Prior to September 1, 2015, procedures in consumer chapter 13 bankruptcy cases varied greatly across the divisions of the Middle District of Florida, creating vastly different workflows for creditors and attorneys with cases pending in multiple divisions across the District. (The Middle District of Florida comprises four divisions, including Orlando, Tampa, Jacksonville and Fort Myers.) As part of the U.S. Bankruptcy Court’s ongoing efforts to increase uniformity across the District, and after months of meetings between members of the bar and a district-wide steering committee, Chief Judge Jennemann recently entered two new administrative orders, effective September 1, 2015, which should result in increased efficiency and ease for creditors and practitioners with geographically diverse caseloads, especially with respect to mortgage modifications and stay relief for secured creditors and lessors.
Administrative Order FLMB-2015-7 amends the Court’s procedures for mortgage modification mediation (MMM) in bankruptcy cases. The majority of amendments appear to be cosmetic, but the following substantive changes were made:
- Mediators are now required to file a report indicating the current status of the mediation within seven days of each mediation conference. Failure to file such reports on a timely basis could result in removal of the mediator from the case and disgorgement of her fees. See A. O. FLMB-2015-7 at 7.
- Debtors are now required to file motions to approve permanent mortgage modifications using the court’s negative notice provisions. Under the prior procedures, debtors had the option to file such motions on negative notice, but it was not mandatory. See A. O. FLMB-2015-7 at 11.
- The MMM is now deemed concluded at the earliest of (1) the filing of the mediator’s report of conclusion, (2) upon entry of an order approving a temporary or permanent loan modification, or (3) upon entry of any other order of the court indicating that the MMM has concluded. See A. O. FLMB-2015-7 at 15. In addition, in the event the MMM results in a mortgage modification agreement between the parties and the lender opts to decline receipt of any additional funds held by the trustee at the conclusion of the MMM, then the trustee is directed to disburse such funds as agreed to by the parties. See A. O. FLMB-2015-7 at 15(A).
- In the event the debtor’s chapter 12 or chapter 13 case is dismissed or converted to a chapter 7 or chapter 11 while the MMM is pending, the chapter 12 or chapter 13 trustee shall disburse any funds remaining in the trustee’s possession to the debtor. See A. O. FLMB-2015-7 at 16.
Administrative Order FLMB-2015-8 applies in all chapter 13 cases filed after September 1, 2015, and represents a significant step forward in the Court’s efforts toward uniformity. Of particular interest to creditors is the Court’s termination of the automatic stay and co-debtor stay with respect to any secured creditor or lessor upon filing of a debtor’s plan that (1) provides for surrender of the secured creditor’s collateral or lessor’s property, (2) provides for direct payments to be made to the secured creditor or lessor, or (3) fails to address the claim of the secured creditor or lessor. See A. O. FLMB-2015-8 at 9; see also 4(e). For most divisions, this represents a significant departure from prior procedures, which either required such creditors to file a motion in order to obtain stay relief or terminated the stay upon entry of the confirmation order without addressing the co-debtor stay. The new procedures also set forth explicit requirements for debtors with respect to the use of the Court’s model plan and confirmation requirements.
Although the administrative orders seem to take a significant step toward uniformity within the Middle District, creditors are encouraged to continue to consult with counsel as to the particular practices that may still be required by each judge and trustee within the District.