An amendment to a federal rule typically take three years. It must first be approved by the Standing Committee, then the Judicial Conference, and then sent to Congress for final review. After many years of consideration in both the Supreme Court and Congress, bankruptcy laws will be getting an update for the first time since 2005. The rules seem to affect mostly financial institutions, as well as, any individual filing Chapter 13 bankruptcy.
Among the most significant changes to the bankruptcy laws and regulations are a new requirement that states secured creditors must file proof of claims with a qualification that failure to do so will not void the creditor’s lien, and new bar dates for filing proof of claims. Additionally a new model Chapter 13 plan has been adopted that is subject to an opt-out in favor of local forms if certain conditions are met. The most recent version of the new Chapter 13 bankruptcy form, also called new Official Form 113, can be found on the United States Courts website.
These new rules may seem minor but do change several things drastically. For example, currently creditors have four months to file a proof of claim (stating that the debtor owes them money), but under the new rules that go into effect December 1st, 2017, they will have only 2 months. Additionally, creditors now have better control over where a debtor mails a claim objection.
For debtors, there has also been a change in avoiding liens in exempt property. Now, individuals filing Chapter 13 bankruptcy can use it to avoid a judicial lien, something that couldn’t be done before. This rule doesn’t apply to mortgages though. Lastly, the new set of bankruptcy rules added a rule “providing for order declaring lien satisfied”, which means that a debtor may request an order declaring that a secured claim has been satisfied, which helps debtors gain documentation for title purposes demonstrating the elimination of a lien or second mortgage.
Bankruptcy rules are very complex, and as demonstrated by this article and the new rules, ever-changing. Because of this complexity coupled with the long term impact of filing bankruptcy, you should contact a Houston bankruptcy attorney when seeking to relieve debt burdens in this manner.