## Facts

- Brandon and Denon Burrier filed a Chapter 13 case and confirmed a plan curing prepetition mortgage arrears through the plan while making ongoing postpetition mortgage payments directly to the mortgage servicer.
- After confirmation, the debtors sought to modify the plan to increase the arrearage amount to be paid through the plan.
- The mortgage creditor moved for relief from the automatic stay, alleging the debtors missed several postpetition, postconfirmation monthly mortgage payments.
- The parties stipulated that the creditor would credit the account if the debtors produced “cancelled checks” for the disputed payments.
- The debtors could not obtain traditional cancelled checks because their bank processed checks through electronic truncation under the Check Clearing for the 21st Century Act (Check 21).
- At an evidentiary hearing, the debtors offered bank statements reflecting debits/payments to the creditor and carbon copies of the checks corresponding to the disputed months.
- The dispute centered on whether the debtors had in fact made the direct mortgage payments and, if so, what proof was adequate given modern check processing.

## Issues

1. Whether a stipulation requiring “cancelled checks” as proof of payment may be satisfied by bank statements and other reliable documentation when Check 21 processing makes traditional cancelled checks unavailable.
2. Whether the creditor established “cause” for relief from the automatic stay under 11 U.S.C. § 362(d) based on alleged postpetition, postconfirmation mortgage payment defaults.

## Decision

- The court denied the creditor’s motion for relief from the automatic stay.
- The court found the debtors’ bank statements and carbon copies of checks were sufficient evidence that the disputed payments were made.
- The court declined to apply the stipulation’s “cancelled checks” language rigidly where the debtors could not reasonably obtain cancelled checks due to Check 21 truncation.
- Because the asserted payment defaults were not proven, the creditor failed to show cause for stay relief.

## Legal Principles

- Proof-of-payment requirements should be applied in a manner consistent with current banking practices; where cancelled checks are not obtainable due to Check 21 truncation, functionally equivalent documentation (e.g., bank statements, check images, check copies) may suffice.
- In stay-relief litigation, credible documentary evidence of payment can rebut a creditor’s allegation of postpetition default and defeat a showing of “cause” under 11 U.S.C. § 362(d).
- Stipulations concerning evidence of payment are construed to accomplish their verification purpose and should not be interpreted to impose impossible conditions when reasonable, reliable substitute proof exists.

## Conclusion

The bankruptcy court refused to lift the automatic stay where the debtors credibly demonstrated that disputed postconfirmation mortgage payments were made using bank records and check copies, and it treated those records as adequate substitute proof when Check 21 processing prevented production of traditional cancelled checks.


In re Burrier, 399 B.R. 258 (Bankr. D. Colo. 2008)