Filed: Sep. 19, 2018
Latest Update: Sep. 19, 2018
Summary: MEMORANDUM DECISION RE: GENERAL ORDER 34 M. ELAINE HAMMOND , Bankruptcy Judge . Effective December 1, 2017, any debtor filing a chapter 13 plan is required to use the standard form chapter 13 plan for the Northern District of California, NDC 1-1. The form plan provides for conduit post-petition payments to Class 1 secured creditors. For most debtors, the Class 1 creditor is their mortgage holder. Under a conduit plan, the debtor provides funds to the chapter 13 trustee on a monthly basis fo
Summary: MEMORANDUM DECISION RE: GENERAL ORDER 34 M. ELAINE HAMMOND , Bankruptcy Judge . Effective December 1, 2017, any debtor filing a chapter 13 plan is required to use the standard form chapter 13 plan for the Northern District of California, NDC 1-1. The form plan provides for conduit post-petition payments to Class 1 secured creditors. For most debtors, the Class 1 creditor is their mortgage holder. Under a conduit plan, the debtor provides funds to the chapter 13 trustee on a monthly basis for..
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MEMORANDUM DECISION RE: GENERAL ORDER 34
M. ELAINE HAMMOND, Bankruptcy Judge.
Effective December 1, 2017, any debtor filing a chapter 13 plan is required to use the standard form chapter 13 plan for the Northern District of California, NDC 1-1. The form plan provides for conduit post-petition payments to Class 1 secured creditors. For most debtors, the Class 1 creditor is their mortgage holder. Under a conduit plan, the debtor provides funds to the chapter 13 trustee on a monthly basis for the debtor's monthly post-petition payment due to Class 1 creditors, in addition to the payment to be disbursed by the trustee to creditors based on debtor's plan. A debtor has the option to propose a non-conduit plan. In doing so, the debtor accepts certain alternate requirements—primarily the obligation to provide a declaration of direct payment with supporting documentary evidence at various intervals in the case.
This non-conduit option and its conditions are provided for in the instructions to the form plan and General Order 34.1 The instructions include an approved, non-standard provision whereby a debtor may elect to opt out of the conduit provision by incorporating alternate plan language. The language includes that the debtor shall file a "Declaration of Direct Payment" as specified. General Order 34 provides that, for each Class 1 creditor the debtor elects to pay directly, debtor shall submit a declaration under penalty of perjury stating that debtor has made the post-petition payment and attaching proper documentary evidence. The purpose of this requirement is to ensure that debtors who choose conduit or non-conduit payments are held to the same standards and treated equitably.
Here, Debtor's counsel filed a declaration that attached a one-page document from Debtor Xuan Thi Casey. The document is a form created by counsel that provides a place for Debtor to write in basic information about the post-petition payments: payment date, creditor name, property address, the entity paid, the method of payment, and payment amount. This form was signed under penalty of perjury by the Debtor.
In response, Devin Derham-Burk, the chapter 13 trustee ("Trustee"), filed a motion to dismiss Debtor's bankruptcy case pre-confirmation based on the failure to provide proof of payment as required by General Order 34. The day before hearing on this motion, Debtor filed additional documentary evidence. In the interim period, Debtor and Trustee filed numerous pleadings primarily seeking guidance from the court on what constitutes "documentary evidence" for the purposes of General Order 34.2
As such, this memorandum decision is issued in order to provide additional guidance.
The purpose behind General Order 34's requirement of documentary evidence is to verify receipt of on-going post-petition payments by the Class 1 secured creditor. Documents that will establish receipt of payment include:
• Statement3 from Class 1 creditor identifying payment received.
• Statement of debtor's bank account reflecting electronic transfer of funds to identified Class 1 creditor.
• Statement of debtor's bank account reflecting transfer of funds to identified Class 1 creditor paid by phone.
• Statement of debtor's bank account reflecting cleared check for payment to Class 1 creditor. If the statement does not provide an image of the cleared check then debtor should also provide a copy or photo of initial check showing payee and check number.
• Receipt for payment made at or delivered to a retail location of the Class 1 creditor.
• Copy of cancelled check for payment to Class 1 creditor.
In this context, "statement" includes a monthly statement or online record available to a debtor. Any statement, receipt, or other document may and should be redacted to remove personal information such as debtor's complete account number.
Some documents demonstrate only a potential or attempted payment. They do not establish receipt of payment by the Class 1 Creditor. As a result, unless supported by further evidence as described above, the following are insufficient evidence of payment:
• Copy or photo of personal check.
• Copy or photo of money order.
• Copy or photo of cashier's check.
Depending on the facts of the case, this evidence may be sufficient to provide Debtor with an opportunity to promptly supplement the record with evidence of receipt of payment by the Class 1 creditor.
Debtor herein ultimately provided a declaration under penalty of perjury with documentary evidence in the form of copies of a personal check and a cashier's check, each accompanied by a record from the issuing bank of the posting of payment to Debtor's account. This is equivalent to a statement of Debtor's bank account reflecting the cleared check, and constitutes sufficient documentary evidence.4 Accordingly, Trustee's motion to dismiss will be denied by separate order.
