Local Rule LBR 3070-2: Chapter 13 – Distributions

LBR 3070-2. Chapter 13 – Distributions

(a) Need to File Claim.

(1) Need to File Proof of Claim. A creditor must file a timely proof of claim (Official Form 410) in order to receive distributions under the plan.

(2) Need to File Administrative Claim. A debtor's attorney must file a request for payment of an administrative expense for compensation and reimbursement of expenses to be paid through plan distributions. The request may be made by filing in the claims register a request substantially conforming to the local form (Request for Payment of Administrative Expense: Compensation for Debtor's Attorney in Chapter 13 Case).

(b) Arrearage Portion of Secured Claim. Notwithstanding Bankruptcy Rule 3002(a), the holder of a secured claim must file a timely proof of claim in accordance with Bankruptcy Rule 3002(c) in order to receive plan distributions for a prepetition arrearage or default. If the plan provides for payment of an "arrearage," the trustee shall make a distribution according to the amount stated on the proof of claim as "Amount of arrearage and other charges at time case filed included in secured claim," unless the court orders otherwise. The trustee will make no distribution on the secured portion of a claim that states the amount of the arrearage is $0.00, none, or the like, or if the arrearage amount is left blank.

(c) Untimely Claims. The court may consider a stipulation to allow an untimely claim without notice to other creditors if executed by the debtor and the trustee.

(d) Trustee's Notice of Claims Filed. The trustee must file and serve on the debtor a notice of claims filed. The trustee shall give notice that distributions on these claims are being made as noted on the list according to the provisions of the confirmed plan unless an objection to a claim is filed or the court orders otherwise. The trustee shall serve the notice of claims filed by the later of (i) 28 days after the latest claims deadline stated in Bankruptcy Rule 3002(c), and (ii) 60 days after the entry of the plan confirmation order.

(e) Determination of Claimant's Address for Distribution. The trustee shall make distributions in accordance with the name and address of the claimant stated on the proof of claim, subject to any amendment, assignment, transfer, change of address, or any other information filed with the court as part of the individual case record. The trustee shall not make a distribution to a claimant or address other than that stated on the proof of claim unless the notice of a change is filed with the court. A claimant may give notice of an address change by filing a form substantially conforming to the local form (Notice of Change of Address (Proof of Claim)).

(f) Claims Amended, Assigned or Transferred After the Deadline to File a Claim. If a claim is amended, assigned, or transferred after the deadline to file a claim under Bankruptcy Rule 3002, the creditor amending the claim, the assignee, or the transferee must file promptly with the court the document amending, assigning or transferring the claim.

(g) Distribution on Disputed Claim. To suspend distribution on a disputed claim, the debtor must file and serve an objection to claim on the claimant not later than 28 days after the filing of the trustee's notice of claims filed. The objection must comply with procedures stated elsewhere in these rules. Pending a determination of an objection, the trustee shall cease making a distribution on the disputed claim. If the objection is overruled, at the request of the claimant or the trustee, the court may make provision for payment of any dividends not paid while the objection was pending. Nothing in these rules prevents the debtor, the trustee, or other party in interest from objecting to a claim after the deadline specified in this paragraph. However, unless the court orders otherwise, an objection that is untimely under this subdivision and that is sustained shall not result in a refund of amounts already paid on the disputed claim.

(h) Relief from Stay.

(1) Order Granting Relief from Stay. If an order granting relief from the automatic or codebtor stay unconditionally permits the secured creditor to foreclose on or repossess its collateral, the trustee shall cease making payments as soon as practicable to all creditors whose claims are based entirely on a secured interest in the collateral being foreclosed on or repossessed.

(2) Stipulation or Order Regarding Relief from Stay. If a stipulated order on relief from stay or other order provides that an arrearage in postpetition payments will be added to the prepetition debt amount paid through the plan, the creditor must file an amended claim to show the adjusted total amount due.

(i) Payment of Debtor's Attorney Fees.

(1) In General.

(A) Duty to Hold Funds in Client Trust Account Until Earned. In compliance with applicable nonbankruptcy law and rules, a debtor's attorney must deposit in a client trust account any payments made by or on behalf of the debtor. Before the petition is filed, an attorney may transfer any fees earned by that date from the trust account to the attorney's operating account. An attorney may not make any such transfers after the petition date without court approval. (B) "Unpaid Compensation" means any unpaid compensation or reimbursement that has been allowed by a court order, less any funds held in a client trust account for the debtor, as of the date that the trustee calculates the relevant distribution. (C) "Available Funds" means all funds received by the trustee as payments under the confirmed plan that have cleared as of the date that the trustee calculates the monthly distribution amounts.

(2) Prior to Plan Confirmation.

(A) No Distribution for Unpaid Compensation Before Plan Confirmation. Unless the court orders otherwise, the trustee shall make no distribution from Available Funds for unpaid compensation prior to entry of a plan confirmation order, whether allowed as presumptive fees under the Chapter 13 Attorney Fee Guidelines or on a standard fee application under Rule 2016-1(a).

(B) Payment of Presumptive Fees in Cases Dismissed or Converted Before Confirmation. In a case that is dismissed or converted prior to confirmation in which the debtor's attorney has opted for presumptive fees under the Chapter 13 Attorney Fee Guidelines, the attorney may seek a distribution from plan payments held by the trustee or in the attorney's client trust account by filing, not later than 14 days after the dismissal or conversion, a fee application supported by time records. In accordance with § 1326(a)(2), the trustee is authorized to retain sufficient funds to pay a potential fee application as an administrative expense under § 503(b) before refunding funds to the debtor.

(3) After Plan Confirmation.

(A) Initial Distribution. Unless the confirmed plan provides otherwise, the initial distribution for Unpaid Compensation shall be paid from Available Funds before each payment to creditors under the plan.

(B) Distributions for Additional Fee Awards. Unless the court orders otherwise and to the extent there are Available Funds, awards for additional fees during the case shall be paid monthly in an amount specified in the fee application at the same time of each payment to holders of secured claims. If the attorney holds funds on deposit in the client trust account, the attorney may pay its fees from these funds with court approval. If there are no allowed secured claims, the fee award shall be paid in full before any payment to other creditors.

(4) Upon Completion of Plan. If the debtor has completed payments under the plan and there are no Available Funds to distribute for any unpaid compensation, the trustee shall file a final report and account in due course.

(5) Form of Request for Payment. A request for payment of compensation as an administrative expense shall be made by filing in the claims register a request substantially conforming to the local form (Request for Payment of Administrative Expense: Compensation for Debtor's Attorney in Chapter 13 Case). The request must attach a copy of the order allowing the compensation if the fee award was made on a standard fee application.