Bankruptcy

NLS 5.19 and later

NLS 5.26 or later is strongly recommended

NLS can be configured to file Chapter 7, 11, and 13 bankruptcy claims and apply settlement results to existing loans.

This feature requires an active account with BankruptcyWatch. A Case Management/Electronic Case Files (CM/ECF) system is also required to access filed documents. Please contact the respective organization for information on registration and usage of their services.

BankruptcyWatch - https://www.bankruptcywatch.com

Pacer - https://www.pacer.gov

Basic Configuration

Basic configuration must be performed before configuring other components of bankruptcy.

Go to Bankruptcy Setup which is located in File > Setup > Loan Setup > Bankruptcy.

Click Add to add a new bankruptcy configuration.

NLS 5.22 and laterNLS 5.21 and before

Item Comments
Name The name of this configuration for your own reference.
Username Username used to log into BankruptcyWatch.
Select the user account to use from the drop down list. The list is comprised of user accounts as configured under the Authorization tab in Setup > System > Web Services.5.22+
Password Click  to enter the password for the Username.
The password is configured under the Authorization tab in Setup > System > Web Services.5.22+

Click the Bankruptcy Endpoint tab and enter the parameters as provided to you.

Beginning with NLS 5.22, the bankruptcy endpoint is configured in Setup > System > Web Services.

Item Comments
URL Enter the hostname that is supplied by BankruptcyWatch to access their services. Do not include the protocol (http:// or https://) as this is determined by the Secure option below.

For offline sandbox testing, use offline.sandbox.bk.watch.

For CM/ECF sandbox testing, use cmecf.sandbox.bk.watch.

Port The port number to use for the URL access. Typically port 443 is used for secure https connections.
Webhook The URL to the NLS Web Service running the BankruptcyWatch webhook.

For hosted clients, please contact Nortridge Support to have our infrastructure team set up your webhook.

For licensed clients, see BankruptcyWatch Webhook on setting up your own BankruptcyWatch webhook. Enter the URL from your webhook setup in the form of
https://<IIS-website-path>/BankruptcyWatch/Notifications.

Secure Select to use a SSL connection (https) for the BankruptcyWatch URL.

Go to Setup > Loan Setup > Loan Group and in the Servicing Options tab, select the configured bankruptcy setup for Bankruptcy.

Bankruptcy Setup Tab

Consumer Monitoring

Run NLSBKSubscriptions.exe, located in your NLS installation folder, to generate and send a list of contacts to BankruptcyWatch for monitoring.

Click Subscribe to activate the consumer monitoring service provided by BankruptcyWatch.

NLS 5.34 and later

Optional: Enter an email address in the Email Notifications field to where notifications for consumer monitoring is to be sent.

Click List Active Items… to view a list of borrowers that are currently subscribed to consumer monitoring.

Case Monitoring

Click Subscribe… to activate the case monitoring service provided by BankruptcyWatch.

NLS 5.35 and laterNLS 5.29 to 5.34NLS 5.26 to 5.28NLS 5.25 and before

Choose the desired case monitoring package and enter the Minimum Payoff Balance for Case Monitoring threshold. This threshold is the minimum payoff balance at which the case monitoring begins.

NLS 5.35 and later

Selecting Bankruptcy Party Info/Call RunDocket during CASE_FILED notification will retrieve the latest information from the court system for each CASE_FILED notification. This will ensure that the information retrieved is up to date.
Additional fee ($0.10, at the time of publication) will be incurred per CASE_FILED notification.

Minimum Payoff Balance for Case Monitoring is the payoff sum of all the balances under the borrower.

Example

Minimum Payoff Balance for Case Monitoring is set to $800.
NLS receives a notification from BKWatch that borrower with SSN=123456789 filed for bankruptcy.
This borrower has three loans with payoff balance of $300, $500, and $200.
NLS will start Case Monitoring with BKWatch if the payoff sum of all loans is greater than or equal to $800.

Example

Enter 1,000.00 to monitor all loans for which the payoff balance is 1,000.00 or more.

NLS 5.26 and later

Optional: Enter an email address in the Email Notifications field to where a file containing all notifications received by NLS is to be sent.

Note

NLS 5.26 to 5.33

Case monitoring subscription must be activated prior to the consumer monitoring subscription being activated for the notification emails to be sent.

NLS 5.34 and later

Email notification for consumer monitoring and case monitoring are configured separately and are independent of each other.

NLS 5.33 and later

Multiple email addresses separated by a semi-colon (;) can be entered in the Email Notifications field.

NLS 5.29 and later

Select the file format of the email notification attachment in the Email Notification Format drop down. Supported formats are CSV, HTML, JSON, and XML.

Events Returned by BankruptcyWatch Description
Case Discharged A case was discharged.
Case Dismissed A case was dismissed.
Case Reopened A case was reopened.
Case Transferred A case was transferred from one division to another.
Case Converted5.35+
A case was converted.
Case Transferred5.35+
A case was transferred.
Case Terminated5.35+
A case was terminated.
Joint Debtor Discharged The joint debtor was discharged.
Joint Debtor Dismissed The joint debtor was dismissed.
Plan Confirmed A chapter 13 plan was confirmed.

Click List Active Items… to view a list of cases (loans) that are currently subscribed to case monitoring.

Court Credentials

Existing court (CM/ECF) accounts are required to access filed documents for each district courts. Click  next to Court Credentials to enter access credentials for each district.

Click Add to create a new set of credentials for a district.

Item Comments
ID This is automatically assigned by NLS.
Username Username used to log in.
Password Click  to enter the password for Username.
District The district code for this credential.
Description A description for your own reference.
Make Default Select to make this the default credential to use.
Proof of Claim Setup

Click  next to Proof of Claim Setup to specify which amounts are to be included in the claim amount in the proof of claim filing.

The selected items will be included in the claim amount. The principal is always included in the claim amount and is not an option.

NLS 5.32

Added Impounds.

The Basis of Claim field is for entering a comma separated list of items to be listed during the proof of claim filing wizard.

Creditor / Signatory Setup

Click  next to Creditor / Signatory to configure the “Signature Address” information that is included in the proof of claim sent to BankruptcyWatch.

For Creditor:

  • Organization is optional.
  • SSN and EIN are mutually exclusive and one of the field is required.
  • If a Creditor Number is specified in the proof of claim, the creditor details are not sent to BankruptcyWatch.
  • First/Middle/Last must be blank when Organization is specified.
  • SSN and EIN must be blank when Organization is specified.

For Signatory:

  • Organization is optional.

NLS 5.32 and later

To attach a signature file for use with Form 410S1, click Attach Signature and select the signature file to use. Only PNG files are supported and should be sized accordingly to fit within the allotted signature space.
Trustee / Lawyer Portfolio

When a bankruptcy filing is received by NLS and the associated trustee or lawyer information does not exist in the database, new contacts will be created using the specified configuration.

Click  next to Trustee/Lawyer Portfolio to configure the trustee and lawyer contact classification.

Select Override Payment Distribution Order and click  to configure the distribution waterfall for payments from the trustee.

Task Template

Click  next to Task Template to associate the bankruptcy setup to an existing task.

Status Codes

Bankruptcy related status codes are configured in the Status Codes tab. See Status Codes for additional information on the various options associated with status codes.

Status codes are automatically assigned to loans based on notifications received from BankruptcyWatch.

Bankruptcy Status Code Consumer Information Indicator Code
Chapter 7 Petition A - Petition for Chapter 7 Bankruptcy
Chapter 7 Dismissed Pending  
Chapter 7 Dismissed I - Chapter 7 Bankruptcy Dismissed

Obsolete as of April 21, 2021.

Chapter 7 Reaffirmed R - Reaffirmation of Debt
Chapter 7 Withdrawn M - Chapter 7 Bankruptcy Withdrawn

Obsolete as of April 21, 2021.

Chapter 7 Reaffirmation Rescinded V - Chapter 7 Reaffirmation of Debt Rescinded
Chapter 7 Discharge Pending  
Chapter 7 Discharged E - Discharged through Chapter 7 Bankruptcy
Chapter 7 Closed Q - Removes Previously Reported CII
Chapter 11 Petition5.31+
B - Petition for Chapter 11 Bankruptcy
Chapter 11 Pre Plan Confirmed5.35+
 
Chapter 11 Plan Confirmed5.35+
 
Chapter 11 Dismissed5.31+
 
Chapter 11 Withdrawn5.31+
 
Chapter 11 Discharged5.31+
F - Discharged through Chapter 11 Bankruptcy
Chapter 13 Petition D - Petition for Chapter 13 Bankruptcy
Chapter 13 Pre Plan Confirmed  
Chapter 13 Plan Confirmed  
Chapter 13 Dismissed Pending  
Chapter 13 Dismissed L - Chapter 13 Bankruptcy Dismissed
Chapter 13 Withdrawn P - Chapter 13 Bankruptcy Withdrawn

Obsolete as of April 21, 2021.

Chapter 13 Discharged Pending  
Chapter 13 Discharged H - Discharged/Completed through Chapter 13 Bankruptcy
Chapter 13 Closed Q - Removes Previously Reported CII

The following status codes require an action from a user:

Bankruptcy Status Code Action Needed
Chapter 7 Dismissed Pending Click  Dismiss to dismiss the bankruptcy
Chapter 7 Discharge Pending Click  Discharge to discharge the bankruptcy
Chapter 13 Pre Plan Confirmed Click  Bankruptcy Plan to set new plan values
Chapter 13 Dismissed Pending Click  Dismiss to dismiss the bankruptcy
Chapter 13 Discharged Pending Click  Discharge to discharge the bankruptcy

Additional status codes may be created as needed. However, those status codes must be assigned to loans manually.

Processing for BankruptcyWatch

There are two applications, NLSBKSubscriptions.exe and NLSBKNotifications.exe, that will need to be run manually or on a schedule through NLS Service to process files required by BankruptcyWatch.

NLSBKSubscriptions.exe will send a list of contacts—with no active bankruptcies and at least one active loan—in NLS to BankruptcyWatch. It can be configured to run on a schedule by selecting Bankruptcy Subscription as the Target Type in Setup > System > NLS Service.

bk subscription

NLSBKNotifications.exe will process the notifications from BankruptcyWatch and import the details into NLS. It can be configured to run on a schedule by selecting Bankruptcy Notification as the Target Type in Setup > System > NLS Service.

bk notification

Loan View

Bankruptcy Tab

The Bankruptcy tab in the Loan view contains the bankruptcy inquiry. The information contained within are comprised of data received from BankruptcyWatch and existing data in NLS.

Bankruptcy Ribbon Bar

A Bankruptcy ribbon bar will become available on loans in bankruptcy.

Claim
 File Proof of Claim Launches the POC Filing Wizard to begin the claim filing process.

Select whether this will be filed using ePOC or CM/ECF.

Step 1 of 4

There are only three steps prior to NLS 5.31.

Select a loan collateral type and attach additional documents to the claim.

Loan Collateral Type

Available options are NONE, Real Estate, Titled Vehicle, and Other.

Description

Required only if Loan Collateral Type is Other.

Value

The monetary value of the collateral.

Additional Documents

Attach additional documents, such as a note and lien recording, to be submitted along with the claim. Click + to open a file browser to add additional documents to the claim. Click - to remove the selected document from the filing.

Balances5.30+

Opens the Balances Manual Entry dialog.

This button will be active only when there is no daily trial balance entry for the bankruptcy’s date filed date.
The Balances Manual Entry dialog will also appear automatically if the balances are not set when proceeding to step 2.

NLS 5.32

Added Impounds.

Step 2 of 4

NLS 5.31 and later

Complete the Form 410 questionnaire.

If a field is left blank, 0, or $0.00, the answer will revert back to No or be unselected.

The questions “Does this claim amend one already filed?” and “Other. Specify applicable subsection of 11 U.S.C. § 507(a)” are disabled and defaults to No until further notice.

Step 3 of 4

Verify that the claim amount is correct and select basis of claim (required).

NLS 5.32

Added Impounds.
Itemized Charges Statement

NLS 5.31 and later

If there are non-principal charges associated with the POC, an option to generate an itemized charges statement 3001(c)(2)(A) will become available. This form can also be added through the  Supplemental Filing Forms dialog.

The statement is a summary of the POC claim amount and includes the principal and values selected in the Proof of Claim setup that are non-zero values.

The Debtor(s) field is populated with the creditor and signatory’s organization (or first/middle/last name if the organization field is blank) and the signatory’s type in parenthesis.

If required, enter the total arrears in the field provided.

NLS 5.32 and laterNLS 5.31 and before

Step 4 of 4

Verify the information and click Finish to file the proof of claim.


NLS 5.29 and later

To generate a form 410A for this filing, click Generate Form 410A and enter the values for the fields that NLS does not track. NLS will create a file named “Form 410A.pdf.”

Note

Note The Generate Form 410A button will be disabled once a Form 410A is added. Additional Form 410A may be added manually and the filename must be unique, contain “410A”, and be a PDF.

A final confirmation alert will appear before the POC is filed.

When the File Claim button is clicked, the POC is sent to the court system and the process cannot be canceled. It may take several minutes for the POC to be verified and accepted.

NLS 5.26 and later

In the event where NLS crashes or the computer is shut down while waiting for the POC confirmation, the same POC filing cannot be re-attempted within 30 minutes after the initial attempt unless an error is returned. This is to prevent the possibility of a duplicate POC filing. When the POC Filing Wizard is re-run, NLS will check the status of the initial filing after the credentials are entered. If the initial filing was successful the POC Filing Wizard will exit.
 Do Not File Proof of Claim Forgoes filing a proof of claim at this time.
Displays a dialog to confirm that a proof of claim will not be filed and a reason must be provided.


A proof of claim may still be filed at a later time.
 
 Supplemental Filing Forms5.30+
Displays a dialog for attaching additional forms.

A form’s status can be Incomplete, Complete, Submitted to court, or Attached to POC.
Note that a previously submitted form cannot be resubmitted.
When the Add button is clicked, a dialog for creating the selected form will appear.

Form 410AForm 410S1


Utility
 View Documents Opens a window for retrieving PACER documents.
 BKWatch API Call Log5.35+
Displays the raw data that was returned by BankruptcyWatch.
 Run Docket Retrieves the docket report from BankruptcyWatch. Additional fees may apply.

Clicking will open a dialog for selecting the document to retrieve.

Select the appropriate ID of the document available from BankruptcyWatch and click Download to retrieve the document.

All downloaded documents will appear in the following list.

Click  to open a window showing the contents of the document.

 Bankruptcy Plan Displays a dialog for entering new values from the Confirmed Bankruptcy Plan.


Loan will be updated with the new values.
 Run Claims Register5.27+
Displays a dialog showing the details of a claim that has been filed for the selected loan. If no previous claim filing is found, “{}” is displayed.

Process
 Dismiss Dismisses the bankruptcy. A clawback will be performed if the On Bankruptcy Dismiss configuration in Setup > Loan Setup >Defaults is set to Perform Clawback.

When a clawback is performed, NLS will create a snapshot of the loan at the time the notification of the dismissal is received from BankruptcyWatch. A copy of the loan will then be created with the following:

  • New loan will use the original loan number and a random number will be assigned to the old loan
  • New loan will become active and the old loan will become restructured
  • Loanacct GL Trans will not be copied to avoid duplicate GL entries
  • Copy all UDFs and comments to the new loan
  • Unwind the payment and re-apply it to the new loan
 Discharge Discharges the bankruptcy. The loan will be written off and closed if the On Bankruptcy Discharge configuration in Setup > Loan Setup > Defaults is set to WriteOff & Close.

Manual Bankruptcy Process

NLS 5.30 and later

Loans can be placed into a bankruptcy status manually without the use of an automated monitoring service by going to the Home ribbon bar and clicking  Add > Add Bankruptcy.

This process simply sets the appropriate status code for the loan and allows for entry of relevant information in the loan’s Bankruptcy tab. Proof of claim, supplemental filing forms, viewing downloaded documents, Docket, and claim register features are not supported.

The bankruptcy Monitoring Status will be set to Manual. If the case number is currently active click  next to the Monitoring Status field to enable monitoring. The Bankruptcy Chapter Type, Case Number, and Date Filed fields are required to enable monitoring. The status of the bankruptcy status codes as configured in Setup > Loan Setup > Bankruptcy > Status Codes must also be set to Active.

Transaction Entry

Transaction made on a loan during a bankruptcy can be specified as having been paid by an entity other than the borrower. In the transaction entry dialog, click Advanced… and select the appropriate contact from which the payment was received. The Paid by list includes all contacts associated with the loan in its contact-loan relationship and any contact designated as a trustee in the bankruptcy setup.

BankruptcyWatch Notifications

Contacts

When a contact files for bankruptcy, a “case filed” notification will be received from BankruptcyWatch and NLS will begin monitoring all loans associated with the contact. A contact in bankruptcy will be indicated by a  icon next to the name field.

If needed, the filing petition called “Voluntary Petition” may be requested from BankruptcyWatch.

Disposition

By default, NLS will monitor the following dispositions from BankruptcyWatch.

Chapter 7
Dismissed
Discharged
Closed / Terminated
Chapter 11
Converted5.31+
Chapter 13
Plan Confirmed
Dismissed
Discharged
Closed / Terminated

Existing Bankruptcies

If a contact has an existing bankruptcy at the time the list of contacts are sent to BankruptcyWatch, that contact and its associated loans will not be monitored.

Event Notification

When an event notification is received from BankruptcyWatch, some fields in the Bankruptcy tab will be populated based on the event.

Event Notification Fields Populated
CASE_FILED
Case Number
Date Notice Received
Date Filed
Court District Filed
Court Division
Court County
Bankruptcy Chapter Type:
Chapter 7, 11, or 13
Payoff Balance at Time of Filing
Principal Owed at Time of Filing
P+I Arrears at Time of Filing (Total Arrears at Time of Filing prior to NLS 5.32)
Total Principal Payment Due
Total Interest Payment Due
Parties
Status Code:
Chapter 7 Petition, Chapter 11 Petition, or Chapter 13 Petition

PLAN_CONFIRMED
Date of Confirmation
Status Code:
Chapter 13 Plan Confirmed

CASE_DISCHARGED
Date Discharged

JOINT_DEBTOR_DISCHARGED5.35+
Co-Borrower Discharge Date

CASE_DISMISSED
Date Dismissed
Status Code:
Chapter 7 Dismissed Pending, Chapter 11 Dismissed Pending, or Chapter 13 Dismissed Pending
If Auto-Dismiss Bankruptcy is enabled: Chapter 7 Dismissed, Chapter 11 Dismissed, or Chapter 13 Dismissed

JOINT_DEBTOR_DISMISSED5.35+
Co-Borrower Dismissal Date

CASE_CONVERTED
BK Conversion Date
Bankruptcy Chapter Type:
New chapter
BK Conversion Chapter:
Old chapter
Status Code:
New status code based on new chapter

CASE_REOPENED5.35+
Date Reopened
Status Code:
Chapter 7 Petition, Chapter 11 Petition, or Chapter 13 Petition

Security Privilege

User and group privileges for bankruptcy may be configured under the Bankruptcy item in the privilege list.

Sandbox Testing

BankruptcyWatch maintains two sandbox environments to test API operations: the first lets clients make API calls in an offline environment that never contacts the court system; the second lets clients use the API to file documents in the QA systems maintained by the bankruptcy courts. If you wish to use the sandbox environments, request a username and password from BankruptcyWatch support.

The offline sandbox allows for the use of the BankruptcyWatch API in an environment that is disconnected from the PACER system, so that API operations that would otherwise incur PACER charges are free. It contains a small collection of cases and documents copied from the PACER system. Most BankruptcyWatch API operations may be called in the offline sandbox, but only certain sets of parameters are supported, corresponding to the limited collection of cases available in the sandbox.

In addition to their production CM/ECF system, many bankruptcy courts provide a QA CM/ECF system for training. These QA systems lets users open cases and file documents with no effect on the court system. The CM/ECF Sandbox allows clients to access the bankruptcy courts' QA systems using the BankruptcyWatch API. To use the CM/ECF sandbox, clients must obtain QA CM/ECF accounts directly from the bankruptcy courts and register them with BankruptcyWatch using CreatePacerAccount.