PAYOFF REQUESTS

FROM: Kelley Skehen, Chapter 13 Trustee

RE: Pay-off Requests

DATE: July 21, 1999

In September 1998, the Chapter 13 trustee’s office ceased giving pay-off quotations over the telephone and began requiring a written request, a minimum of 30 days in advance. The policy resulted from the inability to give complete and accurate pay-off quotations without a full audit of a case file. Problems arose from a variety of sources, including court orders not entered into the chapter 13 system for disbursement purposes, claims not entered and appropriately coded in the system, etc. My initial policy was not to accept such requests from debtors (where represented by counsel), and only to accept such requests from debtor’s counsel. As a result of the opposition to the policy in general and the difficulty of some debtors in obtaining assistance from their counsel, I decided to accept written pay-off requests from debtors.

Since the inception of the policy, however, the chapter 13 trustee’s office has been inundated with requests for pay-off quotations. The majority of these requests are from debtors. Although it is often impossible to determine on the basis of the actual request, many of these "pay-off requests" appear to be merely requests for information about the estimated number of payments remaining under the plan or what the debtor believes to be a "balance due." These requests are easily answered by providing a copy of the debtor’s payment history and referring the debtor to his/her plan, the order confirming that plan, and subsequent orders modifying that plan. This information would give the debtor the ability to estimate approximately how much longer his/her plan is to continue.

The sheer number of "pay-off requests" received by this office daily and the complexity in completing such pay-off audits results in the chapter 13 trustee’s office being unable to respond timely to these requests. This reduces the efficiency of this office, complicates the attorney’s job, and frustrates the client. This problem is not uncommon in jurisdictions around the country. Other chapter 13 trustees have established a policy of requiring attorney verification of pay-off need and providing other information to those debtors wishing "balance due" information and not requiring a pay-off.

We try to meet the needs of all debtors desiring information and to provide the necessary meaningful information in response to each request. In order to do this, my office must somehow distinguish between those cases with actual need for a pay-off quotation and those cases where the need for information may be satisfied with a payment history or other more easily provided information.

Therefore, the general policy of this office will now be as follows:

1. We will provide pay-off quotations in response to written requests received a minimum of 30 days in advance from debtor’s counsel which provide a detailed explanation of the reason(s) why a full pay-off is needed. Supporting documents and identification of any financing company or bank will be appreciated.
2. We will provide pay-off quotations in response to written requests received a minimum of 30 days in advance from banks and financing companies where the debtor is obtaining a loan or refinancing to pay-off the bankruptcy case. These requests must include the debtor’s written authorization.

Requests received directly from a debtor will receive a response that will include a copy of the debtor’s payment history, a reference to the debtor’s plan, as confirmed and subsequently amended, and a recommendation that the debtor should contact his or her attorney if he or she requires a pay-off quotation.