regarding application of the payment the parties agree she made that was received on February 26, 2026, after the filing of this case (the “First Post-Petition Payment“). At the Hearing, the Debtor asserted that the First
Based upon the record in this case, the arguments made at the Hearing, and the findings of fact and conclusions of law stated herein and on the record at the Hearing, which are adopted herein pursuant to Federal Rule of Civil Procedure 7052 and FRBP 9014, the Motion is granted as set forth below, and the Objection to Claim is overruled, all as follows.
In her post-hearing Reply, the Debtor acknowledges that, as determined in the cases of In re Ward, 73 B.R. 119, 121-22 (Bankr. N.D. Ga. 1987) and In re Carr, 36 B.R. 381 (Bankr. N.D. Ga. 1984), contractually authorized late charges are recoverable and allowable as part of an arrearage claim. She believes, however, that these decisions are distinguishable as they did not consider the payment-application and reinstatement structure under the loan documents or the loan servicer‘s accounting and that in this case, late charges are provided for separately from, and subordinated to, the installment amounts past due. In addition, payment of accumulated late charges is not stated to be a condition of reinstating the installment payment stream. Reply, p. 3.4
In the Claim Objection Response, the Respondent argues that, as stated in Claim No. 7, once a monthly payment is not made on a timely basis, a default occurs. A late charge is imposed if the payment is not made by the fifteenth (15th) of the month it is due and, in turn, becomes part of the payment amount that is then due. Thus, a default is not properly cured until the payment and late charge are fully paid. In addition, the Debtor mistakenly conflates acceleration, which the lender may elect to do, and a default. As the Respondent avers, if a default in payment occurs, the lender may choose not to accelerate the note balance as is the case here, where it continued to accept late payments. Based on the payments it received from the Debtor, the Respondent applied them to the monthly payment amount due, so late charges did not accrue, and the loan remained current. This application, however, did not operate to cure the default, which still existed, and the Debtor remain obligated to cure it, including the late charges.
Here, the loan documents require the Debtor to pay all amounts due under the promissory note and also provide for payment of late fees. See Note, ¶ 6 (Late Charge for Overdue Payments); see also Security Deed, ¶ 2 (Application of Payments or Proceeds)(attached to Claim No. 7 as Exhibits, respectively). Such provisions in secured contracts are enforceable under Georgia law.7
Next, the Court turns to the Debtor‘s challenge of the Respondent‘s claim for attorneys’ fees. Reasonable attorneys’ fees are provided for in the Note in paragraph 6(E) and in the Security Deed in paragraph 9. As mentioned above, the Debtor contends these fees have not been properly supported and must be for actual work performed. In its Fees Response, the Respondent counters that its fees are reasonable based on a description of the documents it needed to review and issues it needed to consider to protect its interests as provided under the loan documents.
Under
It has been stated that “[t]he Official Form [410S2] itself does not invite further elaboration (with the exception of line 10 and the ‘Other’ categories) and only requires by way of itemization that the fee amount be ‘listed’ and the ‘dates incurred’ be provided. But once the notice of fees is challenged, more evidence is required.” In re Trudelle, 2017 WL 4411004, at *10 (Bankr. S.D. Ga. Sept. 29, 2017); see also In re Pittman, 2015 WL 1262837, at *2 (Bankr. D.S.C. March 16, 2015). In Trudelle, the court disallowed post-petition fees of $600.00 under
Although the Fees Response provides more detailed description, the Respondent did not put on any evidence regarding the requested fees and thus has not shown why the fee amounts as requested in the Fees Notice should be greater than that amount sought by separate counsel in this case for comparable work.
- The Motion is GRANTED to the extent that the Respondent‘s claim for attorneys’ fees in the Fees Notice is reduced to the amount of $125 for plan review and $450 for preparation and filing of proof of claim, for a total of $575; and
- The Objection to Claim is OVERRULED; more specifically, the late fees are a part of the prepetition arrearage that must be cured, and the First Post-Petition Payment may not be applied to the Debtor‘s February payment but must instead be applied as a post-petition payment.9
The Clerk is directed to serve a copy of this Order upon the Debtor, counsel for Respondent, and the Chapter 13 Trustee.
[END OF ORDER]
Paul Baisier
U.S. Bankruptcy Court Judge
Notes
Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1325(a)(5) of this title, if it is proposed in a plan to cure a default, the amount necessary to cure the default, shall be determined in accordance with the underlying agreement and applicable nonbankruptcy law.
(3) No creditor or servicer may charge a borrower a late payment charge unless the loan documents specifically authorize the charge, the charge is not imposed unless the payment is past due for ten days or more, and the charge does not exceed 5 percent of the amount of the late payment. A late payment charge may not be imposed more than once with respect to a particular late payment. If a late payment charge is deducted from a payment made on the home loan and such deduction results in a subsequent default on a subsequent payment, no late payment charge may be imposed for such default. A lender may apply any payment made in the order of maturity to a prior period‘s payment due even if the result is late payment charges accruing on subsequent payments due….