COLLATERAL RECOVERY AND DEFICIENCY CLAIMS IN CHAPTER 13
- Upon confirmation of a Chapter 13 Plan that provides for surrender of collateral:
- The creditor shall have sixty (60) days from confirmation of the Chapter 13 Plan to amend a timely filed proof of claim regarding any unsecured deficiency balance that may occur upon the sale of the subject collateral if the collateral consists of personal property that was not liquidated within the claims bar date period.
- The creditor shall have ninety (90) days from confirmation of a Chapter 13 Plan to amend a timely filed proof of claim regarding any unsecured deficiency balance that may occur upon the sale of the subject collateral if the collateral consists of real property that was not liquidated within the claims bar date period.
- The time periods provided above may be extended by Court Order upon the creditor filing an appropriate Motion stating the circumstances necessitating a need for a longer period of time and an estimated deficiency.
- If the creditor does not file an amended proof of claim asserting a deficiency balance within the given time period and does not file a timely Motion to Extend the Time, then the claim will be automatically disallowed and the Chapter 13 Trustee shall make no disbursement on such claim.
- If the Chapter 13 Plan provides for the surrender of collateral, that plan shall constitute the debtor(s)’ consent to the immediate termination of the automatic stay.
- If a Chapter 13 Plan does not provide for the surrender of property:
- If the collateral consists of personal property that was not liquidated prior to the claims bar date, the secured creditor shall have sixty (60) days from the date of an Order terminating the automatic stay to amend a timely filed proof of claim regarding any unsecured deficiency balance that may occur upon the sale of the subject collateral.
- If the collateral consists of real property that was not liquidated prior to the claims bar date, the secured creditor shall have ninety (90) days from the date of an Order terminating the automatic stay to amend a timely filed proof of claim regarding any unsecured deficiency balance that may occur upon the sale of the subject collateral.
- The time periods provided above may be extended by Court Order upon the creditor filing an appropriate Motion stating the circumstances necessitating a need for a longer period of time and an estimated deficiency.
- If no amended unsecured proof of claim is filed within the given time period and no Motion to Extend the Time is filed, any claim filed outside the time limits set forth in this rule will be automatically disallowed and the Chapter 13 Trustee shall make no disbursement on such claim unless a Motion and Order allowing the filing of the claim has been entered.
Advisory Committee Notes
2023 Amendment
The amended rule includes only stylistic changes for purposes of internal consistency and/or to correct grammatical errors.
2020 Amendment
The amended rule includes both stylistic and substantive changes. The format of subdivisions is changed to maintain a consistent style across all rules. Various subdivisions are amended for four key purposes. First, subdivision (A) is amended to allow for the possibility that surrender does not necessarily return property to the creditor, which is a legal question to be decided by the Court. Second, references to the “secured” creditor have been removed to avoid confusion in the circumstance where surrender of collateral renders a creditor unsecured; removal of the qualifier is appropriate because the term creditor sufficiently describes the originally secured party. Third, the amendments clarify the process for a secured creditor’s deficiency claim for surrendered collateral, clarifying that such claims should be filed as amendments to the original, timely filed secured claim. Fourth, the amendments remove any reference to filing by negative notice as exclusively within the scope of Local Rule 2002-2.