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1 1 (July 21, 2022)

handle is hein.crs/govehze0001 and id is 1 raw text is: Congressional_______ R a esearch Service Supreme Court Declines to Review Bankruptcy Sanctions Order July 21, 2022 The Supreme Court denied certiorari in Sensenich v. PHHMortgage Corporation on June 13, 2022, allowing to stand a decision of the United States Court of Appeals for the Second Circuit holding that a federal bankruptcy court erred in imposing punitive sanctions on PHH Mortgage Corp. (PHH), a creditor in multiple Chapter 13 bankruptcies. The bankruptcy court's sanctions purported to punish PHH for failing to follow certain of the court's orders and for violating the notice provisions of Federal Rule of Bankruptcy Procedure 3002.1. The Second Circuit's decision sheds light on the scope of a federal bankruptcy court's general authority to employ sanctions to enforce its orders, and it is the first federal appellate decision on the question of whether Bankruptcy Rule 3002.1 empowers a bankruptcy court to impose sanctions for violating the Rule's notice provisions. This Sidebar provides an overview of Chapter 13 of the Bankruptcy Code, Bankruptcy Rule 3002.1, and the bases for the Second Circuit's decision vacating the bankruptcy court's sanctions orders. It also discusses considerations for Congress, including Congress's authority to change the bankruptcy rules should it seek to alter the authority those rules grant to federal bankruptcy courts. Chapter 13, the Role of the Trustee, and Rule 3002.1(c) Chapter 13 of the Bankruptcy Code is entitled Adjustment of Debts of an Individual With Regular Income. As covered in a prior report, Chapter 13 allows an individual debtor to develop and perform a repayment plan under court supervision and protection. The repayment plan may provide for full repayment of debts or offer creditors a percentage of their claims in full settlement. Debtors make payments to creditors under these repayment plans in installments, over three to five years. Individual debtors may use Chapter 13 to avoid a foreclosure on their homes. Unlike a Chapter 7 case, in which a debtor's nonexempt assets are turned over to a trustee and sold to pay creditors, under Chapter 13, a debtor remains in possession of estate property. Chapter 13 also allows debtors to cure past-due mortgage payments and bring them current over a reasonable period of time. Upon the filing of a Chapter 13 petition, an impartial trustee is appointed to administer the case. The Chapter 13 trustee evaluates the case, collects payments from the debtor, and makes distributions to creditors. Congressional Research Service https://crsreports.congress.gov LSB10794 CRS Legal Sidebar Prepared for Members and Committees of Congress

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