Getting It Right the First Time

1. Judicial Lien Avoidance
   1. SC LBR 4003-2 addresses lien avoidance. Following it and using the Court’s local forms (notice, motions, orders) will solve lots of the issues.
   2. Be clear about the property value, the total of senior liens, and the amount of the exemption you contend to be available. If your representation is inconsistent with other information in the case add information to the form motion to clarify the issue.
   3. The lien must have attached pre-petition to be avoided. If the lien was obtained post-petition, there are other issues. An adversary proceeding seeking a declaratory judgment that the lien did not attach may be necessary. Same for after acquired property.
   4. Judgments attach to real estate in the county in which the judgment or transcript is recorded. If the debtor owns property in multiple counties make sure the judgment is recorded in the county you are concerned with and ensure that you reference the correct judgment and property. When necessary or if the schedules lead to confusion, add a line to the motion outlining the relevant facts.
   5. Personal property judicial liens are rare and exist only with an actual pre-petition levy.  This means that a writ of execution has been issued and that the sheriff levied on the personalty (has taken actual or constructive possession of the property).  A levy on personal property lasts four months; after that there is no enforceable lien to be avoided. Add facts to the motion to support the request. Don’t use the household goods lien (NPMSI) forms to seek avoidance of judicial liens attaching to personalty.
   6. If real property is co-owned, the co-owned property judicial lien avoidance form should be used. See Exhibit 1. If there is confusion about property ownership arising from the schedules add facts to the form motion to clarify.
   7. If there are multiple judicial liens being avoided, the liens must be avoided junior to senior.  The total of all senior/unavoidable liens column on the motion and order should include any senior judicial liens that have not yet been avoided, plus any other liens on the property (mortgages, etc.). Obviously the senior lien dollar amount will change on a line by line basis as liens are avoided.
   8. If multiple liens are being avoided, all liens can be listed on the same motion and order, but the motion must be docketed separately for each lien. It saves you and chambers time if one motion and one order is used.
   9. If seeking to avoid a lien in a closed case, the case does not have to be reopened.  The lien still must have attached pre-petition.  The values and debt figures to be used in the motion are the amounts as of the date of filing of the petition. Add information to the form motion to support your request (why are you asking now) and supplement or supply any missing or incorrect information.
   10. Enough information should be provided in connection with the motion to ensure that the Court can determine whether the lien is avoidable:
       1. Case numbers from judgments or other index information are helpful.
       2. If multiple liens are being avoided, provide information on the timing, rank, or priority of the judgments or the dates the judgments were recorded.
       3. If the judgment is listed on the schedules as an unsecured debt, make sure to provide information to the Court sufficient to show that there is actually a pre-petition judgment. We will call about these issues.
2. Chapter 13
   1. Orders Allowing Payment of Funds upon Conversion or Dismissal- after filing the debtor’s consent make sure to use the correct, revised proposed order. Did the case convert or get dismissed? Is the case now (at the time of the order) a chapter 13 or chapter 7? After conversion the chapter 13 trustee is now the former trustee. Drop paragraphs about payments to creditors (adequate protection or conduit payments) if not applicable.
      1. See Exhibit 2a.
      2. See Exhibit 2b.
      3. See Exhibit 2c.
   2. Substitution of Collateral – Replacing a wrecked vehicle. See SC LBR 3015-8.
      1. See Exhibit 3 for a preferred form.
   3. Applications to sell – real estate (modify forms for sales of personalty).
      1. The application and proposed order must include the basic terms of the transaction (buyer, price, etc.)
      2. The application and proposed order must indicate how liens are to be treated (paid in full upon the sale, sale is subject to liens, etc.).
      3. See Exhibit 4.
   4. Motions to incur debt/obtain credit.
      1. See SC LBR 3015-8.
      2. See Exhibit 5 for a preferred form.
   5. Disbursement of insurance proceeds – vehicle accident (modify for home insurance disbursements).
      1. See SC LBR 3015-8.
      2. See Exhibit 6 for a preferred form.
   6. Plan provisions – These are some that I have approved in the past. Talk to the trustee if there are questions.
      1. Student Loans.  The following nonstandard language options are approved for use in Judge Duncan’s cases.  Place all nonstandard language in Section 8.1.
         1. The debtor will continue under the existing [student loan repayment program] with [creditor] which currently has a monthly payment of [amount] as of the time of this Plan. Debtor’s payment is next scheduled to be reviewed prior to the [month, year] payment. Should the monthly payment increase to more than $100 per month, Debtor shall seek Bankruptcy Court approval prior to entering into further agreement. The Trustee shall not make disbursements to the creditor on this claim.

         2. Student loan creditor 1     $____

            Student loan creditor 2     $____

            Specify the amount and frequency of payments and whether disbursed by the trustee or the debtor.

            Debtor will pay monthly as indicated on Schedule J, directly to creditor, but if these claims are filed by any other entity than listed in the schedules and plan, debtor will be responsible to notify the Trustee, or Trustee may make disbursements on the claim pursuant to 5.1 above.

            Provide a brief statement of the basis for separate classification and treatment.

            This class discrimination is fair pursuant to 11 U.S.C. § 1322(b)(1), as the debt to this creditor represents a significant portion of the total general unsecured debt; the estimated payments to the remainder of the pool of unsecured creditors without priority is likely to be lower if the debtor included the debt in the pool to be paid pro rata by the Trustee.  Debtor agrees that if she signs a certification of plan completion, she will be certifying that all contractual payments that came due to this creditor have been made through the date of certification.

         3. The debtor will continue under the existing [student loan repayment program] with [creditor] which currently has a monthly payment of [amount] as of the time of this Plan. Debtor’s payment is next scheduled to be reviewed prior to the [month, year] payment. Should the monthly payment increase to more than $100 per month, Debtor shall seek Bankruptcy Court approval prior to entering into further agreement. The Trustee shall not make disbursements to the creditor on this claim.

            Debtor shall be allowed to seek enrollment in any applicable income-driven or income-based repayment ( known commonly as “IDR” plan with the U. S. Department of Education and/or other student loan servicers, guarantors, etc. or public service loan forgiveness programs (sometimes referred to as “PSLF”) (with such servicer or agency referred to hereafter as “Ed”), without disqualification due to bankruptcy. Ed shall not be required to allow enrollment in any repayment or forgiveness program unless the Debtor otherwise qualifies for such plan. Debtor may, if necessary and desired, seek a consolidation of her student loans by separate motion and subject to subsequent court order. Upon determination by Ed of qualification for enrollment in an IDR and calculation of any payment required under such by the Debtor, the Debtor shall, within 30 days, notify the Chapter 13 Trustee of the amount of such payment. At such time, the Trustee or the Debtor may, if necessary, file a Motion to Modify the Chapter 13 Plan to allow such direct payment of the student loan(s) and adjust the payment to other general unsecured claims as necessary to avoid any unfair discrimination. Debtor shall re-enroll in the applicable program annually or as otherwise required and shall, within 30 days following a determination of her updated payment, notify the Chapter 13 Trustee of such payment. At such time, the Trustee or the Debtor may, if necessary, file a Motion to Modify the Chapter 13 plan to allow such direct payment of the student loan(s) and adjust the payment to other general unsecured claims as necessary to avoid any unfair discrimination. During the pendency of any application by the Debtor to consolidate student loans, to enroll in an IDR or related program, direct payment of student loans under an IDR or similar program, or during the pendency of any default in payments of the student loans under an IDR or other program, it shall not be a violation of the stay or other State or Federal Laws for Ed to send Debtor normal monthly statements regarding payments due and any other communications including, without limitation, notices of late payments or delinquency. These communications may expressly include telephone calls and e-mails. Debtor’s attorney may seek additional compensation by separate applications and court order for services provided in connection with the enrollment and performance under an IDR or PSLF.

         4. Debtor is not seeking nor does this Plan provide for any discharge, in whole or in part, of student loan obligations, however, Debtor currently is in an income-driven or income-based repayment (known commonly as "IDR" plan with the U. S. Department of Education and/or other student loan servicers, guarantors, etc. or public service loan forgiveness programs (sometimes referred to as "PSLF'? (with such servicer or agency referred to hereafter as "Ed”, and shall remain in such IDR or PSLF without disqualification due to bankruptcy so she can get continuous credit for payments made during the bankruptcy which shall be applied to the duration of her IDR and PSLF she qualifies for based on her current employment. Ed shall not be required to allow enrollment in any repayment or forgiveness program unless the Debtor otherwise qualifies for such plan. Debtor may, if necessary and desired, seek a consolidation of her student loans by separate motion and subject to subsequent court order. Upon determination by Ed of qualification for enrollment in any future consolidated IDR and calculation of any payment required under such by the Debtor, the Debtor shall, within 30 days, notify the Chapter 13 Trustee of the amount of such payment. At such time, the Trustee or the Debtor may, if necessary, file a Motion to Modify the Chapter 13 Plan to allow such direct payment of the student loan(s) and adjust the payment to other general unsecured claims as necessary to avoid any unfair discrimination. Debtor shall re-enroll in the applicable program annually or as otherwise required and shall, within 30 days following a determination of her updated payment, notify the Chapter 13 Trustee of such payment. At such time, the Trustee or the Debtor may, if necessary, file a Motion to Modify the Chapter 13 plan to allow such direct payment of the student loan(s) and adjust the payment to other general unsecured claims as necessary to avoid any unfair discrimination. During the pendency of any application by the Debtor to consolidate student loans, to enroll in an IDR or related program, direct payment of student loans under an IDR or similar program, or during the pendency of any default in payments of the student loans under an IDR or other program, it shall not be a violation of the stay or other State or Federal Laws for Ed to send Debtor normal monthly statements regarding payments due and any other communications including, without limitation, notices of late payments or delinquency. These communications may expressly include telephone calls and e-mails.
      2. See Exhibit 7 for approved non-standard language for conduit mortgage plans
      3. Loss Mitigation.  If there are no arrears to be paid through the plan, the following language can be used in Section 8.1: Debtor(s) will seek loss mitigation/mortgage modification on the mortgage loan secured by [Real Property Description].  No payment will be made by the Trustee on this secured claim.  If a loan modification request is not approved within 120 days of the entry of an order lifting the stay to allow loss mitigation, then the stay may be lifted on [Real Property Description] and the creditor may send any required notice to Debtor(s) and proceed with its remedies against the collateral.
3. 362 Orders
   1. Automated form order events should be used whenever possible.  They are available for defaults on 362 motions, settlement orders (both conduit and non-conduit), and defaults on settlement orders.
   2. Family Court orders.  See Exhibit 8. If you are not using this form order, expect questions and a possible hearing.
   3. Default orders.  See Exhibit 9.
   4. Settlement orders.  See Exhibit 10.  Note that there is also a separate settlement order for conduit cases.  See Exhibit 10a.
      1. Language regarding waiver of §§503(b) and 507(b) claims should be in the beginning of the order, prior to the “It is Ordered” section.
      2. Language providing for relief upon default under the terms of the settlement order should provide that relief from stay “may” be granted, not that it “shall” be granted.
      3. Non-applicable provisions in the form order, including blank lines, should be removed.  For example, if the parties are entering into the settlement order solely for the debtor to repay attorney fees, the breakdown of the past-due amounts and the cure payments contained in the form order should be removed.
      4. All nonstandard provisions should be placed at the end of the order.
   5. Defaults on settlement orders. See Exhibit 11.
      1. Pay special attention to the language contained in the settlement order on which default is being sought.  If the settlement order provides that upon the filing of an affidavit of default, a further hearing will be scheduled, relief from stay cannot be granted without such a hearing, unless a proposed order is submitted indicating the debtor’s and/or the trustee’s consent.
   6. Note that these form orders no longer include language indicating that excess funds will be paid to the trustee or bankruptcy estate.
4. Default Judgments in Adversary Proceedings
   1. Obtaining a default judgment is a two-step process.
   2. The first step is to obtain an entry of default.  To obtain an entry of default, a plaintiff (or counter-claimant) must file proof of service (if not already filed) and an affidavit of default.  Once this is filed, Fed. R. Civ. P. 55 (made applicable to adversary proceedings by Fed. R. Bankr. P. 7055) provides that the Clerk must enter default.
   3. The second step is to seek a default judgment.  If the claim is for a sum certain or a sum that can be made certain, the request for default judgment can be made by affidavit, filed at the same time as the affidavit of default.  For all other claims, the request for default judgment must be made by separate motion, filed after the entry of default.
   4. Proposed orders submitted in connection with a request for default judgment should cover all elements of the cause of action. They should include the relevant history of the adversary proceeding and set forth how the complaint adequately pleads each element of the cause of action.  See Exhibit 12.
   5. My orders use the less popular “pled” rather than “pleaded”. With apologies to all who disagree. Thank you.  
5. Rule 7012 and 7056 Notices in Adversary Proceedings - Reminder
   1. ​These Rules require a party filing a motion to dismiss or a motion for summary judgment in an adversary proceeding in which the opposing party is pro se to file a notice in the form set forth in the Local Rules (SC LBR 7012-1 and SC LBR 7056-1).  The notice should be served on the pro se party with the motion and should be filed with the motion on CM/ECF. 
6. Motions to Expedite Hearings
   1. ​The motion to expedite hearing must be a separate motion from the motion seeking relief.  For example, if seeking an expedited hearing on a motion for relief from stay, both a motion for relief from stay and a separate motion to expedite hearing must be filed.  SC LBR 9075-1(a).
   2. The motion to expedite hearing must contain a detailed explanation as to why an emergency hearing is necessary.
   3. The motion should include a proposed date for scheduling the hearing.
   4. Where immediate turnover is sought and an adversary proceeding is filed, a motion for immediate turnover and a motion for expedited hearing must also be filed in the adversary proceeding.  SC LBR 9075-1(c).
7. Motions to Redeem
   1. ​The order should not indicate that after payment, the balance of the claim is unsecured.  Instead, it should simply provide that the creditor will be paid and that they are required to satisfy their lien.
   2. The order should not indicate that a secured creditor is required to establish its secured status in order to be paid. If there is a question about the extent, validity, or priority of a lien an adversary proceeding is necessary.
   3. See Exhibit 13.