Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Diane Davis
Nov. 16 — Most of the official bankruptcy forms are being replaced with revised, reformatted, and renumbered forms, effective Dec. 1.
The new forms are part of a modernization project that began in 2008, to improve the official bankruptcy forms and the interface between the forms and available technology (27 BBLR 653, 5/7/15).
Due to its scope, the process took seven years, rather than the typical two-year cycle, Prof. Elizabeth Gibson of the University of North Carolina School of Law, Chapel Hill, N.C., said Nov. 16 at a webinar sponsored by the American Bankruptcy Institute.
According to Gibson, the process involved bankruptcy and district court judges, bankruptcy clerks, a bankruptcy administrator, and representatives of the U.S. Trustee Program. The Bankruptcy Rules Committee also retained a professional forms consultant to assist in the project.
In creating the new forms, surveys were conducted to determine the problem areas on the current forms, and input was obtained at the design phase from practitioners, trustees, and software vendors, Gibson said. Testing was also conducted with law clerks and others, with several publications for public comments over a three-year period, she said.
The new forms will apply to all cases filed on or after Dec. 1, 2015, according to Judge Arthur I. Harris of the U.S. Bankruptcy Court for the Northern District of Ohio. All practitioners and pro se debtors are expected to use the new forms in new cases starting on “day one,” Dec. 1, Harris said.
The new forms will apply to all cases pending on Dec. 1, to the extent practicable, Harris, said, noting that under Rule 5005 of the Federal Rules of Bankruptcy Procedure, the clerk shouldn't refuse to accept documents for filing solely because they aren't in proper form as required by national or local rules. According to a 1993 Committee Note, the enforcement of the rules is a role for a judge's discretion, Harris said.
“There may be consequences if deficiencies aren't corrected in a timely manner, however” Harris said.
“Don't assume the forms are the same as the old ones,” Harris warned practitioners. “Read the questions and the instructions,” he said, and share them with your clients. Harris also encouraged practitioners to get their clients to disclose all of their assets and claims, including contingent claims. “Disclosure is key,” he said.
There are also Federal Rule of Civil Procedure Amendments set to take effect Dec. 1, Harris said, including Rules 1, 4, 16, 26, 30, 31, 33, 34, 37, and 55. Many of the rules are incorporated into part VII of the Bankruptcy Rules, Harris said.
The Dec. 1, 2015, Civil Rules Amendments, including Committee Notes are available at: www.uscourts.gov/file/18481/download.
One of the key features of the new forms is that there is a separate case-opening form for individuals, new Form B101, Voluntary Petition for Individuals Filing for Bankruptcy, and a new form for non-individual debtors, new Form B201, Voluntary Petition for Non-Individuals Filing for Bankruptcy, Gibson said.
The new form for individual debtors would also be used for married debtors, she said. Only business entities would use the non-individual form.
The non-individual debtor's form reflects how businesses keep financial records, Gibson said. The new forms also remove questions relevant only to individuals, she said.
There are new instruction booklets for individual and non-individual debtors, Harris said. They include general instructions, form-specific instructions, and a glossary, he said. These new instructions should help debtors understand what is being asked by the new forms, he said.
The instructions to the forms are placed where they are needed with a question rather than in the beginning of the form, Gibson said.
According to Gibson, there was a concern from public comments that the new easier-to-use forms would promote more pro se filings. There are warnings throughout the new forms against pro se filings, but they are a reality, Gibson said.
Several modernized forms already in effect will just be renumbered, Gibson said. They include: Schedule I, Current Income of Individual Debtor(s), and Schedule J, Current Expenditures of Individual Debtor(s), Form 3A, Application and Order to Pay Filing Fee in Installments, Form 3B, Application for Waiver of Chapter 7 Filing Fee, Form 22A-1, Chapter 7 Statement of Your Current Monthly Income and Means-Test Calculation, Form 22A-2, Chapter 7 Means Test Calculation, Form 22B, Chapter 11 Statement of Your Current Income, Form 22C-1, Statement of Your Monthly Income and Means-Test Calculation, and Form 22C-2, Chapter 13 Calculation of Your Disposable Income.
Scott Myers of the Administrative Office of the U.S. Courts, Washington, D.C., explained the new numbering system of the new forms. The 100's are used for case-opening forms for individual debtors, the 200's are used for case-opening forms for non-individual debtors, the 300's for court notices and orders, and the 400's for later filed documents, including proof of claim, he said.
According to Harris, other changes to the forms, include changes to Schedule C, Property Claimed as Exempt, which should clarify that debtors should check only one box for each exemption.
This change is in response to the U.S. Supreme Court's decision in Schwab v. Reilly, 560 U.S. 770 (2010), (22 BBLR 855, 6/24/10), Harris said, in which the Supreme Court decided the proper rule to apply when a debtor claims an ambiguous exemption.
A noteworthy change in the new forms, according to Sam Mass of Stratus Intelligence LLC, Chicago, is that Schedule A, Real Property, and Schedule B, Personal Property, are combined in the new forms. According to Mass, there are many more categories of personal property on the new forms.
Schedule E, Creditors Holding Unsecured Priority Claims, and Schedule F, Creditors Holding Unsecured Nonpriority Claims, are also combined, Mass said.
There is also an additional page required for Noticing Parties, Mass said. According to Mass, there is a requirement to specify the part and line from Schedules E/F regarding the original creditor.
Mass urged practitioners to check with their current software vendor to make sure that they are ready with the new forms for Dec. 1.
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