The Proposed National Chapter 13 Plan

The Federal Rules Committee has proposed a National Chapter 13 Plan at Rule 3015(c) of the Bankruptcy Rules that, if approved, would go into effect on December 1, 2015.   The national plan is intended to standardize consumer cases and make it easier for pro se debtors as it comes with an instruction booklet.  The national plan will also make it easier for large creditor firms to quickly look over plans as it standardizes the nation.  Finally the national plan will make it easier for NextGen, the next generation of Electronic Case Filing software to mine data and information and generate reports for unknown parties, including large creditors.

The local Bankruptcy Bar in Knoxville, Tennessee has had several meetings on the proposed plan and will be writing as a committee to the rules committee for comment.  As a committee member, I would like to summarize some of my comments.

1. The national plan is very arithmetic heavy for the debtor.  It requires a lot of summation of what is being paid for each claim with interest, what is being paid over the life of the plan, summations of each class and calculations of Trustee’s fees that must be stated in a section of the proposed national plan.
2. The national plan removes local rules that many times expedite confirmation.  The national plan requires that a creditor object to confirmation at least 7 days prior to a confirmation hearing.  This seems to mandate that a plan cannot be confirmed prior to that date, which in many cases will slow down confirmation of a plan.
3. The national plan provides for tax returns in all cases to be provided to the Trustee if any portion of the tax refund is paid into the plan.
4. The national plan provides for a 36 months plan or a 60 month plan, but nothing in between.
5. The national plan provides for the proof of claim to control, not the amount in the confirmed plan, when the claim is for a mortgage maintenance payments, arrearages, 910 claims, and 1 year purchase money claims.
6. The national plan provides for a default where entire sections or parts of the national plan will not apply unless a check is made to give “notice to interested parties” in part 1 of the plan.

These are just some of the comments I will be making individually and on the Knoxville Bankruptcy Bar Committee Meeting on the National Plan.   For bankruptcy attorneys who have not reviewed the proposed National Plan, you should review it, review the comments of others and make comments of your own. The comment period ends February 15, 2014. Comments can be reviewed or made here.