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 to add a new bankruptcy configuration.

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+

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.

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.

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.

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

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 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.

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.

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.

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.

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.

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