Local Rule 3002.1-2: OBJECTIONS TO NOTICE OF MORTGAGE PAYMENT CHANGE IN CONDUIT MORTGAGE PAYMENT CASES

RULE 3002.1-2. OBJECTIONS TO NOTICE OF MORTGAGE PAYMENT CHANGE IN CONDUIT MORTGAGE PAYMENT CASES.

(a) Objection Pending. If, pursuant to Bankruptcy Rule 3002.1(b), the debtor or trustee files a timely objection to a notice of payment change filed by the holder of a claim secured by a security interest in the debtor's principal residence (the "Mortgage Creditor") in a Conduit Mortgage Payment case (as that term is defined in Local Rule 3015-6(a)(1)), then, until the Court rules on the objection:

(1) the debtor is not required to increase the plan payment;

(2) neither the debtor nor the trustee is required to increase the monthly disbursement to the Mortgage Creditor;

(3) the Mortgage Creditor may not declare a default or otherwise seek to enforce its rights against the debtor based on the debtor or trustee's failure to make the increased mortgage payment; and

(4) the trustee shall continue to make payments in the pre-notice amount and retain any additional sums if the debtor voluntarily increases the plan payment pending the Court's ruling.

(b) Objection Overruled. If the Court overrules the objection and allows the payment change, then:

(1) within 14 days of entry of that order, the debtor shall file a motion to modify the plan and confirmation order with a proposed modified plan curing any post-petition mortgage default, increasing the monthly mortgage payment going forward, and adjusting the terms of the plan and amount of plan payments accordingly; and

(2) the Mortgage Creditor may not declare a default or otherwise seek to enforce its rights against the debtor while the debtor's motion to modify plan is pending, so long as the debtor timely filed that motion.

(c) Objection Sustained. If the Court sustains the objection and disallows the payment change, then if the debtor voluntarily increased the plan payment while the objection was pending pursuant to subparagraph (a)(4) above, the trustee will apply any such retained sums either (1) as sums due under the confirmed plan (thus reducing the term of the plan) or (2) to the funds to be distributed to the general unsecured creditors (thus increasing the dividend to that class of creditors), as the debtor elects.