I just came my confirmation hearing for my Chapter 13 bankruptcy this morning.
As a background, I filed for Chapter 13 bankruptcy in the middle of October, one day before my scheduled sale date because my TRO had elapsed to stop the sale of my property.
Bank of America then filed a copy of the promissory note with the back included with a “Pay to the Order of” – endorsed in blank with the court as their proof of claim for the bankruptcy.
We then filed an objection to their proof of claim stating that it appears that the note is a Bearer Note…and only a person in physical possession would have standing to enforce the note.
Bank of America then filed a response to our objection stating that they had possession of the note and intend to present it at the appropriate time. Under the bankruptcy filing in their proof of claim, they are stating for the record that they are a secured creditor due to their successor interest to Countrywide through acquisition.
Here’s where they run into a pickle. They are not the creditor at all. They are in fact a servicer for a securitized loan. We have evidence from Bank of America that states that the owner of the note is a Freddie Mac Trust. This little fact is going to cause them a lot of problems moving forward.
When we went to court today, the Judge was willing to accept their argument that they had possession of the note and that would be sufficient proof of claim.
We objected to this stating an important Federal Appellate Court ruling in re: Veal.
In Veal, it was decided that mere possession of the note was insufficient proof of claim because the creditor also had to provide proof as to how they came into possession of the note and under what purpose.
The Judge in this case is now setting my case for trial sometime in the next 90 days time frame out. Since we will be going to trial, we are now entitled to enter and request certain discovery evidence from Bank of America.
One of the things we will be asking is to have a representative from Bank of America who can answer depositions with first hand knowledge as to the nature and purpose of the transfer and movements of the note.
The problem that Bank of America is faced with is that now that they have stated for the record that they are a secured creditor of the instrument and not a servicer…they can never go back. There are certain rights, privileges and obligations of a holder of the instrument that needs to be proven.
Moving forward, we will obviously be asking for specific clarity as to the nature and purpose of the the transfer and ownership interest Bank of America has. As a debtor in bankruptcy, I have the right to ascertain who the creditor of the debt obligation with absolute certainty. Under the bankruptcy, the burden of proof is on the creditor.
This is why we recommend people to go into the bankruptcy venue where possible. Obviously, bankruptcy is not something one should enter into lightly but ultimately, if this is a matter of whether or not you get to stay in your home or get kicked onto the streets, the choice is pretty simple.
I will keep you posted with the progress of my case as it progresses.
Vince