Eastern District of North Carolina Issues Order in Wake of Hurricane Matthew

14 Oct Eastern District of North Carolina Issues Order in Wake of Hurricane Matthew

hurricane-floodingThe Bankruptcy Court for the Eastern District of North Carolina has issued an order establishing some procedures in the wake of the massive flooding in the district.

Hurricane Matthew has unleashed unprecedented flooding over many parts of the District.  This flooding has caused disruptions in employment; property damage and other issues.

The Bankruptcy Court has provided to the trustees the authority to continue any § 341 Creditors’ Meetings without a motion.

Chapter 13 Trustees are allowed additional discretion to allow waivers of chapter 13 payments based on the circumstances presented.  The requirement of obtaining court approval for incurring debt over $7,500 is suspended.  If a debtor needs to incur debt to replace flood ravaged property and the debt incurred is over $7,500, the Trustee must approve incurring that debt.  If the Trustee does not approve the proposed additional debt, then the Court approval must be sought.  This is a significant change to expedite folks getting the items they need.

If a motion is filed with the Bankruptcy Court, the motion will not be ruled on if there is no reply unless the Court is persuaded that the debtor and debtor’s counsel actually received the document.  The Court understands that people may be displaced and unable to get their mail and other notices.  This will prevent defaults being entered against debtors in their cases.

The Court will also try to expeditiously consider motions to modify chapter 13 plans based on a change of circumstances when debtors lose income or property as a result of the flooding.  The debtors will still have to set forth specifically what justifies the change and to account for any insurance proceeds or other sources of funds (disaster relief, etc.).

If debtors are in a consent order with the Chapter 13 Trustee and are unable to make their payments, the Trustees are authorized to modify the default provisions in those consent orders.  If the parties cannot agree on such, then the Bankruptcy Court will consider new default provisions for any consent orders.

These are much needed and appreciated modifications to standard procedures.  Hopefully, this will provide some relief to the debtors in our district stemming from Hurricane Matthew.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.

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