New Bankruptcy Rules Go Into Effect
Learn what changes took effect on December 1, 2017, to the Federal Rules of Bankruptcy Procedure.
On December 1, 2017, a series of changes to the Federal Rules of Bankruptcy Procedure went into effect. The new rules have will affect both commercial and consumer bankruptcies and are still being fully digested by legal professionals to determine their significance.
While it is still not known just how drastically the changes will affect bankruptcy filings, they relate directly to liens and proofs of claim, among other areas, and therefore can be very relevant to the lending community.
We’ve summarized them below, but for more information, please refer to the official record found on USCourts.gov.
- Under amended Rule 3002(a), a creditor is required to file a proof of claim, stating the amount of indebtedness due at the time of filing.
Amended Rule 3002(c) shortens the deadline for filing a proof of claim from 90 days after the 341 meeting of the creditors to 70 days after a case is filed or the date of the order of conversion to a Chapter 13. In the case of an involuntary Chapter 7, the deadline is no later than 90 days after the case is filed.
- In a Chapter 7 case that is a “no asset” case and the notice states that proofs of claim should not be filed, a proof of claim will not be required until a Notice of Possible Dividends or Notice of Assets is issued, in which case the deadline will start from the date the notice was issued.
- If a creditor has a security interest in the debtor’s principle residence, the same 70-day deadline applies, but there are an additional 50 days to file attachments (Rule 3002(c)(7).
- Under amended Rule 2002(a), creditors must file objections to confirmation of a Chapter 13 plan within seven days of the confirmation hearing, unless the court orders otherwise.
Pursuant to amended Rule3012, requests to determine the amount of a secured claim may be made by motion, in a claim objection or in Chapter 12 or 13 plan.
- Under amended Rule 4003, a request under Bankruptcy Code section 522(f) to avoid a lien or other transfer may be made in Chapter 12 or 13 plan.
- Pursuant to amended Rule 5009(d), in Chapter 12 or 13 case the debtor may request an order declaring that a secured has been satisfied and that the lien has been released under the terms of the confirmed plan.
Keep in mind that these are significant procedural rules modifications that can directly affect bankruptcy proceedings. At the same time, the relative newness of the changes leave few examples of case law. Be sure to check back with us at a later date for updates and commentary.
Want to learn more about bankruptcy and how it can play a key role in your due diligence strategy?
Be sure to read the following:
The importance of Debtor Name Accuracy in UCC Filings