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40 borrower to cease making payments during the forbearance term. In an attempt to ensure that borrowers could take advantage of both forbearance and a Chapter 13 bankruptcy, Congress added some temporary bankruptcy provisions in the Consolidated Appropriations Act (CAA), signed into law on December 27, 2020, a mere nine months after the CARES Act (2021 CAA)(Pub. L. No. 116-260 (H.R. 133)). Mortgage servicers are most affected by three of those provisions. First, if the debtor's plan was confirmed prior to March 27, 2021, and the debtor is experiencing a hardship directly related to COVID-19, a modified plan may be filed for up to 84 months past the date of the first payment made under the plan. is two-year expansion of the time limit for payment of Chapter 13 plans sunsets on March 27, 2022 (11 U.S.C. § 1329(d)(1)). Second, even if the normal claims bar date has passed, the CAA allows servicers of federally related mortgage loans to file a proof of claim for the amount not received by a mortgage servicer while the mortgage loan was in forbearance. is is officially called a "CARES Forbearance Claim" but is often simply referred to as a "supplemental claim." ere is a director's form (meaning an optional form) for this type of claim. In essence, it treats the defaulted payments that fell due during the forbearance period as distinct from traditional pre and post-petition payments. Pursuant to 11 U.S.C. § 501(f ) and § 502(b)(9), the supplemental proof of claim must be filed no later than 120 days after expiration of the forbearance period. is change sunsets on December 27, 2021. ird, the CAA authorizes the debtor to modify a confirmed Chapter 13 plan to address the missed forbearance payments as reflected in the CARES Forbearance Claim. If the plan is not modified by the debtor within 30 days of the filing of the supplemental claim, the bankruptcy court (on its own motion), the U.S. Trustee's office, the Chapter 13 trustee and/or any party in interest, including a servicer, may move for such a modification. is change also sunsets on December 27, 2021 (Bankruptcy Code Section 1329(e)). Although well-intentioned, the CARES Forbearance Claim has caused tremendous upheaval. Servicers, debtor's counsel, Chapter 13 Trustees, and even the courts are often confused by this new animal especially where the supplemental claim includes post-petition payments. Reading between the lines, the whole point of Congress' efforts with respect to these temporary provisions seems to be to allow missed post-petition payments that accrue during the forbearance period to be paid through an extended plan. e CARES Forbearance Claim provides the breakdown. e debtor, or if the debtor doesn't act within 30 days of the filing of the supplemental claim, the servicer, or any other party in interest, can seek to modify the plan to include the forbearance arrearages. Finally, if the Chapter 13 plan was initially confirmed prior to March 27, 2021, the debtor can extend the plan up to a term of 84 months. For unknown reasons, many servicers want to force payment of the forbearance arrearages over the life of an extended 84-month plan. Accordingly, they file the optional supplemental claim for those arrearages and attempt to get the debtor to both modify the plan to include those arrearages and to extend the plan term to 84 months. Some are requiring their local counsel to file motions to compel the debtor to modify the plan to include those arrearages. Others are asking their local counsel to limit a motion for relief from stay to one seeking only to modify the stay in the hope that this will cause the debtor to act without the stay terminating. Some servicers even go beyond the new bankruptcy provisions and file a supplemental proof of claim for a non-CARES Act forbearances, all again with the hope that the debtor will include those missed payments in the plan. It is respectfully submitted that Congress got it wrong and the efforts of servicers to file these supplemental claims are misplaced. First, to the extent that the payments not made during the forbearance period were contractually due pre-petition, they are by definition pre-petition arrearages and paid through the Chapter 13 plan. ese payments should be included in the normal proof of claim. As to the unpaid payments during the forbearance period that were contractually due post-petition, a servicer already has great Typically, if the debtor fails to make a post-petition payment, a mortgage servicer brings a motion for relief from stay. By: Alan S. Wolf Legal Industry Update

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