A process to come up with a standard national Chapter 13 Plan has resulted in a number of proposed changes to the Bankruptcy Rules which have a target effective date of December 1, 2017. A national Chapter 13 Plan has been proposed and will be mandatory unless a judicial district opts-out by adopting a “Local Form” that complies with new bankruptcy rule 3015.1. Judicial districts in Arkansas appear poised to opt-out and adopt their own local plan but the form has not yet been finalized.
In addition to the adoption of a new form plan, the proposed new rules modify the impact of language in the plan and set shorter deadlines for filing proofs of claim. Secured creditors need to be more vigilant in reviewing the plans or find themselves bound by matters stated in the Plan. Here are some highlights of the proposed new rules:
- Proposed Revised Rule 3002
- Proofs of claim must be filed within 70 days from the petition date.
- For secured claims for the debtor’s principal residence, the mortgage proof of claim attachment and escrow analysis, if applicable, required by Rule 3001(c)(2)(C) needs to be filed within 70 days from the petition date. The written agreement and evidence of perfection can be filed as a supplement within 120 days from the petition date.
- Proposed Revised Rule 3015
- If non-standard provision are included, they must be highlighted in the Plan.
- The amount of a secured claim under §506(a) may be determined by the Plan and controls over the proof of claim. This means that if a secured creditor objects to the value of its collateral in the plan, the creditor must object or will be deemed to have agreed to the valuation.
- If property is being surrendered under the Plan, confirmation of the Plan terminates the automatic stay and co-debt stay. No motion is required.
- Objections to confirmation must be filed at least seven days before the date set for the hearing on confirmation, unless the Court orders otherwise.
- Proposed Revised Rule 4003
- A proceeding to avoid a lien that impairs an exemption can be made by motion or the avoidance can be provided for in the Plan. If no objection is filed by the creditor, the lien is avoided if the avoidance is provided in the Plan and no objection is filed.
There are a number of other changes proposed but the foregoing emphasize the need for a secured lender to be vigilant when a Chapter 13 petition is filed to satisfy the new proof of claim filing dates and to pay attention to any valuations of collateral set forth in the Chapter 13 Plan.
Harry practices in the areas of bankruptcy, creditors’ rights, commercial litigation and trademark/copyright applications. In the bankruptcy area, he has represented creditors in protecting their collateral, pursuing creditor objections to discharge and dischargeability of debts, represented purchasers in acquiring assets from bankruptcy estates and defended creditors in bankruptcy adversary proceedings.
This news alert is created by the attorneys at Friday, Eldredge & Clark, LLP. The information provided is not a substitute for legal advice and should be considered for general guidance only. Please contact one of our attorneys for specific legal advice regarding this matter.