THE NITTY GRITTY OF DIRT FOR DEBT  Southern District of Texas

THE NITTY GRITTY OF DIRT FOR DEBT Southern District of Texas Bench Bar Conference May 9-11, 2018 Carl Barto – Laredo, Texas Emil Sargent – Houston, Texas Chief Judge David R. Jones

The Plan 14. Secured Claims Satisfied by Transfer of Real Property in Satisfaction of Secured Claim. A. The secured claims set forth in this table will be satisfied by the transfer of title to the real property from the Debtor(s) to the transferee identified below. B. The Transferee is . C. The value to be credited to the Transferee’s claim secured by the lien is:

This is NOT a Surrender! Title is actually transferred to a lienholder. Absent an agreement, possession is relinquished on the transfer date.

Surrender vs. Transfer Surrender (p.7) Transfer (p. 14) No transfer of title Transfer of title Can be a partial interest Must own 100% Rule 6007-1 Possession relinquished on transfer Potential ongoing liability No further liability after transfer No adjudication of claims Adjudication of claims

The key is value! It is imperative that values be accurate. Think about the evidentiary presentation of valuation.

Making the Right Choice Understanding your client’s goals. Determining claims/liens. Determining value. Assessing ongoing risks. Integration with plan.

Example 1 Home Value – 150,000. Mortgage Amount - 200,000. Surrender vs. Transfer. Is there anything else you want to know? Ongoing obligations such as POA dues, utility contracts, etc.

Example 2 Home Value – 150,000. Ad Valorem Taxes - 15,000. Mortgage Amount - 200,000. POA Dues - 5,000. Who do you transfer to? What claims remain? Mortgage deficiency - 65,000, POA - 5,000. All unsecured.

Example 3 Home Value – 250,000. Ad Valorem Taxes - 15,000. Mortgage Amount - 200,000. POA Dues - 15,000. Who do you transfer to? What claims remain? None.

Example 4 Home Value – 250,000. Ad Valorem Taxes - 15,000. 1st Mortgage Amount - 200,000. 2nd Mortgage Amount - 50,000. POA Dues - 5,000. Who do you transfer to? What claims remain? 2nd Mortgage Deficiency - 15,000, POA - 5,000. All unsecured.

Questions? Make it work for you!

Form 14F(i) NOTICE OF TRANSFER OF REAL PROPERTY This Notice of Transfer of Real Property is filed pursuant to paragraph 14F of the confirmed chapter 13 plan in the bankruptcy case styled “In re ”, Case Number , in the United States Bankruptcy Court for the Southern District of Texas. A certified copy of the plan is attached as Exhibit “A”. A certified copy of the order confirming the plan is attached as Exhibit “B”. Property Description: Attached as Exhibit “C” is a description of the property that is transferred. Transferor: [Name and address] Transferee: [Name and address] Effective Date of Transfer: As set forth in paragraph 14 of the plan attached as Exhibit “A”. Consideration: As set forth in paragraph 14 of the plan attached as Exhibit “A”. Date: Transferor County: State: Sworn to and subscribed before me on [DATE] by . NOTARY SIGNATURE S T A M P My commission expires:

Paragraph G Form 14G(ii) NOTICE OF ELECTION TO PROCEED BY FORECLOSURE This notice is filed by (“Lender”) pursuant to Paragraph 14G(ii) of the confirmed plan in this case. Lender elects to proceed by foreclosure under applicable non-bankruptcy law to foreclose its interest in the property that is described in paragraph 14D of the confirmed plan. The foreclosure must be completed not later than the 90th day following entry of the order confirming the plan or this notice will be of no further force and effect. Effective on the 30th day following confirmation of the plan, Lender assumes responsibility for all future losses associated with the property and all future charges, liens, and fees against the property. Date: [SIGNATURE BLOCK]

Chapter 13 Plan Form 14(G)(i()-1 Date [ADDRESSED TO DEBTOR[S] AND DEBTOR[S]’ COUNSEL] [LENDER MAY INCLUDE IMPOSED STATEMENTS AND DISCLAIMERS AS REQUIRED BY APPLICABLE NON-BANKRUPTCY LAW] Re: Demand for Special Warranty Deed. In re: , Case Number in the United States Bankruptcy Court for the Southern District of Texas. Dear Debtor(s) and Counsel: This request is sent on behalf of (the “Lender”). Lender holds a claim that is secured by the real property located at [street address]. Pursuant to paragraph 14G(i) of the confirmed bankruptcy plan, Lender demands that you execute the attached Special Warranty Deed and return it in the enclosed prepaid envelope. The Special Warranty Deed must be executed before a notary public and notarized prior to its return. The Special Warranty Deed must be executed and returned within 14 days of the date of this letter. [SIGNATURE BLOCK BY LENDER OR COUNSEL]