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National Chapter 13 Plan Form and Significant Rule Changes are Proposed

Posted By USFN, Thursday, April 4, 2013
Updated: Monday, November 30, 2015

April 4, 2013


by Linda St. Pierre
Hunt Leibert – USFN Member (Connecticut)

Late last year, the Chapter 13 Form Plan Working Group for the Advisory Committee on Bankruptcy Rules released its proposals for comment. The proposals include a National Chapter 13 Plan form as well as important changes to the rules. If approved, these proposals will add some substantial risks to loan mortgage servicing.

The proposed National Chapter 13 Plan will provide that claim objections, cramdowns, and lien-strips may be completed in the plan confirmation process, rather than through the customary separate objection, motion, or adversary complaint procedures. This can result in a claim being disallowed, a lien stripped, or a claim crammed down without the need for filing a separate pleading. In addition, the proposed rules would allow a debtor to file a motion to obtain an order confirming a secured claim has been satisfied after payment or discharge of the claim. Further proposed amended rules seek a deadline to object to the plan at least seven days prior to the confirmation hearing, unless otherwise ordered by the court. In addition, the proof of claim bar date will be decreased to 60 days from the petition filing, rather than 90 days from the first scheduled Section 341 meeting of creditors — shortening the bar date by more than 90 days. Lastly, the proposed rules would require a lender or servicer to file a proof of claim, instead of relying on its lien for future satisfaction and riding out the Chapter 13 process.

If passed, the proposed National Chapter 13 Plan and rule changes will require lenders and servicers to be more diligent in ensuring that timely plan objections and proofs of claims are filed if they are going to ensure that their rights are protected. Changes are not likely to happen before 2014. Look for continued updates as more information is received.

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