Local Rule 4001-1: The Automatic Stay and Secured Creditor Duties

Local Rule 4001-1 The Automatic Stay and Secured Creditor Duties

(a) Motion Requirements. In a motion for relief from stay, the following shall be included. Failure to include any of the following may result in denial of the motion, even without an objection:

(1) Amount of the movant's debt, both as of the petition date and the time of the motion;

(2) Brief description of the security interest, if applicable, with copies of documents evidencing the security interest and perfection;

(3) Description of the property encumbered by the stay, including serial number, vehicle identification number, legal description, physical address, lot and block number, etc.;

(4) Basis for relief (e.g., property not necessary for reorganization, debtor has no equity, property is not property of the estate, or, if brought for cause, specific facts constituting cause);

(5) Valuation of property, basis of valuation (e.g., appraisal, blue book, etc., including applicable copies), and date of valuation;

(6) In Chapter 13 cases, when a creditor whose claim is secured by an interest in real property or personal property that is the debtor's principal residence, is seeking relief from stay on the grounds of post-petition default by the debtor, the creditor must include with the motion for relief from stay a statement of all post-petition account activity that is readable, reasonably understandable, stated in plain English, and substantially consistent with Local Form 10 ("Motion for Relief from Stay Post-petition Transaction History – Creditor Form"); and

(7) In the event the debtor disputes the payment history, the debtor shall prepare and serve a post-petition account payment history in a form consistent with Local Form 11 ("Motion for Relief from Stay Post-petition Transaction History – Debtor Form") at least 7 days prior to the initial hearing.

(b) Application of 11 U.S.C. § 362(e). If a movant seeks application of the provisions of § 362(e), the movant must so state both in the caption and in the body of its motion. Otherwise, the movant will be deemed to have waived the application of § 362(e), and the stay shall remain effective notwithstanding the expiration of the 30-day period. Similarly, if the movant seeks application of § 362(e) but selects a hearing date outside the 30-day period of § 362(e), the movant will be deemed to have waived the application of § 362(e), and the stay shall remain effective at least until the court considers the matter at a hearing and thereafter upon such terms as the court orders. If the movant seeks application of § 362(e) and so notifies the court and the adverse party, the court will schedule the initial hearing within the applicable 30-day period.

(c) Standing Modification of the Automatic Stay as to the IRS. The automatic stay provided in 11 U.S.C. § 362(a) is modified in bankruptcy cases so as to authorize the Internal Revenue Service to:

(1) Make income tax refunds, in the ordinary course of business, directly to debtors, unless otherwise ordered by the court or otherwise instructed by a trustee; and

(2) Offset against any pre-petition refund due a debtor any pre-petition tax obligation owing by the debtor to the United States government.

(d) Proposed Orders. Every proposed order granting any relief stemming from a motion for relief from stay shall:

(1) Include a description of the property encumbered by the stay as described in Local Rule 4001-1(a)(3);

(2) State whether the relief from stay is conditional or absolute;

(3) If conditional, set forth separately and with specificity each condition upon which relief is to be granted; and

(4) State that the creditor has 120 days to file a deficiency claim from the time the subject property is removed from the protection of the stay; however,

(A) In a case where the subject property is real estate or manufactured housing, the deadline for filing a deficiency claim shall be 180 days; and

(B) For good cause shown, an extension of time to file a deficiency claim may be granted by the court so long as a motion is made within the applicable deficiency filing period.

When an order terminating the automatic stay is entered or a notice of termination of the automatic stay is filed, the trustee is authorized to cease payments upon any and all claims in that case where any creditor holds a security interest in the same property.

(e) Secured Creditor Duties in All Title 11 Cases.

(1) A secured creditor who is receiving direct payments from a debtor shall send all payment coupons or statements of account that the creditor provides to its non-bankruptcy borrowers to bankruptcy debtors who have indicated, in their Statement of Intention or Chapter 13 plan, their intent to retain the secured creditor's collateral by complying with the terms of the contract, or to any debtor who so requests. The act of sending such payment coupons or statements of account shall not be considered a violation of the automatic stay or of the debtor's discharge injunction.

(2) If a secured creditor does not provide payment coupons and statements of account referred to in paragraph (e)(1) above, then, upon request by the debtor, that secured creditor shall provide the debtor with a telephone number or other means to access account information that would normally be provided by the payment coupons or statements of account referred to in paragraph (e)(1) above.

(3) A secured creditor shall respond promptly to a trustee's or debtor's reasonable requests for account information.

(4) The automatic stay provided in 11 U.S.C. § 362(a) is modified as follows:

(A) Secured creditors may contact the debtor about payment of property taxes due and the status of insurance coverage on property used as collateral;

(B) If there are direct payments to creditors, the creditor may contact the debtor in writing about any payment in default;

(C) If there are direct payments to a creditor, the creditor shall send statements, payment coupons, or other correspondence to the debtor that the creditor sends to its non-debtor borrowers; and

(D) The situations discussed in Local Rule 4001-2.

(5) For escrowed loans, no less than once a year, each secured creditor shall provide written notice to the debtor and debtor's attorney of any and all amounts due or paid in that year or the coming year, if known, for all escrowed items. If such payment or advance results in a shortage in the escrow account, the creditor shall determine or analyze the amount necessary to cure that shortage and provide the debtor with written notice thereof. Should the analysis result in a payment change, then written notice of the payment change shall be provided to the debtor and debtor's attorney at least 30 days in advance of the due date of the payment change. Direct contact by the creditor to the debtor under this provision shall not be a violation of the automatic stay.

(6) For non-escrowed loans, and if allowed under non-bankruptcy law, should a creditor determine it will advance and pay entities for taxes and/or insurance to protect its security interest, then it shall provide at least 30 days' written notice thereof to the debtor and debtor's attorney before the funds are paid or advanced, unless the creditor suffers an immediate loss during the 30 days. In such a case, notice to the debtor and debtor's attorney shall be given contemporaneously with the advance or payment. Said payment or advance shall be reimbursed to the creditor as allowed under non-bankruptcy law or agreement.

Should the creditor determine that it will thereafter escrow the loan as provided under the security instrument, note, contract, or deed of trust, then the creditor shall thereafter comply with the provisions of Local Rule 4001-1(e)(5).