No Thanks: Most Districts Opt Out of National Chapter 13 Plan

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By Daniel Gill

New bankruptcy rules and a new form Chapter 13 plan went into effect Dec. 1, but all but 13 judicial districts have opted out of the national plan, instead favoring a form adopted by each district.

“It’s not ideal, but it’s certainly an improvement, making the Chapter 13 process more uniform across the country,” former bankruptcy Judge Eugene Wedoff told Bloomberg Law.

Wedoff is president of the American Bankruptcy Institute and was chair of the rules committee overseeing the new regulations.

Chapter 13 allows individuals receiving regular income to obtain debt relief while retaining their property. To do so, the debtor must propose a plan that uses future income to repay all or a portion of debts over a three- to five-year period.

Rule 3015 provides that the Official Form for the Chapter 13 plan must be used by debtors unless a “local form” has been adopted in compliance with new Bankruptcy Rule 3015.1.

Rule 3015.1 sets forth certain requirements any local plan must feature. For example, the local form must include an “initial paragraph” indicating that the plan does or doesn’t contain any nonstandard provision, seek to avoid a lien, or limit the amount of a secured claim based on the value of the collateral.

In addition, the local form must have separate paragraphs related to curing defaults on a debtor’s home mortgage, paying a domestic support obligation, and surrendering collateral.

The local form must contain a final paragraph laying out any “nonstandard provisions,” which can’t be placed elsewhere in the plan. More detail about the plan can be found in Bloomberg Law: Bankruptcy Treatise.

Research by Bloomberg Law shows that only about 13 of a total 94 judicial districts will use the national form. The others all have local forms (although Bloomberg Law hasn’t independently confirmed if or how many of these conform with the bankruptcy rules discussed above.

The districts apparently using the national form, Form 113, are these:

  •  Northern District of Illinois
  •  Northern District of Indiana
  •  Northern District of Iowa
  •  Southern District of Iowa
  •  Western District of Kentucky
  •  Western District of New York
  •  Northern District of Ohio
  •  Northern District of Texas
  •  District of Utah
  •  District of Vermont
  •  District of the Virgin Islands
  •  Western District of Virginia
  •  District of Wyoming
All the other districts across the nation have promulgated their own local forms.

Wedoff said that there are a large number of courts across the country that prefer to use their own form of Chapter 13 plan. But now the plans will have a more similar look, with numbered paragraphs and bold-faced headers.

“It’s absolutely a good thing,” Wedoff said of the changes to the rules. He said the biggest change was the shortening of time for creditors, including secured creditors, to file proofs of claim. Creditors now have to file their proofs of claim 70 days after the bankruptcy filing date. That cuts the amount of time down by nearly half, Wedoff said.

One consumer bankruptcy attorney was less than effusive about the national plan.

“It’s too long, too complicated, and it makes everything harder to understand,” Sharon Sperling told Bloomberg Law.

Sperling sat on the committee that drafted the local form for the Northern District of Florida. The national form calls for a large amount of detail that won’t be necessary for a lot of filings, she said.

To contact the reporter on this story: Daniel Gill in Washington at

To contact the editor responsible for this story: Jay Horowitz at

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