Bankr. E.D.N.C.: In re Carroll- Evidence of Default necessary for Motion for Relief From Stay

Summary: Vericrest sought relief from the automatic stay and the Chapter 7 Trustee objected.  In the present case, the note contains two allonges purporting to transfer the Note by indorsement.  The first purports to transfer the Note from Flagstar Bank, F.S.B.  To LSF7 Bermuda NPL V Trust.  The second allonge is blank indorsement from Bermuda Trust.

To prevail on a Motion for Relief from Stay where there is no issue as to the sufficiency of equity to adequately protect it interests, the moving party must  show “[t]he [d]ebtor owes a debt to it, that it possesses a valid security interest securing the debt, and that the collateral securing the debt is declining in value while the [d]ebtor has failed to provide [the creditor] with adequate protection of its interest” to establish a prima facie case it is entitled to relief for lack of adequate protection. In re Vankell, 311 B.R. 205, 215 (Bankr. E.D. Tenn. 2004).

 At hearing, Vericrest failed to present evidence, including even a verified Motion or Affidavit, that the value of the property was declining or insufficient value to adequately protect the claim.  Similarly, Vericrest asserted a substantial arrearage, but presented not evidence of such, again not even a verified Motion nor Affidavit.  While counsel for Vericrest stated that he had reviewed the payment history and default, such unsworn statements are insufficient, particularly where neither the Debtor nor Trustee affirmatively conceded default.

Commentary: Secured Creditors in the Eastern District are best advised to have Motions for Relief  include an Affidavit establishing that there has been a default and/or that the value of the property is declining or insufficient to adequately protect the claim.

 For a copy of the opinion, please see:

In re Carroll- Evidence of Default necessary for Motion for Relief From Stay.PDF

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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