Bankr. M.D.N.C.: In re Styers- Motion to Dismiss as Alternative to Motion for Relief from Stay

Summary:

Chapter 13 Debtors had fallen behind on payment under their confirmed plan, wherein the mortgage held be Wells Fargo was paid directly by the Debtors. Instead of following the more customary path of seeking relief from the automatic stay, Wells Fargo instead sought dismissal of the Chapter 13 case. The Motion to Dismiss was resolved by bringing the payments “inside” the Chapter 13 plan, but the parties could not agree on the allowance of attorney’s fees in the amount of $350.00. Further, the Bankruptcy Administrator argued that Wells Fargo should instead have filed a Motion for Relief, with its required filing fee of $176.00.

The Court held that pursuant to 11 U.S.C. § 1307, a Motion to Dismiss was an appropriate vehicle for raising the Debtors’ default under the plan and awarded attorneys’ fees.

Commentary:

While it would still be the more considerate practice to seek a consent order before filing a Motion for Relief, which would also avoid the $176.00 filing fee, this seems like a fine method for raising defaults by Debtors. In fact, since most promissory notes and statutes only allow for “reasonable attorney’s fees and costs”, this opinion raises the question of whether requiring a Debtor to repay the filing fees for a Motion for Relief from Stay is ever reasonable, especially given that parties have a duty to mitigate damages, since a viable and less expensive alternative is available.

For a copy of the opinion, please see:

Styers- Motion to Dismiss as Alternative to Motion for Relief from Stay

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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