Servicing Guide

Published June 13, 2018

E-2.1-06: Reviewing Bankruptcy Reorganization Plans (11/12/2014)

The servicer or the law firm must obtain a copy of any proposed reorganization plan and review it prior to the confirmation hearing and any deadline to object to confirmation. The review must consider the scenarios described in the following table.

If any of the following statements are true… Then…

the plan attempts to modify the security deed or mortgage, the note, the principal balance, the interest rate, or the maturity date

the servicer must ensure that the attorney files an Objection to the Confirmation or to other motions filed by the debtor, as appropriate.

the plan does not include the correct arrearage claim amount and provide for the payment of interest (where permissible to collect)

the plan does not provide for the arrearage claim to be paid in a reasonable period of time in accordance with local rules and practices

the plan does not provide for attorney fees

The servicer must direct the law firm to request that post-petition payments be sent directly to the servicer unless local rules and practices require post-petition payments to be sent to the trustee. If the security property is located in a jurisdiction that allows the trustee to receive both the pre-petition and post-petition monthly payments, and the confirmation hearing is not held within 45 days of the meeting of creditors, the servicer must instruct the law firm to consider requesting interim payments by filing a Motion for Adequate Protection Payments, if permitted by the bankruptcy court.