Chase Caught Manufacturing Defaults in BK Court

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Chase Home Finance, Caught Manufacturing Defaults In Bankruptcy Court, Nears Deal With US Trustee

December 23, 2008
In a case presenting facts similar to those in In re Schuessler, 386 B.R. 458 (Bankr. S.D. N.Y., April 10, 2008), in which Chase Home Finance was sanctioned for filing an unwarranted motion to lift the stay, Chase has reportedly entered into a proposed stipulation with the U.S. Trustee regarding procedures to be followed in regard to its proofs of claim, motions for relief from stay, and Chapter 13 plan objections in bankruptcy cases in the U.S. Bankruptcy Court for the Southern District of New York.
In the case of In re Pawson, Case No. 05-18439 (Bankr. S.D.N.Y.) Chase filed a motion for relief from stay although the debtor had substantial equity in a co-operative apartment valued at $1,000,000. Chase alleged that the debtor was two months in arrears in his mortgage payments, though the debtor showed that Chase had been rejecting the online payments he had made since filing his petition.
Chase withdrew the motion three days after the debtor’s response, and the debtor filed a cross-motion for sanctions. U.S. Bankruptcy Court Judge Martin Glenn held hearings on August 7 and 13 on the issue, and to determine the applicability of sanctions against Chase Home Finance.
In a courtroom stunner, Chase’s attorney read into the record its settlement with the debtor, which provided for a payment of $50,000 as well as various forms of non-financial relief.
Unfortunately for Chase, however, paying $50,000 wasn’t the end of the problem. The U.S. Trustee’s Office got into the picture, looking at Chase’s procedures in bankruptcy court.
Though Chase’s proposed stipulated order with the U.S. Trustee has not been posted to the court’s ECF docket, the draft form of the document is an interesting one. The stipulation specifies procedures to be followed prior to the filing of a lift-stay motion, procedures to be followed subsequent to the filing a lift-stay motion, and procedures to be followed in filing proofs of claim and objections to proposed Chapter 13 plans.
You can view Chase’s proposed settlement here.