EAST ST. LOUIS – The United States Bankruptcy
Court for the Southern District of Illinois published a notice on Feb. 7 announcing
greater clarity for the nation’s creditors as it pertains to Chapter 13
insolvencies. The newly added Rule 3015.1 requires, as of December 2017, the
use of a national form for Chapter 13 plans unless a district already has a
process that meets the requirements in the new rule.
According to the federal
bankruptcy court system, a Chapter 13 insolvency “enables individuals with
regular income to develop a plan to repay all or part of their debts. Under
this chapter, debtors propose a repayment plan to make installments to
creditors over three to five years.”
The biggest advantage of this is that the plan allows a
debtor to retain his or her home by ceasing foreclosure proceedings and possibly
resolving delinquent mortgage payments.
requirements of Rule 3015.1 are:
- A district can
only have one form.
- The opening
paragraph must contain a clause allowing discussing limits to the amount of a
secured claim based on valuation of the collateral or propose a method to avoid
- The form must
follow several formatting and disclosure rules including numbering paragraphs, labeling
in bold type, using separate paragraphs for the cure and maintenance of home
mortgages, payment of domestic support obligations, treatment of secured claims,
and surrender of property securing a claim.
- The last
paragraph must discuss any nonstandard provisions, and include a statement that
other nonstandard provisions appearing anywhere else in the plan are void.
A staff attorney with the U.S. Bankruptcy Court, who
wished to remain unnamed, spoke with the Madison
County Record about the added rule.
The attorney told the Record that the rule came about after a committee looked into the possibility
of a national standard for Chapter 13 filings and sent out a request for
comments to the nations’ bankruptcy courts. Based on feedback, it was
determined that while a standard national form could be used, it was desired by
many respondents that the states continue to have the right to develop plans of
William A. Mueller,
an attorney with the Bankruptcy Center office in Belleville, agreed with this
assessment. Mueller told the Record
that the impetus for the committee’s review, which he was a part of, was to
bring about “uniformity in the forms related to filing Chapter 13” and was an idea
that had been “kicking around for years.”
Creditors, Mueller said, faced a daunting task
of keeping abreast of the multitude of different forms even within one single
“Every jurisdiction and
every judge would have their own plan,” Mueller stated. And some districts had
no forms at all.
In an attempt to bring order
out of chaos, Judge Laura K. Grandy assembled a commission of court staffers
and attorneys to propose what came to be termed a “National Plan."
Mueller said that the finalized plan was reviewed last year and was now
finishing up the commentary phase. It was at this stage that the National Plan
hit the major obstacle of preferences for local forms, which resulted in the
plan going from a national standard to a tool of mandatory minimum requirements
that all plans have to abide by.