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National Chapter 13 Plan Project

Posted By USFN, Tuesday, August 1, 2017
Updated: Monday, August 14, 2017

August 1, 2017

by Michael J. McCormick
McCalla Raymer Leibert Pierce, LLC
USFN Member (Connecticut, Florida, Georgia, Illinois)

The genesis of the National Chapter 13 Plan Project was approximately five years ago. Originally proposed by now-retired U.S. Bankruptcy Judge Eugene Wedoff (N.D. Ill.), the main idea behind the project was to make Chapter 13 more uniform and efficient, especially for national creditors or attorneys practicing in more than one jurisdiction (i.e., having to deal with more than one plan version).

The project is coming to a conclusion, and after several iterations and rounds of public comment, there have been less than optimal results for creditors. This less-than-ideal situation is the result of large-scale opposition to a nationwide plan by judges and other stakeholders, which was mostly unforeseen when the Advisory Committee on Rules of Bankruptcy Procedure embarked on this mission years ago.

Unfortunately for proponents of Official Form 113, it became clear that the idea of a national plan was not going to be adopted without some form of a compromise, which is now contained in newly-adopted Federal Rules of Bankruptcy Procedure Rule 3015.1.

The U.S. Supreme Court recently authorized a number of significant changes to the procedural rules applicable to bankruptcy proceedings, including the adoption of Official Form 113. Unless Congress intervenes, the new rules will take effect on December 1, 2017.

Under amended Rule 3015(c), debtors will need to use Official Form 113 for their plan unless their jurisdiction has adopted its own local form (i.e., a conforming plan), which must itself include the information outlined in Rule 3015.1. Among other things, Rule 3015.1 will compel conforming plans to include a paragraph requiring the debtor to highlight any nonstandard plan terms, specifications limiting any secured creditor’s claim to the value of its collateral, or provisions seeking to avoid a lien on the debtor’s real or personal property.

Between now and December 1, districts should be deciding whether to use Form 113 or adopt a conforming plan. Some districts are much further along in the process, having already determined which plan to adopt and holding seminars to educate practitioners about the changes. Other districts have only recently sent out emails soliciting public comment and, unfortunately, there is still a third group of districts that appear to have done little and may not be able to formally adopt one plan or another prior to the looming December 1 date. The result in such situations is that Form 113 becomes the new plan in those districts.

It is anticipated that not all debtor attorneys will receive word of the change and some jurisdictions will be more forgiving than others about accepting outdated plans in cases filed after December 1.

The USFN Bankruptcy Committee is working to compile a table showing which plan each district intends to adopt. As this USFN Report is being finalized for print, it appears that only seven districts have thus far adopted the national Chapter 13 plan (Form 113), effective on December 1, 2017: Alaska; Illinois (Northern District); Indiana (Northern District); Iowa; New York (Western District); Ohio (Northern District); and Utah.

Accordingly, at the moment, it seems that the majority of districts are choosing to opt out pursuant to new Rule 3015.1 and adopt their own conforming plan. Stay tuned …

Copyright © 2017 USFN and McCalla Raymer Leibert Pierce, LLC. All rights reserved.
Summer USFN Report

Note for consideration of the USFN Award of Excellence: This article is not a "Feature."

 

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