Vt. Bankruptcy Case Opens Door To Rule 3002.1 Sanctions

Law360, New York (September 30, 2016, 5:18 PM EDT) -- Jonathan Hoffmann

Jonathan Grayson

Greg Cook A recent case from the U.S. Bankruptcy Court for the District of Vermont handed down what may be the first instance of punitive sanctions under Federal Bankruptcy Rule of Procedure 3002.1. The court levied a $375,000 sanction for failure to comply with Rule 3002.1’s notice requirements despite the court’s repeated instructions to do so. This ruling could spur similar litigation for violations of Rule 3002.1, especially for repeat offenders. Residential mortgage servicers are wise to take notice.

Background

Chapter 13 of the Bankruptcy Code[1] allows a debtor to pay debts over a period of time....

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