Source: https://thelegaltaxi.com/Home/SRM_BankruptcySample
Timestamp: 2019-04-25 14:35:58+00:00

Document:
RE: Whether amended consent orders by debtors in a bankruptcy proceeding valid? Are such orders enforceable if they prevent creditors from enforcing their rights?
Chris (Creditor) held a mortgage and a deed of trust in property given by the (Samantha) debtor, her son, and a third party, all are owners of the property. During a 4-year period, all of the owners filed bankruptcy proceedings, always within days of a scheduled foreclosure sale, which is normally 180 days from the declaration of non-receipts of payment from creditor’s side. After some time the son filed a second bankruptcy, proceeding regarding same matter and then parties entered into an amended consent order and the debtor and other owners (including third party owners) acted in a concerted effort to prevent the client's efforts to enforce its rights, this is what alleged by Chris. Movant debtor filed for relief under Chapter 13 of the United States Bankruptcy Code. The debtor filed an amended motion against respondent creditor to void the foreclosure sale on the debtor's real property.
Bankruptcy law states clearly some aspects of abuse within the boundaries of USC. It will be viable to enquire into the facets of abuse done by debtors, not in conformity with the contractual terms of a bankruptcy plans. Research issue involves, debtors infringing creditors’ right construing from the facts will be researched along with concurrent provisions of law. However, it is pertinent to look into the conduct of other co-owenrs of the property to impute constructive notice upon them.
According to In re Mullin, a due on sale clauses is valid and enforceable in Texas. Further, the debtor normally is not allowed to modify the contract terms on a loan secured by the debtor's property, 11 U.S.C. § 1322(b)(2).
Pursuant to 11 U.S.C.S. § 1322(b)(2), a bankruptcy debtor may not modify the rights of a secured creditor who has an interest in real property, securing the debtor's principal residence. The rights referred to in § 1322(b)(2) are those reflected in the relevant mortgage instruments, which are enforceable under state law. Due on sale clauses are valid and enforceable in Texas.
A debtor normally is not allowed to modify the contract terms on a loan secured by the debtor's property. 11 U.S.C. § 1322(b)(2).
[T]he purpose of 11 U.S.C.S. § 1322(b)(2) is to prohibit a bankruptcy plan from modifying the rights of the holders of claims secured by home mortgages.
In the bankruptcy arena, an agreement to repay an otherwise dischargeable debt that does not comply with the requirements of 11 U.S.C.S. § 524(c) must be supported by consideration entirely independent of the discharged debt. Executing a new promissory note to repay a debt that was discharged in order to avoid a foreclosure on debtor's home is new consideration that supports a finding of a valid post-discharge agreement.
Hence, unless the adequate consideration supports the new agreement, it is unenforceable regardless of whether the agreement satisfies the other requirements for contracts. According to facts, all co-owners have filed several bankruptcy petitions in the last four years whenever a foreclosure sale was scheduled. It is apparent that the debtors filed this bankruptcy petition in order to stop the foreclosure on the property. Thus, a bankruptcy plan may not alter the contractual interest rate and terms. The debtor may not use the plan for amending the consent order as a medium to prevent the holder's right to foreclose against the property. However, the amended consent orders between debtors might be enforceable.
Bankruptcy courts have imposed equitable servitude, where holders of a covenant seek money damages and holders of equitable servitude seek injunctions in cases where a pattern of abuse of the bankruptcy system is clear.
The court confronted a situation in which an owner of property subject to foreclosure (who happened to be in bankruptcy at the time) transferred a fractional interest in the property to several others, one of whom filed his own bankruptcy petition. Court found that an equitable servitude was necessary to prevent continuing abuse by the debtor.
Through Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, a different plan modification procedure is allowable for individual debtors in bankruptcy cases, as opposed to that for corporate or partnership debtors.
In determining whether debtor's systematic abuse of the bankruptcy system was indicia of egregious behavior and bad faith, pursuant to 11 U.S.C.S. § 362(c)(4)(D), the conduct of the non-debtor and co-owner was sufficiently egregious to impute constructive notice upon them. The conduct of the non-debtor co-owner was sufficiently obvious to impute constructive notice upon him. The question is not how the reviewing court would have ruled, but rather whether a reasonable person could agree with the bankruptcy court's decision; if reasonable persons could differ as to the issue, then there is no abuse of discretion.
The bankruptcy court sanctioned appellant for violating the discharge injunction. On appeal, the court held that the parties did not enter into any type of reaffirmation agreement that would be enforceable under the Bankruptcy Code. The debtor's voluntary post-petition payments did not obligate her to continue making payments under the note. Also, the bankruptcy court was correct in determining that the parties did not enter into a because there was no new consideration given in exchange for renewal of the agreement.
The contractual terms of a bankruptcy plan might not be alterable. Also, the due on sale clauses are valid and enforceable in Texas. The amended consent orders between debtors and the co-owners might be enforceable. However, the conduct of the property owners may prove sufficient to impute constructive notice upon them if the court finds probable cause that the debtors and the property’s co-owners acted together in a concerted way to prevent creditor’s efforts to enforce its rights. Such concerted conduct may hold by court as an abuse of the bankruptcy process.

References: § 1322
 § 1322
 § 1322
 § 1322
 § 1322
 § 524
 § 362