Louisiana Bankruptcy Judge Sets Parameters for Calculation of Escrow Amounts Due When Bankrupcy Case is Filed
By Pam Stewart, Texas Bankruptcy Attorney on May 31, 2008 in Uncategorized
Judge Elizabeth Magner, a United States Bankruptcy Judge for the Eastern District of Louisiana, has set out parameters for the calculation of escrow amounts due as of the petition date and how they should be reflected on proofs of claim. The issue arose in the Irby Fitch case, case number 07-11319, pending in the Eastern District of Louisiana. The parameters are as follows:
"First, the debtor’s actual escrow balance as of the petition date is to be listed on the proof of claim. Lenders are then required to list the last year’s property tax payment and premiums for all related insurance, as well as the date of last payment made on each account. Each amount should then be divided by 12 and multiplied by the number of months between the date of last payment and the petition date. The sum of these amounts, plus two months worth of escrow payments as allowed by RESPA (collectively referred to as the ‘Catch Up Escrow Payments’), should then be subtracted from the actual escrow balance existing on the petition date. If the difference is a negative number, this amount should be reflected on the proof of claim as a past due sum. If the difference is a positive number, it should be a credit against other sums owed…."
"Because the escrow amount is now balanced, past due installments should be listed on the proof of claim with only interest and principal components. Any amounts held in debtor’s suspense should be separately listed as a credit. All other outstanding fees, costs, and charges should be separately listed."
The Court determined in this case after the accounting was reconciled that the proof of claim should be reduced by $3,233.69 in Debtors’ favor.
Wells Fargo has filed a Notice of Appeal in this case.
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