Florie Baca and Abran A. Baca

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	FLORIE BACA and ABRAN A. BACA, 	No. 13-10-10765 JA
Debtors.
MEMORANDUM OPINION
This matter came before the Court on November 13, 2012 for a final hearing on the
Chapter 13 Trustee’s Notice of Final Cure Payment pursuant to Fed.R.Bankr.P. 3002.1(f) filed
July 16, 2012 (“Notice of Final Cure Payment”) and a response thereto (“Response”) filed July
31, 2012 by Beneficial Financial I, Inc. as successor by merger to Beneficial New Mexico, Inc.
(“Beneficial”).1 The Notice of Final Cure Payment reflected, in part, that the Debtors had
completed all payments required to cure the pre-petition default due to Beneficial. See Docket
No. 59. The Response reported that post-petition amounts remain due. See Docket entry on July
31, 2012. On December 4, 2012, the Debtors, Beneficial and the Chapter 13 Trustee filed a
Stipulation of Facts (“Stipulation”) stipulating that Beneficial’s Proof of Claim No. 11-1 is
secured by the Debtors’ principal residence.2 See Docket No. 75.
During oral argument the Chapter 13 Trustee raised concerns about the effect of
Fed.R.Bankr.P. 3002.1 and whether the Debtors are precluded from receiving a discharge
because they failed to make all of the regular post-petition mortgage payments due to
1 By stipulation of the parties, the Court took judicial notice at the final hearing of all documents
filed in the Debtors’ bankruptcy case and all filed proofs of claim.
2 Beneficial filed two proofs of claim in the Debtors’ bankruptcy case: Claim No. 8-1 and Claim
No. 11-1. 	The Stipulation stipulates that Claim No. 8-1 is secured by property other than the
Debtors’ principal residence. 	Rule 3002.1, Fed.R.Bankr.P. is, therefore, inapplicable to Claim
8-1. 	See Fed.R.Bankr.P. 3002.1(a)(“This rule applies in a chapter 13 case to claims that are . . .
secured by a security interest in the debtor’s principal residence.”).
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Beneficial.3 The Debtors acknowledge that they did not make all of the regular post-petition
mortgage payments to Beneficial, but assert that they nevertheless are entitled to a discharge.
The Debtors further assert that Beneficial is estopped from later claiming any post-petition
arrearages under the Mortgage in excess of the amount of the arrearages specified in its
Response. 	The Court will treat the Debtors’ request to apply estoppel principles to Beneficial’s
Response as an oral motion.4 Beneficial objected to the relief requested by that oral motion,
arguing that it is not estopped. 	As part of the Court’s determination of whether Beneficial
should be estopped from asserting additional post-petition charges in excess of the amounts
reflected in its Response, the Court will also determine whether Rule 3002.1 applies.
However, there is no pending motion before the Court requesting the entry of a discharge.
Notice has not been given to creditors regarding the entry of a discharge, and no party in interest
has objected to the Court granting the Debtors a discharge. Accordingly there is no controversy
for the Court to decide regarding entry of a discharge. Any issue concerning the Debtors’
eligibility for discharge implicated by the information contained in the Response to the Notice of
Final Cure Payment that the Debtors have not made all direct payments required by the plan is,
therefore, not ripe for determination. 	If the Court were to decide that issue at this time, it would
be an improper advisory opinion. See In re Mile Hi Metal Systems, Inc., 899 F.2d 887, 891 n.3
(10 th Cir. 1990)(“Federal Courts do not issue advisory opinions.”)(citing FCC v. Pacifica
Found., 438 U.S. 726, 735, 98 S.Ct. 3026, 3033, 57 L.Ed.2d 1073 (1978)(remaining citation
3 The same issue is arising in other chapter 13 cases pending in this District in which the debtors
have made all payments to the Chapter 13 Trustee required by a confirmed chapter 13 plan but
have not made all direct payments on a long term secured debt and such failure was made known
to the Chapter 13 Trustee by a response filed pursuant to Fed.R.Bankr.P. 3002.1(g).
4It is appropriate for the Court to treat the Debtors’ request for estoppel as an oral motion
because the only affected party is Beneficial, and Beneficial argued at the final hearing that it
should not be bound by its Response.
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omitted)). See also In re Brown, 371 B.R. 505, 509 (Bankr.N.D.Okla. 2007)(refusing to issue an
opinion that would be advisory in nature).
After consideration of the evidence and the arguments of counsel, and after careful
review of the applicable Rule and relevant case law, the Court concludes that 1) Rule 3002.1
applies to Beneficial’s claim secured by the Debtors’ principal residence; and 2) Beneficial will
be bound by the post-petition amount reported as due in its Response, unless it amends its
Response.5
In connection with the Court’s ruling, the Court FINDS:
1. 	The Debtors filed a voluntary petition under Chapter 13 of the Bankruptcy Code
on February 22, 2010.
2. 	The Debtors filed a Chapter 13 plan on the same date. See Docket No. 4.
3. 	The Chapter 13 plan provides for payments of $1,164.00 per month to the Chapter
13 Trustee for a period of 56 months. Id.
4. 	Paragraph 4.4 of the Chapter 13 plan provides that claims will be treated in one of
the following ways:
(1) Direct – direct payment by the debtor under the terms of the original
agreement between the debtor and the creditor;
(2) In full – payment in full of the allowed secured claim by the chapter 13 trustee
through the plan;
(3) Bifurcate – payment of the value of the collateral by the chapter 13 trustee
through the plan based on the outcome of a separate motion to value the
collateral which the debtor shall file, with the balance of the claim to be
treated as a non-priority unsecured claim;
(4) Surrender – debtor will surrender the collateral; or
(5) Avoidance – debtor shall file a separate motion to avoid lien.
(6) Other – [as may be provided in section 10 or 12 of the plan]
Chapter 13 Plan, pp. 5 – 6 (Docket No. 4).
5 The Court is not deciding whether Beneficial would be permitted to amend its Response outside
the period for responding set forth in Fed.R.Bankr.P. 3002.1.
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5. 	Paragraph 4.4.3 of the Chapter 13 plan provides that the “Trustee will pay the pre-
petition arrearages set forth in an allowed proof of claim . . . ” Id. at p. 6.
6. 	The Chapter 13 plan provides that the Debtors will make direct payments to
Beneficial that become due post-petition under its mortgage secured by the Debtors’ principal
residence at the contract rate of interest in accordance with the terms of the mortgage. Id. at p. 5.
7. 	The Order Confirming Chapter 13 Plan was entered on May 5, 2010. 	See Docket
No. 24.
8. 	Beneficial filed a proof of Claim on April 9, 2010 asserting a secured claim
against the Debtors’ principal residence. See Claim No. 11-1. Beneficial’s Claim No. 11-1
included a claim for pre-petition arrearages in the amount of $5,583.28. 	Id.
9. 	The Chapter Trustee filed a Notice of Completed Plan on July 16, 2013 stating
that the Debtors have “made all plan payments and [have] complied with all requirements as
stated in the Chapter 13 Plan as confirmed and/or modified.” See Docket No. 57.
10. 	The Debtors filed their Certification and Statements in Support of Entry of
Chapter 13 Discharge. See Docket No. 65.
11. 	The Chapter 13 Trustee filed a Notice of Final Cure Payment pursuant to
Fed.R.Bankr.P. 3002.1(f) on July 16, 2012. See Docket No. 59. The Notice of Final Cure
Payment was served on Beneficial and the Debtors. Id.
12. 	The Notice of Final Cure Payment states that the amount required to cure the pre-
petition default in Beneficial’s Claim No. 11-1 has been paid in full. Id. The Notice of Final
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Cure Payment also states that the monthly ongoing mortgage payment is paid directly by the
Debtors. Id.6
13. 	On July 20, 2012 the Chapter 13 Trustee withdrew her Notice of Completed Plan.
See Docket No. 64.
14. 	Beneficial filed its Response to the Notice of Final Cure Payment pursuant to
Fed.R.Bankr.P. 3002.1(g) on July 31, 2012. See Docket Entry on July 31, 2012 relating to Claim
11-1.
15. 	The Response states that Beneficial agrees that the amount required to cure the
pre-petition default to be paid through the Chapter 13 Plan has been paid in full, but that
Beneficial does not agree that the Debtors have paid all post-petition amounts due to Beneficial.
In the Response, Beneficial states that the post-petition amount of $4,711.07 remains due. See
Response.
16. 	The Response includes an attachment containing an itemization of payments due
post-petition that remain unpaid as of the date of statement that total $4,711.07. The statement is
dated July 30, 2012. The statement includes the following language:
This section itemizes the required cure of post-petition amounts, if any, that the
holder contends remain unpaid as of the date of this statement but may not, due to
timing, reflect all payments sent to Creditor as of the date of the Cure Notice. In
addition, the amounts due may include payments reflected in the Trustee’s records
but which have not yet been received and/or processed by the Creditor.
6 The Notice of Final Cure Payment appears to be a form that includes the following “check the
box” provision regarding the monthly ongoing mortgage payment:
Mortgage is Paid:
___ Through the Chapter 13 Conduit _X__ Direct by Debtors.
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17. 	No motion seeking a determination as to whether the Debtors have cured the
default and paid all required postpetition amounts has been filed pursuant to Fed.R.Bankr.P.
3002.1(h).
18. 	The Debtors agree that they did not make all of the regular post-petition mortgage
payments to Beneficial and that the past-due amount identified in the Response represents the
total of the unpaid regular post-petition mortgage payments.
19. 	The Debtors and Beneficial agree that the post-petition amount identified in the
Response does not include any charges in addition to the amount of unpaid regular post-petition
mortgage payments, such as late fees, insurance, or attorneys’ fees that might otherwise be
provided for under the terms of the mortgage.
DISCUSSION
A. Whether Fed.R.Bankr.P. 3002.1 applies to Beneficial’s claim
Rule 3002.1, Fed.R.Bankr.P., became effective on December 1, 2011.7 One intended
purpose of the rule is “to provide a prompt, efficient, and cost-effective means to determine
whether there is a question as to the status of a debtor’s home loan at the conclusion of the
chapter 13 case.” In re Carr, 468 B.R. 806, 808 (Bankr.E.D.Va. 2012).
For Rule 3002.1 to apply, the creditor’s claim must be “1) secured by a security interest
in the debtor’s principal residence, and 2) provided for under § 1322(b)(5) of the Code in the
debtor’s plan.” Fed.R.Bankr.P. 3002.1(a). The parties have stipulated that Beneficial’s claim
No. 11-1 is secured by the Debtors’ principal residence. Section 1322(b)(5) allows a debtor to
7 By an administrative order, the Notice of Final Cure Payment requirement under
Fed.R.Bankr.P. 3002.1(f) applies to cases pending in the Bankruptcy Court for the District of
New Mexico as of December 1, 2011 only if the debtor completes all payments under the plan on
or after that date. 	See Court Administrative Matters: Implementation of New Rule 3002.1 -
No. 11-00001 S.
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cure a pre-petition default on a secured claim and maintain payments during the Chapter 13 case,
provided the last payment to the secured creditor is due after the completion of all plan
payments. See 11 U.S.C. § 1322(b)(5)(the plan may “provide for the curing of any default
within a reasonable time and maintenance of payments while the case is pending on any
unsecured claim or secured claim on which the last payment is due after the date on which the
final payment under the plan is due[.]”). The Debtors’ plan provides for curing the pre-petition
arrearages due to Beneficial, and provides further that the Debtors would continue making post-
petition mortgage payments directly to Beneficial “outside” of the plan.8 Beneficial’s mortgage
is a long term debt on which the last payment will become due after the completion of the
Debtors’ plan. Thus, the plan provided for Beneficial’s claim secured by a mortgage against the
Debtors’ principal residence under 11 U.S.C § 1322(b)(5). Consequently, Rule 3002.1 applies to
that claim.9
B. Whether Beneficial is Estopped from Claiming Additional Post-Petition Amounts
Beneficial filed its Response pursuant to Rule 3002.1(g), which provides:
(g) Response to Notice of Final Cure Payment. Within 21 days after service of the
notice under subdivision (f) of this rule, the holder shall file and serve on the debtor,
debtor’s counsel, and the trustee a statement indicating (1) whether it agrees that the
debtor has paid in full the amount required to cure the default on the claim, and (2)
whether the debtor is otherwise current on all payments consistent with § 1322(b)(5) of
8 According to customary usage in this District, the distinction between payments made through
the plan and payments made outside the plan is whether the Chapter 13 Trustee acts as the
disbursing agent; the Chapter 13 Trustee does not disburse payments made by a debtor directly
to a creditor outside the plan.
9But see, In re Merino, 2012 WL 2891112, *1 (Bankr.M.D.Fla. 2012)(pointing out that Rule
3002.1 does not specify whether it applies only to payments made “inside the plan” or only to
payments made “outside the plan.” ). The Merino court reasoned further that because “the rule
was adopted to ‘aid in the implementation of § 1322(b)(5), which permits a chapter 13 debtor to
cure a default and maintain payments of a home mortgage over the course of a debtor’s plan[,]’
[a]n inference may be drawn that Rule 3002.1 does not apply to claims being paid outside the
plan.” 	Merino, 2012 WL 2891112 at *1.
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the Code. The statement shall itemize the required cure or postpetition amounts, if any,
that the holder contends remain unpaid as of the date of the statement. The statement
shall be filed as a supplement to the holder’s proof of claim and is not subject to Rule
3001(f).
Fed.R.Bankr.P. 3002.1(g).
The Response includes an itemization of the post-petition amounts which details the date the
amount was assessed, the assessed amount, and the amount outstanding. See Response. Each
assessed amount itemized in the Response is described as an “Installment Payment.” Id.
Pursuant to subdivision (h) of Rule 3002.1, if the debtor disagrees with the amounts
stated in a creditor’s response, the debtor may file a motion seeking a judicial determination of
whether the debtor has “paid all required post-petition amounts.” 	Fed.R.Bankr.P. 3002.1(h).
Here, the Debtors did not file a motion pursuant to Rule 3002.1(h). 	However, based on the
information contained in the Response, the Debtors had no reason to file such a motion. 	The
Debtors do not dispute that they failed to make all of the regular post-petition mortgage
payments. The itemized post-petition amounts contained in the Response relate only to the
regular installment payments.
Rule 3002.1 attempts to address the problem faced by many Chapter 13 debtors who
would “emerge from bankruptcy only to face a substantial and previously undisclosed arrearage”
resulting from unpaid late fees or other charges arising from their residential mortgage. 	In re
Sheppard, 2012 WL 1344112, *2 (Bankr.E.D.Va. Apr. 18, 2012). 	Under Rule 3002.1(g), the
creditor is obligated to itemize all arrearages still due and owing if the creditor contends that the
debtor has not made all post-petition payments. 	Fed.R.Bankr.P. 3002.1(g). 	Beneficial filed its
Response pursuant to Rule 3002.1(g), but asserts that it nevertheless may return to state court to
foreclose the mortgage and seek additional charges or late fees not included in its Response that
are provided for under the terms of the mortgage. 	This Court disagrees. 	Equitable estoppel
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principals bar Beneficial from seeking fees or other charges in excess of the unpaid regular
mortgage installment payments included in the Response that may have accrued up through the
date of the filing of the Response.
“Estoppel is an equitable doctrine invoked to avoid injustice in particular cases.” Heckler
v. Community Health Services of Crawford County, Inc., 467 U.S. 51, 59, 104 S.Ct. 2218, 2223,
81 L.Ed.2d 42 (1984). 	“Equitable estoppel allows one party to prevent another ‘from taking a
legal position inconsistent with an earlier statement or action that places his adversary at a
disadvantage.’” Kowalczyk v. Immigration and Naturalization Serv., 245 F.3d 1143, 1149 (10 th
Cir. 2001)(quoting Penny v. Giuffrida, 897 F.2d 1543, 1545 (10 th Cir. 1990)). Generally, for
equitable estoppel to apply the following elements must be present:
(1) the party to be estopped must know the facts; (2) the party to be estopped must intend
that his conduct will be acted upon or must so act that the party asserting the estoppel has
the right to believe that it was so intended; (3) the party asserting the estoppel must be
ignorant of the true facts; and (4) the party asserting the estoppel must rely on the other
party's conduct to his injury.
In re Riazuddin, 363 B.R. 177, 185 (10th Cir. BAP 2007)(citing Kowalczyk, 245 F.3d at
1149)(quoting Penny v. Giuffrida, 897 F.2d at 1545)).
All elements are present here. 	Beneficial was obligated to itemize all post-petition amounts it
contended the Debtors still owed under the terms of the mortgage. Beneficial presumably knows
the facts from its own records. 	The intended purpose of Rule 3002.1 is to provide debtors with a
procedure for the bankruptcy court to establish the exact amounts of post-petition arrearages
before the debtors lose the protection their bankruptcy case affords them from foreclosure of the
mortgage. Consequently, the Debtors had a right to rely on the figures contained in the
Response. The Debtors had no reason to know the exact amount of other post-petition charges.
And, because the Debtors do not contest the fact that they have missed some of the regular
monthly installment payments, they relied on the Response and had no reason to file a motion
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pursuant to Rule 3002.1(h). 	Under these circumstances, the Court grants the Debtors’ oral
motion to estop Beneficial from seeking additional post-petition charges that may have accrued
under the terms of the mortgage through the date of the Response absent amendment of the
Response with leave of the Court. 	Not binding Beneficial to its Response would undermine the
intended purpose of Rule 3002.1.
CONCLUSION
Because the Beneficial’s claim is secured by an interest in the Debtors’ principal
residence, and because the Debtors’ plan provided for payment of Beneficial’s claim under 11
U.S.C. § 1322(b)(5), Fed.R.Bankr.P. 3002.1 applies. 	Equitable estoppel principals bind
Beneficial to the amounts reflected in its Response for the period up to the date of the Response.
Whether the Debtors are nevertheless entitled to discharge despite their failure to make all of the
regular post-petition mortgage payments directly to Beneficial as provided for in their confirmed
Chapter 13 plan is not ripe for determination.
Under local practice in this District, the Chapter 13 Trustee issues a Notice of
Completion of Plan Payments, which prompts the Clerk of the Court to issue the Clerk’s Notice
to Debtor of Deadline to File Certification and Statements in Support of Chapter 13 Discharge
(“Notice”). 	The Notice directs the Debtors to file a certification and statements in support of
entry of discharge in accordance with NM-LBR 2083-1 (the “Certification”).10 In this case, the
Chapter 13 Trustee issued a Notice of Completion of Plan Payments, but later withdrew it. The
Debtors filed the Certification (Docket No. 65), but because the Chapter 13 Trustee withdrew the
10 Upon the filing of the Debtors’ Certification and Statement in Support of Entry of Chatper13
Discharge, the Bankruptcy Court Clerk’s Office issues a notice to all creditors and parties in
interest of the deadline to file objections to the Debtors’ Certification and Statement in Support
of Entry of Chapter 13 Discharge. If no objections are filed, the Bankruptcy Clerk of Court
enters the discharge.
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Notice of Completion of Plan Payments, a notice of the deadline to object to the Certification
was not sent to all creditors and parties in interest.11 The Chapter 13 Trustee’s concerns raised at
the hearing on the Notice of Final Cure Payment suggest that the Chapter 13 Trustee may choose
not to re-file the Notice of Completion of Plan Payments until the issue of whether the Debtors
are entitled to receive a discharge notwithstanding their failure to make all of the direct payments
is resolved. However, in order for this Court to decide that issue, there must be a pending
motion or request before the Court for entry of a discharge, to which parties in interest have an
opportunity to object. The Debtors may file a motion for entry of discharge and serve notice of
an objection deadline for the motion and the Certification. If a timely objection is filed thereto,
the Court will decide the issue. If no objections are timely filed, the Court will enter the
discharge. 	An order consistent with this Memorandum Opinion will be entered.
_______________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: December 20, 2012
COPY TO:
Arun A. Melwani 	Kelley L. Skehen
MELWANI LAW P.C. 	Chapter 13 Trustee
Attorney for Debtors 	625 Silver Ave. SW, Suite 350
10749 Prospect Ave NE Ste F 	Albuquerque, NM 87102
Albuquerque, NM 87112-3281
Michael K. Daniels
Attorney for Beneficial Financial I, Inc.
PO Box 1640
Albuquerque, NM 87103-1640
11The Bankruptcy Court Clerk’s Office put a halt code on the case with an explanation that the
certification and statements in support of entry of discharge must be made and dated after the
Chapter 13 Trustee filed the notice of completed plan, and that the Debtors would be required to
re-certify once the Chapter 13 Trustee files a notice of completed plan.
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