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The Weight To Be Given To Comments From Bankruptcy Judges On Proposed Bankruptcy Rules and Forms

posted by david lander

 The Advisory Committee on Bankruptcy Rules (and forms) has been quite active and successful over the past decade in improving the practice of law in the Bankruptcy Courts.  Some of their major innovations such as the overhaul of the process for appealing a decision of the bankruptcy court have engendered little comment and have been deemed important contributions to justice.  Others, such as the responses to changes in the consumer credit and consumer mortgage industries have engendered very active comment from both the creditor and debtor communities and the Committee has endeavored to evaluate carefully all such comments to make certain the proposed rules and forms are not only well written and thought through but also fair to both sides.  In the business bankruptcy  realm the proposed rules governing Informal Committees (2019) engendered significant comment from the claims buying industry and the Committee made numerous changes in response to those comments.

All of this is by way of introduction to a look at the current and ongoing effort regarding the  Chapter 13 Model Plan.  As expected, the pair of publications of the sets of rules and forms engendered strong responses from both the consumer debtor and the consumer creditor communities as well as the Chapter 13 Trustees; the most interesting point to me was that a large segment of those warring parties reached an agreement on the form and rule changes which the Committee then promulgated for comment.  The fly in the ointment was the comments by Bankruptcy Judges themselves which were significant in scope and numerosity and intensity. The original proposals and the initial modifications called for the Model Chapter 13 Plan to be compulsory for use by the courts.  The questions for consideration by the Committee in response to the flurry of judicial comments were:

  1. To what degree were the objections a "to-be-expected" resistance to change?
  2. To what degree were the objections a reaction to the “my model plan is better than your model plan aspect of  human nature?
  3. How great was the problem being addressed by the model plan and related rule changes?

The Committee and the consumer bankruptcy community are currently considering a “compromise” developed in response to the somewhat surprising strength of objections by Bankruptcy Judges. The compromise provides for a district to adopt a local form instead of using the national Form 113 if it meets the criteria specified in the national rules. The Rules Committee will meet March 31, 2016, in Denver to consider the compromise proposal contained in changes to Rule 3015 and a new Rule 3015.1. The chapter 13 plan Form 113 and the other related rules changes have been approved by the advisory committee but are being held in abeyance until an entire package is submitted to the  Committee on Rules of Practice and Procedure (the Standing Committee). It appears that the earliest this could go into effect is December 1, 2017, and that is if the comment period is shortened.

It will be fascinating to see what the committee decides as it endeavors to balance the comments by the different constituencies, the consumer debtors, the consumer creditors, the Chapter 13 Trustees and the Bankruptcy Judges. 

Not easy work, but this is not only a very hard working committee but generally a wise one as well.

Two final technical points. First the work of this committee must past muster from the Committee on Rules of Practice and Procedure (the Standing Committee). The Standing Committee independently reviews the findings of the advisory committees and, if satisfied, recommends changes to the Judicial Conference, which in turn recommends changes to the Supreme Court.  The Court considers the proposals and, if it concurs, officially promulgates the revised rules by order, to take effect unless Congress enacts legislation to reject, modify, or defer the pending rules. 

Second, the author was a member of the Committee from 2008 to 2014. 

 
 

Comments

Good points as to the National Model Plan. The proposed "compromise" that has garnered significant support of the different constituencies requires each district adopting a local form to include some but not all of the well intentioned elements of the National Model Plan. This addresses the criticism that Chapter 13 has become too parochial. Such flexibility is necessary and appropriate.

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