Barbara Foley is US Bankruptcy Court speaker at Bankruptcy Section meeting

By Roberta M. Gubbins Legal News "We have been working on the Uniform Chapter 13 Plan since early summer." said Barb Foley, US Bankruptcy Court, Western District, Chapter 13 Trustee "We are hoping that by having a uniform plan we will avoid regular creditor objections, trustee objections and so forth. This is an attempt to get us all on the same page at least to the standard provisions in the plan and give you the opportunity to make changes to it that you deem necessary to meet the needs of your client." Foley spoke to the Ingham County Bar Association Bankruptcy Section luncheon meeting held at the Michael Franck Building in Lansing on April 14th. Because each plan that comes presented to the court is slightly different, "it is necessary for staff to read each plan." She noted that with the uniform plan that says the same time in every paragraph, "we are not wasting our time but can go immediately to Section P (Additional Provisions) to see what is different in your plan." The first section of the proposed plan deals with Plan Parameters, "where it is indicated whether the commitment period is 36 or 60 months." The Funding section II spells out the amount of payment and frequency. The local rule provides that every plan shall have a pay order for automatic payroll deduction." Disbursements are covered in section III. "Where is the money going to go? The order of priority under the code is first, Administrative claims, which include court-filing fee, allowed trustee fee and attorney fees and costs. Priority claims are next and include Domestic Support Obligations (child support or alimony), which can be paid directly by the debtor or through the trustee. "I need to know for the post-petition DSO payments the end date of the payments and the age of the children. Third, secured creditors such as real property that may have more than one creditor; we need to know which creditor goes with which property. Foley noted that payment on these debts start the month after the Petition is filed--"if you file in March, the payments will start in April so the arrearage needs to include March payments due. If you want a real property tax escrow through the trustee, check the box on the form." When she makes the payments she pays the mortgage first, then the tax escrow amount and the balance will go the secured creditors. Fourth, Executory Contracts such as land contracts or other such contracts and last are unsecured creditors. With wholly unsecured liens on real property the language states that 'upon completion of the plan the lien and loan shall be discharged and the lien removed from the property. How do you prove that is gone? "A copy of the plan and the Trustee's plan completion letter may recorded with the County Register of Deeds," Foley said. The tentative plan delineates the information needed by the Trustee to make the payments on the debts. In relation to unsecured creditors, there are three choices--pay 100% of the debt or pay a pro-rata share of a fixed amount or payment of an amount remaining after payment of superior claims. "This paragraph tells me when the plan is done. If we paid 100% of the debt owed to unsecured creditors according to the plan, then we are done," Foley said. The General Provisions are grouped together at the end. The trustee can reduce the length of the plan, for example, "you have a 36 month plan but you've paid in tax refunds so can complete payments early and shorten the length of the plan." Foley noted that the debtors can not incur more debt in excess of $2000 or sell any property with a fair market value greater than $2000.00." She recommended that practioners look closely and analyze section H, Trustee Post-confirmation disbursement, "which shows how we plan to send out the money. If you want to modify the plan, you can under the additional provisions section," Foley said. She asked that practioners pay attention to section I re: Tax returns--note any that have not been filed. Foley recommended that if there are additional attorney fees that the claim for such is filed early since there might not be funds to pay the fee. The plan, she indicated, does provide a tool to teach the client their rights and responsibilities while in bankruptcy. The proposed plan has been sent to the judges for review and comments. "My philosophy," she concluded, "is that this is a growing thing" that can change as the laws or procedures change. The next meeting of the Bankruptcy section is tentatively scheduled for May 16th, location and topic TBA. Published: Mon, Apr 25, 2011

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