SELF-REPRESENTED CREDITOR · united states bankruptcy court district of massachusetts a guide for the self-represented creditor in a bankruptcy case june 2014

UNITEDSTATESBANKRUPTCYCOURTDISTRICTOFMASSACHUSETTSA GUIDE FOR THE

SELF-REPRESENTED CREDITOR

IN A BANKRUPTCY CASE

June 2014

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TableofContents

Subject PageNumber

LegalAuthority,StatutesandRules.......................................................................................1

WhoisaCreditor?..........................................................................................................................1

OverviewoftheBankruptcyProcessfromtheCreditor’sPerspective...................2

ACreditor’sObjectionsWhenaPersonFilesaBankruptcyPetition.......................3

LimitedStay/NoStay.....................................................................................................3

RelieffromStay................................................................................................................4

ViolationsoftheStay......................................................................................................4

Discharge.............................................................................................................................4

WorkingwithProfessionals.......................................................................................................4

Attorneys.............................................................................................................................4

Prose ..................................................................................................................................................5

ProseLawClerk.............................................................................................................................6

GettingStarted.................................................................................................................................7

FilingDocumentsandPapers....................................................................................................7

CaseNumber......................................................................................................................8

ElectronicFilingAccessforCreditors...................................................................................8

Deadlines............................................................................................................................................9

TheBankruptcyProcess..............................................................................................................9

ReceivingNotices.............................................................................................................9

TheTrustee........................................................................................................................10

MeetingofCreditorsPursuantto§341(A)..........................................................10

PreparingfortheMeetingofCreditors..................................................................11

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AftertheMeetingofCreditors....................................................................................12

AdversaryProceedings.................................................................................................12

TheClaimsProcess........................................................................................................................13

ProofofClaim....................................................................................................................13

TypesofClaims..................................................................................................14

UnclaimedFunds...............................................................................................14

ObjectionstoClaims.......................................................................................................15

Motions,HearingsandCourtAppearances.........................................................................15

Hearings...............................................................................................................................16

TelephonicorVideoconferenceAppearances.....................................................17

CertificatesofService.....................................................................................................17

CourtAppearances..........................................................................................................17

WhatCreditorsShouldKnowAboutChapter7: LiquidationundertheBankruptcyCode...............................................................19 Background........................................................................................................................19 Eligibility..............................................................................................................................19 HowChapter7Works....................................................................................................19 TheRoleoftheChapter7Trustee............................................................................22 TheChapter7Discharge..............................................................................................23WhatCreditorsNeedtoKnowAboutChapter11: ReorganizationundertheBankruptcyCode........................................................26 Background........................................................................................................................26 HowChapter11Works.................................................................................................26 TheChapter11DebtorinPossession.....................................................................28 TheUSTrusteeorBankruptcyAdministrator....................................................29 Creditor’sCommittees...................................................................................................29 TheSmallBusinessCaseandtheSmallBusinessDebtor...............................29 TheSingleAssetRealEstateDebtor........................................................................30 AppointmentorElectionofaCaseTrustee..........................................................31 TheRoleofanExaminer...............................................................................................31 TheAutomaticStay.........................................................................................................32 WhoeCanFileaPlan......................................................................................................32

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AvoidableTransfers........................................................................................................33 CashCollateral,AdequateProtectionandOperatingCapital.......................33 Motions.................................................................................................................................34 AdversaryProceedings.................................................................................................34 Claims....................................................................................................................................34 EquitySecurityHolders................................................................................................35 ConversionorDismissal...............................................................................................35 TheDisclosureStatement............................................................................................36 AcceptanceofthePlanofReorganization.............................................................37 TheDischarge....................................................................................................................38 PostconfirmationModificationofthePlan...........................................................39 PostconfirmationAdministration.............................................................................39 RevocationofConfirmationOrder...........................................................................40 TheFinalDecree...............................................................................................................40WhatCreditorsShouldKnowaboutChapter12: FamilyFarmerorFamilyFishermanBankruptcy.............................................41 Background........................................................................................................................41 HowChapter12Works.................................................................................................42 TheChapter12PlanandConfirmationHearing................................................44 MakingthePlanWork...................................................................................................46 TheChapter12Discharge............................................................................................46WhatCreditorShouldKnowAboutChapter13: IndividualDebtAdjustment........................................................................................47 Background........................................................................................................................47 AdvantagesofChapter13............................................................................................47 Chapter13Eligibility.....................................................................................................48 HowChapter13Works.................................................................................................48 Chapter13PlanandConfirmationHearing.........................................................50 MakingthePlanWork...................................................................................................52 PaymentstoCreditors...................................................................................................53 TheChapter13Discharge............................................................................................53 TheChapter13HardshipDischarge.......................................................................54Glossary..............................................................................................................................................55

AppendixA:NoticeofAppearanceandRequestforNotice.........................................61

AppendixB:ProofofClaimandInstructions.....................................................................62

LEGALAUTHORITY,STATUTESANDRULES

Theletters“U.S.C.”refertotheUnitedStatesCode.Thenumberthatprecedes“U.S.C.”referstothetitleoftheU.S.Code(e.g.,11U.S.C.).Thenumbersfollowing“U.S.C.”refertothesectionofthetitleoftheU.S.Code(e.g.“11U.S.C.§109”).

TheUnitedStatesBankruptcyCodeisfoundinTitle11oftheU.S.Code.CopiesoftheUnitedStatesCodeareavailableatpubliclibrariesandmayalsobefoundonline(linkstotheCodearefoundattheU.S.BankruptcyCourt’swebsite:www.mab.uscourts.gov).

Inthismanual,referencesonlytothesectionnumberrefertothesectionoftheBankruptcyCode(i.e.,title11).

InadditiontotheU.S.Code,thereareFederalandLocalRulesthatapplytoeverycase.LinkstotheFederalRulesofBankruptcyProcedure(“Fed.R.Bankr.P.)aswellastheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusetts(“LocalRules”)arefoundattheUnitedStatesBankruptcyCourt’swebsite:www.mab.uscourts.gov.,Inthismanual,theyarecollectivelyreferredtoasthe“Rules.”

AlsoontheBankruptcyCourt’swebsiteyouwillfindlinkstoOfficial,ProceduralandLocalformsIfyouareaprosecreditoryoumustbecomeacquaintedwiththedutiesandobligationsimposedbytheCodeandtheRules.

WHOISACREDITOR?

TheU.S.BankruptcyCodedefinesacreditoras“entitythathasaclaimagainstthedebtorthataroseatthetimeoforbeforetheorderforreliefconcerningthedebtor;…entitythathasaclaimagainsttheestateofakindspecifiedinsection348(d),502(f),502(g),502(h)or502(i)ofthistitle;or…..entitythathasacommunityclaim.”See§101(10).

Theterm“claim”meansarighttopayment,whetherornotsuchrightisreducedtojudgment,liquidated,unliquidated,fixed,contingent,matured,unmatured,disputed,undisputed,legal,equitable,secured,orunsecured”ora“righttoanequitableremedyforbreachofperformanceifsuchbreachgivesrisetoarighttopayment,whetherornotsuchrighttoanequitableremedyisreducedtojudgment,fixed,contingent,matured,unmatured,disputed,undisputed,secured,orunsecure.”See§101(5).

Andtheterm“communityclaim”meansaclaimthatarosebeforethe

commencementofthecaseconcerningthedebtorforwhichpropertyofthekindspecifiedinsection541(a)(2)ofthistitleisliable,whetherornotthereisanysuchpropertyatthetimeofthecommencementofthecase.”§101(7).

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Whilethesedefinitionsareimportant,mostindividualsunderstandthattheyareacreditoriftheyareowedmoneybyapersonorcorporationthathasfiledabankruptcypetitionintheU.S.BankruptcyCourt.

OVERVIEWOFTHEBANKRUPTCYPROCESSFROMTHECREDITOR’SPERSPECTIVE

Thissectionwillgiveyouaglimpseintothebankruptcyprocess,thestepsinvolvedinmostcases,andwhatadebtormustdotoeffectivelynavigateacasethroughthisCourt.

1. Consumerdebtors1mustreceive“anindividualorgroupbriefing(includingabriefingconductedbytelephoneorontheInternet)thatoutlinedtheopportunitiesforavailablecreditcounselingandassistedsuchindividualinperformingarelatedbudgetanalysis.”11U.S.C.§109(h).Thebriefingmustbeobtainedwithin180daysbeforethepetitionisfiled.Thecourtmayexcusethisrequirementifexigentcircumstancesexist,orinthecaseofdisability.See11U.S.C.§109(h)(3),(4).

2. Alldebtorsmustuseofficialforms,includingtheMeansTestCalculationsform(form22),andtheymustbecompletedaccuratelyandfiledwiththeCourt.

3. Thecertificateofcreditcounselingmustbefiledwiththeofficialforms.

4. Alldebtorsmustpaythefilingfeeinfullora. FileanApplicationtoWaivetheFilingFee,whichmustbeapprovedbythe

Court;b. FileanapplicationtoPaytheFilingFeeinInstallments,whichmustbe

approvedbytheCourt.

5. Atleast7daysbeforethescheduledmeetingofcreditors(alsoreferredtoasa§341meeting),alldebtorsmustsendthetrusteeacopyoftheirprioryear’sfederalincometaxreturn.2

6. Inadditiontothetaxreturn,atleast7daysbeforethescheduledmeetingofcreditors,alldebtorsmustsendthetrusteecopiesofallpaystubsandotherevidenceofincomereceivedwithinthe60dayperiodpriortothefilingofthecase.

1“Theterm‘debtor’meansaperson….concerningwhichacaseunderthistitlehasbeencommenced.”11U.S.C.§101(13).Forotherdefinitionsofterms,see§101andtheGlossaryattheendofthisGuide.2Debtorsmayalsoprovidethetrusteeand/oracreditorwithatranscriptoftheapplicabletaxreturn.

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7. Ifacreditorrequestsacopyofthetaxreturnatleast15daysbeforethemeetingofcreditors,thedebtor(s)mustprovideacopytothatcreditoratleast7daysbeforethemeeting.

8. Atthemeetingofcreditors,debtorsmustprovidetwoformsofidentification:aphotoidentification,suchasadriver’slicenseorpassport,andaproofofsocialsecuritynumber(socialsecuritycard,correspondencefromtheSocialSecurityAdministration,IRSformW‐2or1099).CorporatedebtorsmustprovideproofofIDaswellasproofthatthepersonappearingattheMeetingofCreditorshastheauthoritytoappear.

9. Alldebtorsmustattendthemeetingofcreditorsandbeexaminedunderoathbythetrustee.Creditorsareinvitedtoattendthismeeting.

10. Alldebtorsmustcooperatewiththetrusteeandrespondtoallreasonablerequestsforinformationanddocuments.

11. Within45daysafterthefirstscheduleddateofthemeetingofcreditors,allconsumerdebtorsmustcompleteaFinancialManagementcourseapprovedbytheOfficeoftheUnitedStatesTrusteeandfileacertificateofcompletionwiththeCourt.Thisrequirementdoesnotapplytocorporationsorbusinesses.

ACREDITOR’SOBLIGATIONSWHENAPERSONFILESABANKRUPTCYPETITION

Immediatelyuponthefilingofthebankruptcypetition,anautomaticstayisimposed.Thescopeofthatstayisdescribedindetailin§362oftheBankruptcyCode.Allcollectionactivitymustcease.Forexample,ifyouareinvolvedinacivillawsuitwiththedebtor,thecasemaynotproceedwithoutBankruptcyCourtapprovalor“relief”fromthestay.Therearesomelimitationsonthestay,andthoselimitationsarealsofoundin§362oftheBankruptcyCode.

LIMITEDSTAY/NOSTAY

Section362(c)(3),(4)limitsthestayfordebtorswhohavefiledbankruptcybefore.Ifadebtorhashadapendingbankruptcycaseinthe12‐monthperiodpriortothefilingofthenewcase,thestaywillenteruponfilingofthenewcase.However,thestaywillextinguish30daysafterthefilingofthenewcaseunlessthedebtorfilesamotiontoextendthestayandthatmotionisfiled,andheardwithinthe30dayperiod.Ifadebtorhashadtwo(2)casespendinginthe12‐monthperiodpriortothefilingofthenewcase,nostaywilltakeeffectuponthefilingofthenewcaseintheabsenceofanorderfromtheBankruptcyCourt.

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Sincetherecanbeconsequencesforviolatingthestay,itisstronglyrecommendedthatyouconferwithcounselbeforetakinganyactionagainstadebtor,thedebtor’sproperty(andinsomecases,theco‐debtor)withoutfirstseekingappropriaterelieffromtheBankruptcyCourt.

RELIEFFROMSTAY

Acreditorispermittedtoseekrelieffromtheautomaticstay.Section362describesthecircumstancesthatacreditormayseekrelieffromthestay,andtheRulesdescribetheproceduralmechanismsthatthecreditormustusetoseekrelieffromthestay.MotionsforRelieffromStaymustbeaccompaniedbytheappropriatefilingfeeandfiledwiththeClerk.ThemotionmustalsobeaccompaniedwithaCertificateofServicereflectingthedateandmethodbywhichthemotionwasservedontheappropriateparties.SeeLocalRule4001‐1foradditionalinformationonMotionsforRelieffromStay.

VIOLATIONSOFTHESTAY

Acreditorwho,despiteknowingaboutthefilingofthebankruptcycase,continuestoengageincollectionactivityrisksbeingfoundinviolationofthestay.Thismightresultindamages,costsandfeesbeingassessedagainstthecreditor.

AcreditorneednothaveofficialnoticefromtheBankruptcyCourtthatabankruptcycasehasbeencommencedtobeawareofthebankruptcy.Infact,ifadebtorverballyinformsthecreditorthatacasehasbeencommenced,thatmaybesufficienttofindthatanysubsequentcollectionactionwasaknowingandintentionalviolationofthestay.Ifyouhaveanyquestionsorconcernsaboutwhetheranactivitymightbeconsideredaviolationoftheautomaticstay,youarestronglyurgedtoconferwithcompetentcounsel.

DISCHARGE

Assumingthedebtorreceivesadischarge,thedischargepermanentlybarsthecreditorfromcollectionofthedebt.

WORKINGWITHPROFESSIONALS

ATTORNEYS

Youmayworkwithanattorneywhocangiveyouspecificlegaladviceandguidance,tailoredtoyoursituation.TolawfullypracticelawintheU.S.BankruptcyCourtfortheDistrictofMassachusetts,theattorneymustbeamemberingoodstandingofthebaroftheU.S.DistrictCourtfortheDistrictofMassachusetts.Inordertobeamemberofthebarof

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theU.S.DistrictCourtfortheDistrictofMassachusetts,theattorneymustbeamemberofthebaroftheCommonwealthofMassachusetts.

TodeterminewhetherapersonisanattorneylicensedtopracticelawintheCommonwealthofMassachusetts,visittheBoardofBarOverseerswebpage:www.massbbo.org.TodeterminewhetherapersonisanmemberingoodstandingoftheU.S.DistrictCourtfortheDistrictofMassachusetts,visittheCourt’swebsiteatwww.mad.uscourts.govandlookunder“Attorneys>Admission>MA–FederalBarSearch.”

Remember,Courtpersonnelareprohibitedfromgivingyoulegaladvice.Onlyalicensedattorneycan:

Explainthemeaningofastatutoryprovisionorrule; Provideaninterpretationofcaselaw; Explaintheresultoftakingornottakingactioninacase; Helpyoucompleteformsoradviseyouregardingwhatislegallyrequired

whenaformrequiresyoutoprovideinformation; Advisewhetherjurisdictionisproperinacase; Advisewhetheracomplaintproperlypresentsaclaim; Adviseonthebestprocedureorstrategytoaccomplishaparticulargoal; Advisewhoshouldreceivepropernoticeorserviceofpapers.

PROSE

Ifyouplantorepresentyourselfproseinabankruptcycase(i.e.,withouttheassistanceofanattorney),thefirststepintheprocessistoobtaintheproperforms.Theofficialforms,authorizedbytheJudicialConferenceoftheUnitedStates,areavailableonlineatwww.mab.uscourts.gov.Theyareavailableforfree.LinkstotheUnitedStatesBankruptcyCodeaswellastherulesarealsofoundontheBankruptcyCourt’swebsite.Itwillbeyourresponsibilitytoknowandunderstandthem.

Corporations,partnershipsandLLCsmaynotfilepapersinabankruptcycaseprosehowever,therearecertaindocumentsthatanon‐attorneyrepresentative(suchasamember,officeroremployee)mayfileprosethatdonotrisetothelevelofpracticinglaw.Theyinclude:

RequestforNoticeunderFed.R.Bankr.P.2002(i) ProofofClaim(OfficialFormB10) WithdrawalofaProofofClaim NoticeofTransferofClaimOtherthanforSecurity ApplicationforSearchofBankruptcyRecords RequesttoRecoverUnclaimedFunds ReaffirmationAgreementandProposedOrder BallotforVotingontheelectionofatrustee

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Ballotvotingonaproposedplaninachapter11case(theplanproponentisresponsibleformailingtheballottothecreditortocastavote).

Ifyouareencounteringdifficultylocatingaform,orhavequestionsaboutaformyoushouldcontacttheProSeLawClerk.

TheBankruptcyCodeallowsnonattorneyrepresentativesofcorporations,partnershipsandLLCstobepresentandtoparticipateintheMeetingofCreditors.

Ifanactionorproceedingisbroughtbyoragainstthecorporations,partnershipsorLLCs,itmustretainanattorney.Forexample,acorporation,partnershiporLLCmaynot,withoutanattorneyappearingonitsbehalf:

Fileamotionforrelieffromstay Defendagainstaproceedingagainstit3 Defendanobjectiontoitsproofofclaim4

PROSELAWCLERK

TheCourthasaProseLawClerkwhomaintainsofficehoursinallthreeDivisions:Boston(Eastern),Springfield(Western)andWorcester(Central).TheProseLawClerkcannotgiveyoulegaladvicebutmaybeabletoprovideyouguidanceonprocessandprocedure.

HerearesomeexamplesofsomebasicquestionsthattheProseLawClerkmaybeabletoanswerforyou:

“Whatsortofbankruptcycasehasthedebtorfiled?” “WhatdoIneedtofiletoobjecttothebankruptcy?” “WhatdoIneedtofiletorespondtoamotion?” “HowdoIgetnoticesinthecase?” “HowdoIserveasummons?” “WhenistheMeetingofCreditors?”(TheSection341meeting) “WhatarethedeadlinesIneedtobeawareof?” “CanIgetfreelegalassistance?”

WhiletheProseLawClerkisanattorney,theProseLawClerkmaynotpracticelaw.Legaladvicecanonlybeobtainedfromanattorney.TheProseLawClerkmaybeabletodirectyoutoanappropriatelawyerreferralagencyforlegaladviceand/orrepresentation.

3 Thisdoesnotprohibitanon‐attorneyrepresentativefromcontactingtheopposingparty’sattorneytodiscussasettlementofthedispute. 4 Thisdoesnotprohibitacreditorfromamendingitsproofofclaimprosetocureadefectthatwassubjecttotheobjectiontotheproofofclaim.

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GETTINGSTARTED

Bankruptcyisacomplexlegalworldthathasavocabularyallitsown.Manycommonlyuseddefinitionsarefoundin§101(aswellastheGlossaryattheendofthisGuide).Therearesomeothertermsthatyoucomeacross.Knowingthesewillhelpyouunderstandtheprocess.Forexample:

Estate:Theestateisdefinedby§541.Refertothissectiontolearnwhatconstitutes“propertyoftheestate.”

Prepetitionandpost‐petition:Theterm“prepetition”meansbeforethebankruptcypetitionwasfiled.Theterm“post‐petition”meansafterthecasewasfiled.

Trustee:Atrusteeistheindividualappointedtoadministertheassetsoftheestate.Atrusteemayliquidateorsellassets,orincaseswherethereisaplan,atrusteemaycollectpaymentsanddisbursetheproceedstocreditors.

Inadditiontounderstandingterms,itisveryimportantthatyouprotectyourselfandyourfamily,anditisalsoimportantthatyoudonotdisclosepersonalinformationconcerningthedebtor(s).Whileyoumustprovidetruthfulandcompleteinformationinyourfilings,youshouldtakecarenottodisclosehighlypersonalandprivateinformationeitherofyouorofthedebtor.

Inallotheryoushouldprovideonlythelastfourdigitsofthedebtor’ssocialsecuritynumber(e.g.XXX‐XX‐1234).Thesameappliesforallaccountnumbers.Youshouldalsoneveridentifyminorchildrenbytheirname.Listthemonlyas“minorchildren”or“minorstepchildren”orthelike,andprovidetheirages.Donotincludethefullbirthdateofthedebtor–oranyoneelse.Onlyincludetheyearofbirth.

Insomecases,youmayberequiredtofileevidenceoradditionaldocuments.Forexample,ifyoufileaproofofclaim,youmaywanttoattachadocumentthatcontainsandaccountnumberorotherpersonalidentifyinginformation.Inthoseinstances,youshouldredactthatinformation,leavingonlythelastfourdigits.

FormoreinformationonPrivacyPolicyandRedactionRequirements,pleasevisitthelinkunderBankruptcyInformationontheCourt’swebsite.

FILINGDOCUMENTSANDPAPERS

Oncealltheformsarecompleted,youshoulddelivertheminhand,ormailthemtotheU.S.BankruptcyCourt.Filingsareacceptedbetween8:30a.m.and4:30p.m.onbusinessdays,buttheofficeisopenuntil5:00p.m.TheaddressesfortheCourtare:

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EasternDivision/Boston: CentralDivision/Worcester:

UnitedStatesBankruptcyCourt UnitedStatesBankruptcyCourtJohnW.McCormackPostOfficeandCourtHouse DonohueFederalBuilding5PostOfficeSquare,Suite1150 595MainStreet,Room211Boston,MA02109‐3945 Worcester,MA01608‐2076

WesternDivision/Springfield:

UnitedStatesBankruptcyCourtUnitedStatesCourthouse300StateStreetSpringfield,MA01105

WhiletheBankruptcyCourtholdshearingsinHyannis,theHyannislocationdoesnotacceptanypleadingsforfiling.ForcasesassignedtotheCapedivision,allpleadingsshouldbefiledintheBostonCourt.

Todeterminewhichdivisiontomaildocuments,pleaserefertotheordersyoumayhavereceivedfromtheCourt,orrefertoAppendix5oftheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusetts.TheserulescanbefoundontheCourt’swebsite:www.mab.uscourts.gov.

CASENUMBER

AllcasesfiledwiththeCourtareassignedacasenumber,sometimesalsoreferredtoasadocketnumber.Thecasenumberisbrokendownintosections.Forexample,casenumber11‐22665FJB:the“11”istheyearthatthecasewasfiled.Inthiscase,itwasfiledin2011.The“22665”isthenumberassignedtothecase.“FJB”indicatesthejudgetowhomthecasewasassigned.Inthisexample,itwasassignedtoChiefJudgeFrankJ.Bailey.

AllpleadingsanddocumentsfiledwiththeCourtmusthavethecasedocketnumberofthecase.WhenspeakingtoanyCourtClerkpersonnel,includingtheProSeLawClerk,besureyouhavethisinformationreadilyavailable.

ELECTRONICFILINGACCESSFORCREDITORS

Individualprosecreditorsinabankruptcycasearenotpermittedtofiledocumentselectronically.TheProSeLawClerkhasanemailaddress.However,pleadingsandotherdocumentsmaynotbefiledviaemailandtheProSeLawClerkwillnotacceptanypleadingssentbyemail.

Anaddedbenefitofhavingcompetentlegalcounselisthatallattorneyspracticingbeforethebankruptcycourtarerequiredtofilelegaldocumentsandpleadingselectronically.Thisavoidstravelingtothecourttofiledocuments,andalleviatesconcerns

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withmailingorsendingdocumentsviacourier,aswellasservingotherpartieswhoarerepresentedandparticipateinElectronicCaseFiling.

Whileprosecreditorsmaynotfiledocumentselectronically,youmayviewallCourtfilingsinacaseonthepubliccomputerterminalslocatedintheClerk’sofficeineachDivision.YoumayalsoobtainaPACERloginandpassword,whichwouldenableyoutoviewdocumentsfromanycomputer.ToobtainaPACERloginandpassword,youmustvisitwww.pacer.govandclickthelinkforCaseSearchOnlyRegistration,andcompletetheon‐lineregistrationform.Thisserviceisnotfree;thereisachargeof$.10foreverypagethatyouview.

DEADLINES

Thebankruptcyprocesscanmoveveryquickly,particularlyinchapter7cases.Thereareanumberofdeadlinesthatapplytocreditorsinabankruptcycaseandmanyofthesedeadlinesareestablishedattheverymomentthatthecaseisfiled.

Themostimportantdeadlinesaretoobjecttodischarge,toobjecttoadebtor’sclaimofexemptionsandtofileaproofofclaim.Youmuststrictlyadheretodeadlines.Intheeventyouneedadditionaltimetofileadocument,orcomplywithanorderofCourt,youmustseekanextension–byfilingaMotiontoExtendTime–beforetheexpirationofthedeadline.

Pleaserememberthis:ifyoumissadeadline,andyoumay,andinmanycaseswillforfeityourrights.

DeadlinesarealsofoundthroughouttheRulesandtheCode.Remember,ifyouchoosetobeproseyouareresponsibleforknowingandadheringtoallapplicabledeadlines.

THEBANKRUPTCYPROCESS

RECEIVINGNOTICES

Whileyoumightbelistedonthecreditormatrix,thatalonewillnotensurethatyoureceivenoticeofeverydocumentfiledinabankruptcycase.Toreceivecopiesofdocuments,youmustfilearequestfornotice.InAppendixAyouwillfindanexampleofarequestfornotice.Thenoticemustbeprepared,printed,signedandthenfiledwiththeCourt.

IfyoufileanoticewiththeCourt,oranyotherpleading,orifyoureceivenoticefromtheBankruptcyCourtthatyouareacreditorinacase,itisveryimportantthatyounotifytheCourtifyoumoveoryourcontactinformationinanywaychanges.Bankruptcycases

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cantakemonthsandsometimesyearstoreachaconclusion,andtheCourtwillhavenowayofnotifyingyouwithoutanupdatedaddress.

YoumayalsoviewallCourtfilingsinthecasefreeofchargeonthepubliccomputerterminalslocatedintheClerk’sofficeineachDivision.Foraddedconvenience,youmaywishtoobtainaPACERloginandpassword,whichwouldenableyoutoviewdocumentsfromanycomputer.

THETRUSTEE

Inachapter7case,thetrusteehasanumberofresponsibilitieswhichmaybefoundin§704.Thechapter13trustee’sresponsibilitiesarefoundin§1302.Theresponsibilitiesofchapter11trusteesinsmallbusinesscasesmaybefoundin§1116,andforchapter12trustees,itisin§1202.

Whilethetrusteemaysharesomecommoninterestswithcreditors,bankruptcytrusteesmaynotberepresentativeofanycreditor,butmustrepresentallcreditorswithoutpartiality.Therefore,creditorscannotrelyonthetrusteeforlegaladviceandcounsel.Forspecificquestions,creditorsmustconsultwiththeirownattorney.

MEETINGOFCREDITORSPURSUANTTO§341(A)

Shortlyafterabankruptcycaseisfiled,theCourtwillsendyoualongwiththeothercreditorslistedonthecreditormatrixa“NoticeofChapter___Case,MeetingofCreditors,andDeadlines.”Thisisalsocommonlyreferredtoasa“341meeting”or“meetingofcreditors.”Inthespaceafterchapter,thenoticewillindicatewhichchapterthatwasfiled:7,11,12or13.Thisnoticealertsyouthatthedebtorhasfiledabankruptcypetitionandthatyouaswellasothercreditorsmaybeprohibitedfromtakingcertainactionsagainstthedebtororthedebtor’sproperty.Thisnoticealsoinformsyouofkeydeadlines,suchas:

ThetimewithinwhichtheyhavetofileaProofofClaim,ifitappearsthattherewouldbeassetsthatcanbeliquidatedtopaycreditors;5

Thetimewithinwhichtofileacomplaintobjectingtothedischargeunder523(a)orobjectingtothedischargeofalldebtorsunder727(a);and

ThetimewithinwhichtoobjecttothepropertythedebtorclaimsasexemptonScheduleC.6

5Ifitdoesnotappearthatthereareassetstopayclaims,theNoticewillstate“PleaseDoNotFileaProofofClaimUnlessYouReceiveaNoticeToDoSo.”Ifitislaterdeterminedthatthereareassetstopayclaims,anothernoticewillbesentadvisingofthedeadlinetofileproofsofclaim.6Thisdeadlineisnotexpresslysetforthonthenotice.However,thedeadlinetoobjecttoexemptionsissetforthinFed.R.Bank.P.4003.Atleastonedeterminativefactorastowhenthatdeadlineisindicatedbythisnotice.Rule4003provides,inpertinentpart:“…a

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Thereversesideofthisnoticehasimportantinformationthatyoushouldread.

Thenoticeofthemeetingprovidesthespecificdate,timeandlocationforthemeeting,whichcreditorsareinvitedtoattend.Thenoticealsoinformseveryonethatatrusteehasbeenassignedtothecase,andthename,addressandothercontactinformationforthetrustee.Itisthetrustee’sroletoexaminethedebtoratthemeetingofcreditorsregardingtheirfinancialsituation,andtodetermineifthereareanyassetsthatthedebtorshasthatmaynotbeexemptandthatheorshecouldliquidate(i.e.,sell)thatheorshecouldgeneratecashtopaycreditors.

PREPARINGFORTHEMEETINGOFCREDITORS

All§341Meetingsarerecordedonaudiotapeorbydigitalrecorder.Afterthedebtororitsrepresentativeisadministeredanoath,thetrusteewillthenaskthedebtortoverifythattheycompletedthepetitionandschedulesandthattheyaretruthfulandaccurate.Youwillthenbegivenanopportunitytoaskquestions.Thetrusteehastherighttolimitquestionsbasedonthetimeallottedandtheothercreditorswhomaybepresent.ThetrusteemayalsosuggestthatyouseekadditionalinformationviaanexaminationunderFed.R.Bankr.P.2004.7

ABOUTTHEMEETINGOFCREDITORS

TheMeetingofCreditorsispresidedoverbythetrusteeappointedtothecase.TheBankruptcyCourtdoesnotpresideatorattendtheMeetingofCreditors.See§341(c).Themeetingisnotahearingbywhichanypartymayrequestthatacasemaybedismissed.ThatrequestmayonlybemadeinwritingtotheCourtviaaMotiontoDismiss.

IfyoucannotattendaMeetingofCreditors,youshouldcontactthetrusteeassignedtothecaseforguidanceonwhatstepsyouareabletotaketoparticipateinthemeeting.

partyininterestmayfileanobjectiontothelistofpropertyclaimedasexemptwithin30daysafterthemeetingofcreditorsheldunder§341(a)isconcludedorwithin30daysafteranyamendmenttothelistorsupplementalschedulesisfiled,whicheverislater.”Fed.R.Bankr.P.4003(b).7 Rule2004provides,inpertinentpart:“[o]nmotionofanypartyininterest,thecourtmayordertheexaminationofanyentity.”Fed.R.Bankr.P.2004(a).“Theexaminationofanentityunderthisruleorofthedebtor…mayrelateonlytotheacts,conduct,orpropertyortotheliabilitiesandfinancialconditionofthedebtor,ortoanymatterwhichmayaffecttheadministrationofthedebtor'sestate,ortothedebtor'srighttoadischarge.”Fed.R.Bankr.P.2004(b).BeforerequestingaRule2004examinationofthedebtororanyotherentity,itisstronglyrecommendedthatyouconferwithanattorney.

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Exceptinrarecircumstances,MeetingsofCreditorsareheldinconjunctionwithothermeetingsofcreditors,andofteninthepresenceofotherswhoarewaitingfortheirmeetingtobecalled.

AFTERTHEMEETINGOFCREDITORS

Creditorsandthetrusteehaveadeadlineof30daysfollowingtheconclusionoftheMeetingofCreditorstoobjecttothedebtor’sclaimofexemptions.SeeFed.R.Bankr.P.4003.IfthedebtoramendsScheduleC(theDebtor’sScheduleofPropertyClaimedasExempt)aftertheMeetingofCreditors,anew30daydeadlineistriggered.

Creditorsandthetrusteehaveadeadlineof60daysfollowingthedateofthefirstscheduledcreditor’smeetingtofileacomplaintobjectingtodischarge.

Certaindebtsarenotdischargeable.Thoseexceptionstodischargearefoundin§523(a)oftheBankruptcyCode.Insomeinstances,toexceptaclaimfromdischargethedebtormustcommenceanadversaryproceedingbyfilingacomplaintwiththeCourt.Seee.g.,§523(a)(8).Inotherinstances,itisthecreditorthatmusttimelyfilethecomplaintchallengingthedischarge.Seee.g.,§523(c)(1).TheClerk’sOfficecannotadviseyouwhetheradebtyoumaybeowedisdischargeable.Ifyouhavequestionsaboutwhetherthedebtyouareowedisdischargeable,youarestronglyurgedtocontactanattorney.

TheexactdeadlinetofileaComplaintObjectingtoaDebtor’sDischargeisstatedonthecreditor’smeetingnoticesenttoyoushortlyafterfiling.ExtensionsofthatdeadlinemaybeallowedbyfilingatimelymotionwiththeCourt.Adocumentisfiledtimelyifitisfiledonorbeforethedeadline.Ifthatdeadlinepasses,andthereisnocomplaintobjectingtothedischarge,andnoextensionoftimehasbeenallowed,thecourtwillenteradischarge.Simplystated,thedischargerelievesthedebtorofanypersonalliabilityforalldischargeabledebtslistedinthedebtor’sbankruptcyschedules.

ADVERSARYPROCEEDINGS

Adversaryproceedingsareaseparateproceduralprocessinabankruptcy.Inabankruptcycase,thereisadebtorandtherearecreditors,butinanadversaryproceedingthereisaplaintiffandthereisadefendant.Theplaintiffinitiatestheadversaryproceeding,andthedefendantistherespondingordefendingparty.

Theadversaryproceedingisinitiatedbytheplaintiffwhofilesacomplaint.Afterthedefendanthasbeenservedwithasummonsissuedbythecourtalongwithacopyofthecomplaint,thedefendantfilesananswer.Thedefendantmay,butisnotrequiredto,fileamotiontodismissoruseotherproceduralmechanisms,suchasrequestingthatanotherpartyjointhecase.Thecasethenmovesintodiscovery,wherepartiesexchangeinformationandobtainevidencetosupporttheirrespectiveclaims.

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TherulesthatgovernadversaryproceedingsarefoundinPartVIIoftheFederalRulesofBankruptcyProcedure.Fed.R.Bankr.P.7001identifiesthetypesofactionsthatwouldbeconsideredadversaryproceedings.

Acreditormayfinditselfasadefendantinanadversaryproceedingifitreceivedapreferentialpayment,oriftheadebtorseekstodeterminewhetheraparticulardebtisdischarged.Acreditormayalsobeaplaintiffinanadversaryproceedingifthecreditorseeksadeterminationofnondischargeabilityofthedebtowed.

Whetheryouarebringinganadversaryproceeding,orfindyourselfdefendinganadversaryproceedingitisimportanttoknowthatadversaryproceedingscanbeexceptionallycomplicated.TheproceduralrulesareidenticalinmostrespectstotheFederalRulesofCivilProcedure.Discoverymechanismssuchasdepositionsandrequestsforproductionmightbeutilized.

TheCourt’sfinaldecisionswillbebasedonevidence.Thosefinaldecisionsmaybebasedonmotions(seee.g.Fed.R.Bankr.P.7056)orfollowingatrial,wherewitnessesareexaminedandcrossexaminedanddocumentsareadmittedintoevidence.TherulesrelatingtoevidenceadmissibilityarefoundintheFederalRulesofEvidence.Ifyouarecontemplatingbringinganadversaryproceeding,orifyoufindyourselfasapartyinanadversaryproceeding,youarestronglyencouragedtoconferwithlegalcounselortheProseLawClerk.However,rememberthattheClerk’sOffice(andthisincludestheProseLawClerk)cannotgiveyoulegaladvice.

THECLAIMSPROCESS

PROOFOFCLAIM

Inmostbankruptcycases,creditorsarepaidbythetrusteefromtheestate.However,themajorityofindividualchapter7casesfiledareconsidered“noasset.”Thismeansthatthedebtorhasnounexemptassetstoliquidatetopaycreditors.Inthosecases,unsecuredcreditorswillreceivenopaymentontheirclaims,andthoseclaimswillbedischargedunlessanobjectiontodischargeissustained.

Additionally,nocreditorwillbepaidfromtheestateifthecreditorhasnotfiledaproofofclaim.8Tofileaclaim,creditorsmustuseofficialformB10.SeeAppendixB.Whencompletingaproofofclaim,creditorsshouldneverincludethefullaccountnumberofthedebtor’saccount,andshouldneverincludethedebtor’sfullsocialsecuritynumber.ProofsofclaimmustbefiledbythedeadlineestablishedbytheCourt.Thefailuretofileaclaimtimelymayresultinitbeingdisallowed.

CreditorsfilingclaimsshouldpayspecialattentiontoPartIIIofFed.R.Bankr.P.3001through3022,aswellasLocalRule3001‐1;Appendix1,Chapter13Rule13‐13.

8 Incertaincircumstances,debtorsandtrusteesmayfileproofsofclaimonbehalfofcreditors,however,theyarenotrequiredto.

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Simplyfilingaclaimdoesnotautomaticallyresultinitbeingallowedandpaid.Creditorsshouldbemindfulthatpartiesininterest(namelytrusteesanddebtors)mayobjecttoproofsofclaim.ApartyobjectingtoaclaimmustfileawrittenobjectionwiththeClerk.Ifthecreditordisputestheobjection,thecreditorwhoisthesubjectoftheclaimobjectionmustfileawrittenresponsewiththeclerk.Ifthepartiesareunabletoreachagreementontheissuesraisedbytheclaimsobjection,theCourtwillscheduleahearing.AdditionalinformationconcerningtheclaimsobjectionprocessmaybefoundinLocalRule3007‐1;Appendix1,Chapter13Rule13‐13.

Inaddition,filingaclaimdoesnotensurethatyouwillreceivenoticesofthecase.Ifyouwanttoreceivenoticesandpapersfiledinthecase,pleaserefertothepriorsection“ReceivingNotices.”Inaddition,ifyoufileaproofofclaim,pleasebesureyounotifytheCourtandthetrusteeofanychangeincontactinformation(mailingaddress,telephonenumber,etc.).

Finally,butnolessimportantly,theCourtrequiresanoriginalsignedproofofclaimbythedeadlineestablishedbytheCourt.

‐TypesofClaims

OnOfficialFormB10,youwillberequiredtoidentifywhetheryourclaimissecured,unsecuredpriorityorunsecured.Page3oftheOfficialFormcontainsdefinitionsthatmayhelpyoudeterminethenatureofyourclaim.Remember,nooneattheClerk’soffice,includingtheProseLawClerkcananalyzeyourclaimanddeterminewhattypeofclaimyouhave.Ifyouarenotsurewhattypeofclaimyouhave,youshouldconsultwithanattorney.

‐UnclaimedFunds

Thereisnosettimewhencreditorscanexpecttoreceivechecksfromatrustee.Therefore,youmustnotifytheCourtandthetrusteeifyouraddresschangestoavoidyourpaymentsbeingunclaimed.Anunclaimeddividendariseswhenthetrusteemailsachecktoyouraddressofrecord,butthecheckisreturnedbecauseofabadaddress(oralternatively,itisnevercashedforwhateverreason).Underchapter7,12and13,ninetydaysafterthefinaldistributionofassets,thetrusteewillstoppaymentonanynon‐negotiatedchecksanddepositthefundswiththeCourtasunclaimed.TheCourtthenbecomestheCustodianofthefundsuntilthepersonentitledtothemfilesanapplication/petitionwiththeCourtforpayment.

ThefundscannotbereleasedwithoutaCourtorder.Toapplyforsuchanorder,theclaimantentitledtopaymentmustpetitiontheCourtforpayment,providenoticeoftherequesttotheUnitedStatesAttorneyandotherrelevantpartiesand,afterprovidingfullproofoftheirrighttothefunds,anorderprovidingfordistributionwillissue.Asample

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petitionforpaymentofunclaimedfundsformisattachedasExhibitBandalsoavailableontheCourt’swebsite.

OBJECTIONSTOCLAIMS

Afiledclaimmaybethesubjectofanobjectionbythedebtorand/orthetrusteeorotherpartyininterest.Ifyourclaimisobjectedto,youmustfileatimelyresponse.Ifyoudonotfilearesponse,theobjectionmaybesustainedwhichmeansthatyourclaimmaybedisallowed,inwholeorinpart.

Assumingyourclaimhasbeenobjectedtoandaresponsehasbeenfiled,theLocalRulesestablishesaframeworkwhichisfoundinRule3007‐1.However,inchapter13cases,theprocedureisfoundinLocalRule,Appendix1,Chapter13Rule13‐13.

Inthatprocess,thepartiesareobligatedtoconfertoattempttonarrowtheissuesofdispute.Ifanagreementonallissuescannotberesolved,theobjectingpartywillfileanotice.Asacreditor,youareobligatedtoparticipateintheconferenceandtheruleprovidesthatsanctionsmaybeawarded,includingsustainingoroverrulingtheobjectioninadditiontomonetarysanctions.SeeChapter13Rule13‐13(d).

MOTIONS,HEARINGSANDCOURTAPPEARANCES

Duringabankruptcycase,circumstancesmaycallforyoutoobtainanorderfromtheCourt.Thisisaccomplishedbyamotion.

Amotionisaformalwrittenrequesttothejudgeforrelief,orforadecisiononaparticularmatterorissue.Thepartyfilingthemotionisgenerallyreferredtoasthe“movingparty”orthe“movant.”Somemotionsorrequestsmaybemadeorallyinopencourt,butinbankruptcy,mostmotionsmustbemadeinwritingwithnoticegiventoallappropriateparties.SeeLocalRules9013‐1and9013‐3foradditionalguidance.

Inthewrittenmotion,themovingpartymakestherequestandthenexplainstothecourtwhythereliefisrequested.Underappropriatecircumstances,theCourtmayactonthemotionwithoutahearing.

TheFederalRulesofBankruptcyProcedureaswellastheLocalRulesoftheUnitedStatesBankruptcyCourtfortheDistrictofMassachusettshaveavarietyprovisionsdealingwithmotions,aswellasprovisionsonhowtorespondtomotions.Ifyouneedtofileamotion,orifyouneedtorespondtoamotion,itisveryimportantthatyoubecomeacquaintedwiththoserules.Ifyouhavesubstantivequestionsabouthowtoprepareyourmotion,youmustobtainadvicefromanattorney.TheClerk’sofficecannotofferyousubstantivelegaladvice.

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Toavoiddelayofthereliefbeinggranted,ortoavoidthemotionbeingdenied,itisveryimportanttoensurethatyourmotionwasappropriatelyservedonthepartiesandyoufileacertificateofservicewiththeClerk.

HEARINGS

Fromtimetotime,theCourtwillscheduleahearingonamotion.Whenthatoccurs,theCourtwillnotifyyou.Ifyouarethemovingparty,youwillreceiveanoticeofhearinginthemail.Inmostcircumstances,thenoticeofhearingwilldirectyouasthemovingpartytoserveacopyofthenoticeonallpartiesandtofileacertificateofservicedemonstratingthatyoucomplied.

Inrarecircumstances,theCourtmayscheduleanemergencyorexpeditedhearing.YouwillwanttoensurethatanydocumentyoufilewiththeCourt,inadditiontoyournameandmailingaddressalsoincludesaworkingtelephonenumberthattheClerk’sofficecanreachyou.

Ingeneral,hearingsarescheduleddaysandsometimesweeksinadvance.Ifyouhaveaconflict,youshouldimmediatelyrequestanewdatebyfilingaMotiontoContinueHearingandservingallparties(andwheneverpossible,obtainanagreementfromtheotherpartiesinthecase).IfyouhavenotheardbackfromtheCourtpriortothescheduledhearingdate,youarethenencouragedtocalltheClerk’sOfficetodetermineifyourMotiontoContinueHearingwasallowedordenied.Ifthemotionwasdenied,youwillneedtoappearatthehearing.

Creditorsarenotrequiredtoattendeveryhearinginabankruptcycase,noraretheyrequiredtorespondtoeverymotionfiled.However,anydocumentsyoureceiveshouldbereadcarefully.Ifyouarethemovingpartyortherespondingordefendingparty,yourpresenceatthehearingwillberequired.

Hearingsmaybeevidentiaryornonevidentiary,thecourtwillissueanoticeidentifyingwhichisapplicabletothehearing.AnonevidentiaryhearingisonewherethereisnoevidenceshowntotheCourt.Alternatively,itcanbewherethepartiesagreeonthefactsandevidence,andtheCourtcanruleonthepartiesarguments.MostmattersrequiringahearingintheBankruptcyCourtstartwithanonevidentiaryhearing,however,ifthereisadisputeofamaterialissueoffact,anonevidentiaryhearingwillbescheduled.

Atanevidentiaryhearing,theCourtacceptsevidencethroughdocumentsand/ortestimony,andtheopposingpartyispermittedtofileitsownevidenceandtestimony.Bothpartieswillhaveanopportunitytocross‐examinewitnesses.Beforeappearingproseatanevidentiaryhearing,itisstronglyurgedthatyouconsultwithacompetentbankruptcyattorney.

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TELEPHONICORVIDEOCONFERENCEAPPEARANCES

Forgoodcauseshown,apartymayappearinacourtproceedingbytelephoneorbyvideoconference.ThisprocessisgovernedbyLocalRule9074‐1.

CERTIFICATESOFSERVICE

AcertificateofserviceisawrittenstatementfiledwiththeCourtindicatingthatyoumailedcopiesofaparticularpleading,noticeormotiontoallappropriateparties.Todeterminewhoaretheappropriateparties,youshoulddetermine(1)whohasfiledanappearanceinyourcase;(2)whoarethetrusteesassignedtoyourcase;(3)whohasrequestednoticeinyourcase;and(4)whattheFederalRulesofBankruptcyProcedureandtheLocalRulesfortheU.S.BankruptcyCourtfortheDistrictofMassachusettsstatearethenecessaryandappropriatepartiestoserve.

Certificatesofserviceareveryimportant.TheyprovidetheCourtwithclearproofthatservicehasbeenaccomplishedinthemannerthatyoudescribeintheCertificate,andthatthepartieshavebeennotifiedoftheirrightandtheiropportunitytobeheard.Motionscanbedenied,andhearingsmaybedelayedifacertificateofserviceisdeficientorwasneverfiled.

Thecertificateofserviceneedstobeincludedwiththepleadingyouarefilinganditmustbesignedbyyou.Thecertificatemuststatethefollowing:

Thedateofservice Themethodofservice(mail,overnightcourier,fax,email,byhand,etc.) Thenamesandaddressesofthepartiesserved

ForadditionalreadingonCertificatesofService,pleaseseeLocalRule9013‐3andFed.R.Bankr.P.2002.

COURTAPPEARANCES

Wheneveryouarescheduledtoappearincourt,arriveontime.Besureyoudressappropriately:yourhearingwillbeinaUnitedStatesBankruptcyCourt,andthedecisionmadebyaUnitedStatesBankruptcyJudge.Considerwearingwhatyoumightwearifyouweretoattendareligiousserviceonaholiday,orifyouweretoattendanimportantjobinterview.

Pleaseplanaccordinglyfortraffic,publictransportationandparking.Considermakingalternativechildcarearrangementssoyourattentioncanbefocusedexclusivelyonthelegalandfactualissuesthatarescheduledtobeheard.Allcourtbuildingshavesecurity,andinBoston,youwillneedtogothroughtwosecurityscreenings:oneforthe

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FederalBuilding,andoneforthecourt.Becauseothersmightalsobecomingintothebuildingatthesametime,youshouldanticipatedelaysgettingthroughsecurityandthereforeplanaccordingly.ProsecreditorswhoarenotmembersofthebararenotpermittedtocarrycellphonesintoCourtandyouwillberequiredtoleavethemwithsecurity.

Ifyouarriveinthecourtroomandthejudgehasnotyettakenthebench,youmaywanttospeaktotheCourtroomDeputy(whomaybesittingatadeskinfrontofthejudge’sbench)tocheckin.Ifthejudgesittingonthebench,courtisinsessionandyoushouldquietlytakeaseatandwaitforthecasetobecalled.

Infederalcourts,partiesspeakfromapodiumwhichisusuallylocatedbetweentwotablesinthecourtoom.Partiesshouldspeakonlyfromthepodium,andintothemicrophone.

Thecourtusesdigitalaudioptechnology.Itisveryimportantthatyouidentifyyourselfbeforespeakingforthefirsttime(forexample,“JohnSmith,creditor”)andyouspeakclearly.

BepreparedtoanswertheCourt’squestionsandtorespondtoanyargumentsorstatementsmadebyotherparties.Becourteousandrespectfulatalltimes.Donotinterruptotherparties.Ifyouwishtorespondtoastatementmadebytheopposingpartyafteryouhavealreadyspoken,askthecourtforanopportunitytobeheardaftertheopposingpartyfinishestheirstatement.

Whileyoumayberepresentingyourself,youareexpectedtocomporttothelevelofdignityanddecorumexpectedofanyoneappearingbeforetheCourt.Asaproseparty,youarealsoexpectedtohaveanunderstandingofthelawandfactsconcerningtheissuethatisbeforetheCourt.

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WhatCreditorsShouldKnowAboutChapter7:LiquidationundertheBankruptcyCode

ThechapteroftheBankruptcyCodeprovidingfor"liquidation,"(i.e.,thesaleofadebtor'snonexemptpropertyandthedistributionoftheproceedstocreditors.)

Background

Achapter7bankruptcycasedoesnotinvolvethefilingofaplanofrepaymentasinchapter13.Instead,thebankruptcytrusteegathersandsellsthedebtor'snonexemptassetsandusestheproceedsofsuchassetstopayholdersofclaims(creditors)inaccordancewiththeprovisionsoftheBankruptcyCode.Partofthedebtor'spropertymaybesubjecttoliensandmortgagesthatpledgethepropertytoothercreditors.Inaddition,theBankruptcyCodewillallowthedebtortokeepcertain"exempt"property;butatrusteewillliquidatethedebtor'sremainingassets.Inchapter7,debtorsmayloseproperty(butthatisnotalwaysthecase).

Eligibility

Toqualifyforreliefunderchapter7oftheBankruptcyCode,thedebtormaybeanindividual,apartnership,oracorporationorotherbusinessentity.11U.S.C.§§101(41),109(b).Subjecttothemeanstestdescribedaboveforindividualdebtors,reliefisavailableunderchapter7irrespectiveoftheamountofthedebtor'sdebtsorwhetherthedebtorissolventorinsolvent.Anindividualcannotfileunderchapter7oranyotherchapter,however,ifduringthepreceding180daysaprior

bankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourt,orthedebtorvoluntarilydismissedthepreviouscaseaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)and(e).

Inaddition,noindividualmaybeadebtorunderchapter7oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trustee(orbankruptcyadministrator)hasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.

Oneoftheprimarypurposesofbankruptcyistodischargecertaindebtstogiveanhonestindividualdebtora"freshstart."Thedebtorhasnoliabilityfordischargeddebts.Inachapter7case,however,adischargeisonlyavailabletoindividualdebtors,nottopartnershipsorcorporations.11U.S.C.§727(a)(1).Althoughanindividualchapter7caseusuallyresultsinadischargeofdebts,therighttoadischargeisnotabsolute,andsometypesofdebtsarenotdischarged.Moreover,abankruptcydischargedoesnotextinguishalienonproperty.

HowChapter7Works

Achapter7casebeginswiththedebtorfilingapetitionwiththebankruptcycourt

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servingtheareawheretheindividuallivesorwherethebusinessdebtorisorganizedorhasitsprincipalplaceofbusinessorprincipalassets.1Inadditiontothepetition,thedebtormustalsofilewiththecourt:(1)schedulesofassetsandliabilities;(2)ascheduleofcurrentincomeandexpenditures;(3)astatementoffinancialaffairs;and(4)ascheduleofexecutorycontractsandunexpiredleases.Fed.R.Bankr.P.1007(b).Debtorsmustalsoprovidetheassignedcasetrusteewithacopyofthetaxreturnortranscriptsforthemostrecenttaxyearaswellastaxreturnsfiledduringthecase(includingtaxreturnsforprioryearsthathadnotbeenfiledwhenthecasebegan).11U.S.C.§521.Creditorsmayrequesttaxreturnsortranscripts.See§521(e)(2)(A).

Individualdebtorswithprimarilyconsumerdebtshaveadditionaldocumentfilingrequirements.Theymustfile:acertificateofcreditcounselingandacopyofanydebtrepaymentplandevelopedthroughcreditcounseling;evidenceofpaymentfromemployers,ifany,received60daysbeforefiling;2astatementofmonthlynetincomeandanyanticipatedincreaseinincomeorexpensesafterfiling;andarecordofanyinterestthedebtorhasinfederalorstatequalifiededucationortuitionaccounts.Id.Marrieddebtorsmayfileapetitionjointlyorindividually.11U.S.C.§302(a).Eveniffilingjointly,bothspousesaresubjecttoallthedocumentfilingrequirementsofindividualdebtors.(TheOfficialFormsmaybeobtainedfromtheinternetat

1 An involuntary chapter 7 case may be commenced under certain circumstances by a petition filed by creditors holding claims against the debtor. 11 U.S.C. § 303. 2 Please see Local Rule 4002‐1.

www.uscourts.gov/bkforms/index.html.FormsarealsoavailableattheCourt.)

Thecourtsmustchargeafilingfee.Informationaboutthefilingfeesmaybefoundonthecourt’swebsite.Normally,thefeesmustbepaidtotheclerkofthecourtuponfiling.Withthecourt'spermission,however,individualdebtorsmayrequesttopayininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);LocalRules1006‐1,1006‐2;BankruptcyCourtMiscellaneousFeeSchedule,Item8.Thenumberofinstallmentsislimitedtofour,andthedebtormustmakethefinalinstallmentnolaterthan120daysafterfilingthepetition.Fed.R.Bankr.P.1006.Forcauseshown,thecourtmayextendthetimeofanyinstallment,providedthatthelastinstallmentispaidnotlaterthan180daysafterfilingthepetition.Id.Ifajointpetitionisfiled,onlyonefilingfee,oneadministrativefee,andonetrusteesurchargearecharged.Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§707(a).

Ifthedebtor'sincomeislessthan150%ofthepovertylevel(asdefinedintheBankruptcyCode),andthedebtorisunabletopaythechapter7feesevenininstallments,thecourtmaywaivetherequirementthatthefeesbepaid.28U.S.C.§1930(f).

InordertocompletetheOfficialBankruptcyFormsthatmakeupthepetition,statementoffinancialaffairs,andschedules,thedebtormustprovidethefollowinginformation:

Alistofallcreditorsandtheamountandnatureoftheirclaims;

Thesource,amount,andfrequencyofthedebtor'sincome;

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Alistofallofthedebtor'sproperty;and

Adetailedlistofthedebtor'smonthlylivingexpenses,i.e.,food,clothing,shelter,utilities,taxes,transportation,medicine,etc.

Marriedindividualsmustgatherthisinformationfortheirspouseregardlessofwhethertheyarefilingajointpetition,separateindividualpetitions,orevenifonlyonespouseisfiling.Inasituationwhereonlyonespousefiles,theincomeandexpensesofthenon‐filingspousearerequiredsothatthecourt,thetrusteeandcreditorscanevaluatethehousehold'sfinancialposition.

Amongtheschedulesthatanindividualdebtorwillfileisascheduleof"exempt"property.TheBankruptcyCodeallowsanindividualdebtor3toprotectsomepropertyfromtheclaimsofcreditorsbecauseitisexemptunderfederalbankruptcylaworunderthelawsofthedebtor'sapplicablehomestate.See11U.S.C.§522(b).ManystateshavetakenadvantageofaprovisionintheBankruptcyCodethatpermitseachstatetoadoptitsownexemptionlawinplaceofthefederalexemptions.Inotherjurisdictions,theindividualdebtorhastheoptionofchoosingbetweenafederalpackageofexemptionsortheexemptionsavailableunderstatelaw.Thus,whethercertainpropertyisexemptandmaybekeptbythedebtorisoftenaquestionofstatelaw.

Filingapetitionunderchapter7"automaticallystays"(stops)mostcollectionactionsagainstthedebtororthedebtor'sproperty.11U.S.C.§362.But 3 Each debtor in a joint case (married spouses) can claim exemptions under the federal bankruptcy laws. 11 U.S.C. § 522(m).

filingthepetitiondoesnotstaycertaintypesofactionslistedunder11U.S.C.§362(b),andthestaymaybeeffectiveonlyforashorttimeinsomesituations.See11U.S.C.§362(c).Thestayarisesbyoperationoflawandrequiresnojudicialaction.Aslongasthestayisineffect,creditorsgenerallymaynotinitiateorcontinuelawsuits,wagegarnishments,oreventelephonecallsdemandingpayments.Thebankruptcyclerkgivesnoticeofthebankruptcycasetoallcreditorswhosenamesandaddressesareprovidedbythedebtor.

Between20and40daysafterthepetitionisfiled,thecasetrustee(describedbelow)willholdameetingofcreditors.IftheU.S.trusteeorbankruptcyadministratorschedulesthemeetingataplacethatdoesnothaveregularU.S.trusteeorbankruptcyadministratorstaffing,themeetingmaybeheldnomorethan60daysaftertheorderforrelief.Fed.R.Bankr.P.2003(a).Duringthismeeting,thetrusteeplacesthedebtorunderoath,andboththetrusteeandcreditorsmayaskquestions.Thedebtormustattendthemeetingandanswerquestionsregardingthedebtor'sfinancialaffairsandproperty.11U.S.C.§343.Ifajointpetitionbasbeenfiled,bothspousesmustattendthecreditors'meetingandanswerquestions.Within10daysofthecreditors'meeting,theU.S.trusteewillreporttothecourtwhetherthecaseshouldbepresumedtobeanabuseunderthemeanstestdescribedin11U.S.C.§704(b).

Thedebtormustcooperatewiththetrusteeandtoprovideanyfinancialrecordsordocumentsthatthetrusteerequests.TheBankruptcyCoderequiresthetrusteetoaskthedebtorquestionsatthemeetingofcreditorstoensurethatthedebtorisawareofthepotential

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consequencesofseekingadischargeinbankruptcysuchastheeffectoncredithistory,theabilitytofileapetitionunderadifferentchapter,theeffectofreceivingadischarge,andtheeffectofreaffirmingadebt.Sometrusteesprovidewritteninformationonthesetopicsatorbeforethemeetingtoensurethatthedebtorisawareofthisinformation.Inordertopreservetheirindependentjudgment,bankruptcyjudgesareprohibitedfromattendingthemeetingofcreditors.11U.S.C.§341(c).

Inordertoaccordthedebtorcompleterelief,theBankruptcyCodeallowsthedebtortoconvertachapter7casetoacaseunderchapter11,12,or135aslongasthedebtoriseligibletobeadebtorunderthenewchapter.However,aconditionofthedebtor'svoluntaryconversionisthatthecasehasnotpreviouslybeenconvertedtochapter7fromanotherchapter.11U.S.C.§706(a).Thus,thedebtorwillnotbepermittedtoconvertthecaserepeatedlyfromonechaptertoanother.

TheRoleoftheChapter7Trustee

Whenachapter7petitionisfiled,theU.S.trustee(orthebankruptcycourtinAlabamaandNorthCarolina)appointsanimpartialcasetrusteetoadministerthecaseandliquidatethedebtor'snonexemptassets.11U.S.C.§§701,704.Ifallthedebtor'sassetsareexemptorsubjecttovalidliens,thetrusteewill

5 A fee is charged for converting, on request of the debtor, a case under chapter 7 to a case under chapter 11. The fee charged is the difference between the filing fee for a chapter 7 and the filing fee for a chapter 11. 28 U.S.C. § 1930(a). Additional information concerning fees is found on the court’s website.

normallyfilea"noasset"reportwiththecourt,andtherewillbenodistributiontounsecuredcreditors.Mostchapter7casesinvolvingindividualdebtorsarenoassetcases.Butifthecaseappearstobean"asset"caseattheoutset,unsecuredcreditors6mustfiletheirclaimswiththecourtwithin90daysafterthefirstdatesetforthemeetingofcreditors.Fed.R.Bankr.P.3002(c).Agovernmentalunit,however,has180daysfromthedatethecaseisfiledtofileaclaim.11U.S.C.§502(b)(9).

Inthetypicalnoassetchapter7case,thereisnoneedforcreditorstofileproofsofclaimbecausetherewillbenodistribution.Ifthetrusteelaterrecoversassetsfordistributiontounsecuredcreditors,theBankruptcyCourtwillprovidenoticetocreditorsandwillallowadditionaltimetofileproofsofclaim.Althoughasecuredcreditordoesnotneedtofileaproofofclaiminachapter7casetopreserveitssecurityinterestorlien,theremaybeotherreasonstofileaclaim.Acreditorinachapter7casewhohasalienonthedebtor'spropertyshouldconsultanattorneyforadvice.

Commencementofabankruptcycasecreatesan"estate."Theestatetechnicallybecomesthetemporarylegalownerofallofthedebtor'sproperty.Itconsistsofalllegalorequitableinterestsofthedebtorinpropertyasofthecommencementofthecase,includingpropertyownedorheldbyanotherpersonifthedebtorhasaninterestintheproperty.Generally

6 Unsecured debts generally may be defined as those for which the extension of credit was based purely upon an evaluation by the creditor of the debtor's ability to pay, as opposed to secured debts, for which the extension of credit was based upon the creditor's right to seize collateral on default, in addition to the debtor's ability to pay.

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speaking,thedebtor'screditorsarepaidfromnonexemptpropertyoftheestate.

Theprimaryroleofachapter7trusteeinanassetcaseistoliquidatethedebtor'snonexemptassetsinamannerthatmaximizesthereturntothedebtor'sunsecuredcreditors.Thetrusteeaccomplishesthisbysellingthedebtor'spropertyifitisfreeandclearofliens(aslongasthepropertyisnotexempt)orifitisworthmorethananysecurityinterestorlienattachedtothepropertyandanyexemptionthatthedebtorholdsintheproperty.

Thetrusteemayalsoattempttorecovermoneyorpropertyunderthetrustee's"avoidingpowers."Thetrustee'savoidingpowersincludethepowerto:setasidepreferentialtransfersmadetocreditorswithin90daysbeforethepetition;undosecurityinterestsandotherprepetitiontransfersofpropertythatwerenotproperlyperfectedundernonbankruptcylawatthetimeofthepetition;andpursuenonbankruptcyclaimssuchasfraudulentconveyanceandbulktransferremediesavailableunderstatelaw.Inaddition,ifthedebtorisabusiness,thebankruptcycourtmayauthorizethetrusteetooperatethebusinessforalimitedperiodoftime,ifsuchoperationwillbenefitcreditorsandenhancetheliquidationoftheestate.11U.S.C.§721.

Section726oftheBankruptcyCodegovernsthedistributionofthepropertyoftheestate.Under§726,therearesixclassesofclaims;andeachclassmustbepaidinfullbeforethenextlowerclassispaidanything.Thedebtorisonlypaidifallotherclassesofclaimshavebeenpaidinfull.Accordingly,thedebtorisnotparticularlyinterestedinthetrustee'sdispositionoftheestateassets,exceptwithrespecttothepaymentofthose

debtswhichforsomereasonarenotdischargeableinthebankruptcycase.Theindividualdebtor'sprimaryconcernsinachapter7casearetoretainexemptpropertyandtoreceiveadischargethatcoversasmanydebtsaspossible.

TheChapter7Discharge

Adischargereleasesindividualdebtorsfrompersonalliabilityformostdebtsandpreventsthecreditorsowedthosedebtsfromtakinganycollectionactionsagainstthedebtor.Becauseachapter7dischargeissubjecttomanyexceptions,debtorsshouldconsultcompetentlegalcounselbeforefilingtodiscussthescopeofthedischarge.Generally,excludingcasesthataredismissedorconverted,individualdebtorsreceiveadischargeinmorethan99percentofchapter7cases.Inmostcases,unlessapartyininterestfilestimelyacomplaintobjectingtothedischargeoramotiontoextendthetimetoobject,thebankruptcycourtwillissueadischargeorderrelativelyearlyinthecase–generally,60to90daysafterthedatefirstsetforthemeetingofcreditors.Fed.R.Bankr.P.4004(c).

Thegroundsfordenyinganindividualdebtoradischargeinachapter7casearenarrowandareconstruedagainstthemovingparty.Amongotherreasons,thecourtmaydenythedebtoradischargeifitfindsthatthedebtor:failedtokeeporproduceadequatebooksorfinancialrecords;failedtoexplainsatisfactorilyanylossofassets;committedabankruptcycrimesuchasperjury;failedtoobeyalawfulorderofthebankruptcycourt;fraudulentlytransferred,concealed,ordestroyedpropertythatwouldhavebecomepropertyoftheestate;orfailedtocompleteanapproved

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instructionalcourseconcerningfinancialmanagement.11U.S.C.§727;Fed.R.Bankr.P.4005.

Securedcreditorsmayretainsomerightstoseizepropertysecuringanunderlyingdebtevenafteradischargeisgranted.Dependingonindividualcircumstances,ifadebtorwishestokeepcertainsecuredproperty(suchasanautomobile),heorshemaydecideto"reaffirm"thedebt.Areaffirmationisanagreementbetweenthedebtorandthecreditorthatthedebtorwillremainliableandwillpayalloraportionofthemoneyowed,eventhoughthedebtwouldotherwisebedischargedinthebankruptcy.Inreturn,thecreditorpromisesthatitwillnotrepossessortakebacktheautomobileorotherpropertysolongasthedebtorcontinuestopaythedebt.

Ifthedebtordecidestoreaffirmadebt,heorshemustdosobeforethedischargeisentered.Thedebtormustsignawrittenreaffirmationagreementandfileitwiththecourt.11U.S.C.§524(c).TheBankruptcyCoderequiresthatreaffirmationagreementscontainanextensivesetofdisclosuresdescribedin11U.S.C.§524(k);seealsoLocalRule,OfficialLocalForm6.Amongotherthings,thedisclosuresmustadvisethedebtoroftheamountofthedebtbeingreaffirmedandhowitiscalculatedandthatreaffirmationmeansthatthedebtor'spersonalliabilityforthatdebtwillnotbedischargedinthebankruptcy.Thedisclosuresalsorequirethedebtortosignandfileastatementofhisorhercurrentincomeandexpenseswhichshowsthatthebalanceofincomepayingexpensesissufficienttopaythereaffirmeddebt.Ifthebalanceisnotenoughtopaythedebttobereaffirmed,thereisapresumptionofunduehardship,andthecourtmay

decidenottoapprovethereaffirmationagreement.Unlessthedebtorisrepresentedbyanattorney,thebankruptcyjudgemustapprovethereaffirmationagreement.

Ifthedebtorwasrepresentedbyanattorneyinconnectionwiththereaffirmationagreement,theattorneymustcertifyinwritingthatheorsheadvisedthedebtorofthelegaleffectandconsequencesoftheagreement,includingadefaultundertheagreement.Theattorneymustalsocertifythatthedebtorwasfullyinformedandvoluntarilymadetheagreementandthatreaffirmationofthedebtwillnotcreateanunduehardshipforthedebtororthedebtor'sdependents.11U.S.C.§524(k).TheBankruptcyCoderequiresareaffirmationhearingifthedebtorhasnotbeenrepresentedbyanattorneyduringthenegotiatingoftheagreement,orifthecourtdisapprovesthereaffirmationagreement.11U.S.C.§524(d)and(m).Thedebtormayrepayanydebtvoluntarily,however,whetherornotareaffirmationagreementexists.11U.S.C.§524(f).

Anindividualreceivesadischargeformostofhisorherdebtsinachapter7bankruptcycase.Acreditormaynolongerinitiateorcontinueanylegalorotheractionagainstthedebtortocollectadischargeddebt.Butnotallofanindividual'sdebtsaredischargedinchapter7.Debtsnotdischargedincludedebtsforalimonyandchildsupport,certaintaxes,debtsforcertaineducationalbenefitoverpaymentsorloansmadeorguaranteedbyagovernmentalunit,debtsforwillfulandmaliciousinjurybythedebtortoanotherentityortothepropertyofanotherentity,debtsfordeathorpersonalinjurycaused

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bythedebtor'soperationofamotorvehiclewhilethedebtorwasintoxicatedfromalcoholorothersubstances,anddebtsforcertaincriminalrestitutionorders.11U.S.C.§523(a).Thedebtorwillcontinuetobeliableforthesetypesofdebtstotheextentthattheyarenotpaidinthechapter7case.Debtsformoneyorpropertyobtainedbyfalsepretenses,debtsforfraudordefalcationwhileactinginafiduciarycapacity,anddebtsforwillfulandmaliciousinjurybythedebtortoanotherentityortothepropertyofanotherentitywillbedischargedunlessacreditortimelyfilesandprevailsinanactiontohavesuchdebtsdeclarednondischargeable.11U.S.C.§523(c);Fed.R.Bankr.P.4007(c).

Thecourtmayrevokeachapter7dischargeontherequestofthetrustee,acreditor,ortheU.S.trusteeifthedischargewasobtainedthroughfraudbythedebtor,ifthedebtoracquiredpropertythatispropertyoftheestateandknowinglyandfraudulentlyfailedtoreporttheacquisitionofsuchpropertyortosurrenderthepropertytothetrustee,orifthedebtor(withoutasatisfactoryexplanation)makesamaterialmisstatementorfailstoprovidedocumentsorotherinformationinconnectionwithanauditofthedebtor'scase.11U.S.C.§727(d).

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WhatCreditorsNeedtoKnowAboutChapter11:

ReorganizationundertheBankruptcyCode

ThechapteroftheBankruptcyCodeproviding(generally)forreorganization,usuallyinvolvingacorporationorpartnership.(Achapter11debtorusuallyproposesaplanofreorganizationtokeepitsbusinessaliveandpaycreditorsovertime.Peopleinbusinessorindividualscanalsoseekreliefinchapter11.)

Background

Acasefiledunderchapter11oftheUnitedStatesBankruptcyCodeisfrequentlyreferredtoasa"reorganization"bankruptcy.

Anindividualcannotfileunderchapter11oranyotherchapterif,duringthepreceding180days,apriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourt,orwasvoluntarilydismissedaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)‐(e).

Inaddition,noindividualmaybeadebtorunderchapter11oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trustee(orbankruptcyadministrator)has

determinedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.

HowChapter11Works

Achapter11casebeginswiththefilingofapetitionwiththebankruptcycourtservingtheareawherethedebtorhasadomicileorresidence.Apetitionmaybeavoluntarypetition,whichisfiledbythedebtor,oritmaybeaninvoluntarypetition,whichisfiledbycreditorsthatmeetcertainrequirements.11U.S.C.§§301,303.AvoluntarypetitionmustadheretotheformatofForm1oftheOfficialFormsprescribedbytheJudicialConferenceoftheUnitedStates.Unlessthecourtordersotherwise,thedebtoralsomustfilewiththecourt:(1)schedulesofassetsandliabilities;(2)ascheduleofcurrentincomeandexpenditures;(3)ascheduleofexecutorycontractsandunexpiredleases;and(4)astatementoffinancialaffairs.Fed.R.Bankr.P.1007(b).Ifthedebtorisanindividual(orifajointpetitionisfiledbyamarriedcouple),thereareadditionaldocumentfilingrequirements.Suchdebtorsmustfile:acertificateofcreditcounselingandacopyofanydebtrepaymentplandevelopedthroughcreditcounseling;evidenceofpaymentfromemployers,ifany,received60daysbeforefiling;astatementofmonthlynetincomeandanyanticipatedincreaseinincomeorexpensesafterfiling;andarecordofanyinterestthedebtorhasinfederalorstatequalifiededucationortuitionaccounts.11U.S.C.§521.Individualsmayfileapetitionormarriedcouplesmayfileajointpetition.11U.S.C.§302(a).(The

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OfficialFormsareavailablefromthecourt,maybepurchasedatlegalstationerystoresordownloadedfromtheInternetatwww.uscourts.gov/bkforms/index.html.)

Thecourtsarerequiredtochargeafilingfee.Thefeesmustbepaidtotheclerkofthecourtuponfilingormay,uponrequestandwiththecourt'spermission,bepaidbyindividualdebtorsininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);BankruptcyCourtMiscellaneousFeeSchedule,Item8.Fed.R.Bankr.P.1006(b)limitstofourthenumberofinstallmentsforthefilingfee.Thefinalinstallmentmustbepaidnotlaterthan120daysafterfilingthepetition.Forcauseshown,thecourtmayextendthetimeofanyinstallment,providedthatthelastinstallmentispaidnotlaterthan180daysafterthefilingofthepetition.Fed.R.Bankr.P.1006(b).Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§1112(b)(10).

Thevoluntarypetitionwillincludestandardinformationconcerningthedebtor'sname(s),socialsecuritynumberortaxidentificationnumber,residence,locationofprincipalassets(ifabusiness),thedebtor'splanorintentiontofileaplan,andarequestforreliefundertheappropriatechapteroftheBankruptcyCode.Uponfilingavoluntarypetitionforreliefunderchapter11or,inaninvoluntarycase,theentryofanorderforrelief,thedebtorautomaticallyassumesanadditionalidentityasthe"debtorinpossession."11U.S.C.§1101.Thetermreferstoadebtorthatkeepspossessionandcontrolofitsassetswhileundergoingareorganizationunderchapter11,withouttheappointmentofacasetrustee.Adebtorwillremainadebtorin

possessionuntilthedebtor'splanofreorganizationisconfirmed,thedebtor'scaseisdismissedorconvertedtochapter7,orachapter11trusteeisappointed.Theappointmentorelectionofatrusteeoccursonlyinasmallnumberofcases.Generally,thedebtor,as"debtorinpossession,"operatesthebusinessandperformsmanyofthefunctionsthatatrusteeperformsincasesunderotherchapters.11U.S.C.§1107(a).

Generally,awrittendisclosurestatementandaplanofreorganizationmustbefiledwiththecourt.11U.S.C.§§1121,1125.Thedisclosurestatementisadocumentthatmustcontaininformationconcerningtheassets,liabilities,andbusinessaffairsofthedebtorsufficienttoenableacreditortomakeaninformedjudgmentaboutthedebtor'splanofreorganization.11U.S.C.§1125.Theinformationrequiredisgovernedbyjudicialdiscretionandthecircumstancesofthecase.Ina"smallbusinesscase"(discussedbelow)thedebtormaynotneedtofileaseparatedisclosurestatementifthecourtdeterminesthatadequateinformationiscontainedintheplan.11U.S.C.§1125(f);seealso,LocalRules,OfficialLocalForm15.

Thecontentsoftheplanmustincludeaclassificationofclaimsandmustspecifyhoweachclassofclaimswillbetreatedundertheplan.11U.S.C.§1123.Creditorswhoseclaimsare"impaired,"i.e.,thosewhosecontractualrightsaretobemodifiedorwhowillbepaidlessthanthefullvalueoftheirclaimsundertheplan,voteontheplanbyballot.11U.S.C.§1126.Afterthedisclosurestatementisapprovedbythecourtandtheballotsarecollectedandtallied,thecourtwillconductaconfirmationhearingto

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determinewhethertoconfirmtheplan.11U.S.C.§1128.

Inthecaseofindividuals,chapter11bearssomesimilaritiestochapter13.Forexample,propertyoftheestateforanindividualdebtorincludesthedebtor'searningsandpropertyacquiredbythedebtorafterfilinguntilthecaseisclosed,dismissedorconverted;fundingoftheplanmaybefromthedebtor'sfutureearnings;andtheplancannotbeconfirmedoveracreditor'sobjectionwithoutcommittingallofthedebtor'sdisposableincomeoverfiveyearsunlesstheplanpaystheclaiminfull,withinterest,overashorterperiodoftime.11U.S.C.§§1115,1123(a)(8),1129(a)(15).

TheChapter11DebtorinPossession

Chapter11istypicallyusedtoreorganizeabusiness,whichmaybeacorporation,soleproprietorship,orpartnership.Acorporationexistsseparateandapartfromitsowners,thestockholders.Thechapter11bankruptcycaseofacorporation(corporationasdebtor)doesnotputthepersonalassetsofthestockholdersatriskotherthanthevalueoftheirinvestmentinthecompany'sstock.Asoleproprietorship(ownerasdebtor),ontheotherhand,doesnothaveanidentityseparateanddistinctfromitsowner(s).Accordingly,abankruptcycaseinvolvingasoleproprietorshipincludesboththebusinessandpersonalassetsoftheowners‐debtors.Likeacorporation,apartnershipexistsseparateandapartfromitspartners.Inapartnershipbankruptcycase(partnershipasdebtor),however,thepartners'personalassetsmay,insomecases,beusedtopaycreditorsinthebankruptcycaseorthe

partners,themselves,maybeforcedtofileforbankruptcyprotection.

Section1107oftheBankruptcyCodeplacesthedebtorinpossessioninthepositionofafiduciary,withtherightsandpowersofachapter11trustee,anditrequiresthedebtortoperformofallbuttheinvestigativefunctionsanddutiesofatrustee.Theseduties,setforthintheBankruptcyCodeandFederalRulesofBankruptcyProcedure,includeaccountingforproperty,examiningandobjectingtoclaims,andfilinginformationalreportsasrequiredbythecourtandtheU.S.trusteeorbankruptcyadministrator(discussedbelow),suchasmonthlyoperatingreports.11U.S.C.§§1106,1107;Fed.R.Bankr.P.2015(a).Thedebtorinpossessionalsohasmanyoftheotherpowersanddutiesofatrustee,includingtheright,withthecourt'sapproval,toemployattorneys,accountants,appraisers,auctioneers,orotherprofessionalpersonstoassistthedebtorduringitsbankruptcycase.Otherresponsibilitiesincludefilingtaxreturnsandreportswhichareeithernecessaryororderedbythecourtafterconfirmation,suchasafinalaccounting.TheU.S.trusteeisresponsibleformonitoringthecomplianceofthedebtorinpossessionwiththereportingrequirements.

RailroadreorganizationshavespecificrequirementsundersubsectionIVofchapter11,whichwillnotbeaddressedhere.Inaddition,stockandcommoditybrokersareprohibitedfromfilingunderchapter11andarerestrictedtochapter7.11U.S.C.§109(d).

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TheUSTrusteeorBankruptcyAdministrator

TheU.S.trusteeplaysamajorroleinmonitoringtheprogressofachapter11caseandsupervisingitsadministration.TheU.S.trusteeisresponsibleformonitoringthedebtorinpossession'soperationofthebusinessandthesubmissionofoperatingreportsandfees.Additionally,theU.S.trusteemonitorsapplicationsforcompensationandreimbursementbyprofessionals,plansanddisclosurestatementsfiledwiththecourt,andcreditors'committees.TheU.S.trusteeconductsameetingofthecreditors,oftenreferredtoasthe"section341meeting,"inachapter11case.11U.S.C.§341.TheU.S.trusteeandcreditorsmayquestionthedebtorunderoathatthesection341meetingconcerningthedebtor'sacts,conduct,property,andtheadministrationofthecase.

TheU.S.trusteealsoimposescertainrequirementsonthedebtorinpossessionconcerningmatterssuchasreportingitsmonthlyincomeandoperatingexpenses,establishingnewbankaccounts,andpayingcurrentemployeewithholdingandothertaxes.Bylaw,thedebtorinpossessionmustpayaquarterlyfeetotheU.S.trusteeforeachquarterofayearuntilthecaseisconvertedordismissed.28U.S.C.§1930(a)(6).Theamountofthefee,whichmayrangefrom$250to$10,000,dependsontheamountofthedebtor'sdisbursementsduringeachquarter.ShouldadebtorinpossessionfailtocomplywiththereportingrequirementsoftheU.S.trusteeorordersofthebankruptcycourt,orfailtotaketheappropriatestepstobringthecasetoconfirmation,theU.S.trusteemayfileamotionwiththecourttohavethedebtor'schapter11caseconvertedto

anotherchapteroftheBankruptcyCodeortohavethecasedismissed.

InNorthCarolinaandAlabama,bankruptcyadministratorsperformsimilarfunctionsthatU.S.trusteesperformintheremainingforty‐eightstates.ThebankruptcyadministratorprogramisadministeredbytheAdministrativeOfficeoftheUnitedStatesCourts,whiletheU.S.trusteeprogramisadministeredbytheDepartmentofJustice.Forpurposesofthispublication,referencestoU.S.trusteesarealsoapplicabletobankruptcyadministrators.

Creditors’Committees

Creditors'committeescanplayamajorroleinchapter11cases.ThecommitteeisappointedbytheU.S.trusteeandordinarilyconsistsofunsecuredcreditorswhoholdthesevenlargestunsecuredclaimsagainstthedebtor.11U.S.C.§1102.Amongotherthings,thecommittee:consultswiththedebtorinpossessiononadministrationofthecase;investigatesthedebtor'sconductandoperationofthebusiness;andparticipatesinformulatingaplan.11U.S.C.§1103.Acreditors'committeemay,withthecourt'sapproval,hireanattorneyorotherprofessionalstoassistintheperformanceofthecommittee'sduties.Acreditors'committeecanbeanimportantsafeguardtothepropermanagementofthebusinessbythedebtorinpossession.

TheSmallBusinessCaseandtheSmallBusinessDebtor

InsomesmallercasestheU.S.trusteemaybeunabletofindcreditorswillingtoserveonacreditors'committee,orthecommitteemaynotbeactivelyinvolved

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inthecase.TheBankruptcyCodeaddressesthisissuebytreatinga"smallbusinesscase"somewhatdifferentlythanaregularbankruptcycase.Asmallbusinesscaseisdefinedasacasewitha"smallbusinessdebtor."11U.S.C.§101(51C).Determinationofwhetheradebtorisa"smallbusinessdebtor"requiresapplicationofatwo‐parttest.First,thedebtormustbeengagedincommercialorbusinessactivities(otherthanprimarilyowningoroperatingrealproperty)withtotalnon‐contingentliquidatedsecuredandunsecureddebtsof$2,490,925orless.Second,thedebtor'scasemustbeoneinwhichtheU.S.trusteehasnotappointedacreditors'committee,orthecourthasdeterminedthecreditors'committeeisinsufficientlyactiveandrepresentativetoprovideoversightofthedebtor.11U.S.C.§101(51D).

Inasmallbusinesscase,thedebtorinpossessionmust,amongotherthings,attachthemostrecentlypreparedbalancesheet,statementofoperations,cash‐flowstatementandmostrecentlyfiledtaxreturntothepetitionorprovideastatementunderoathexplainingtheabsenceofsuchdocumentsandmustattendcourtandtheU.S.trusteemeetingthroughseniormanagementpersonnelandcounsel.Thesmallbusinessdebtormustmakeongoingfilingswiththecourtconcerningitsprofitabilityandprojectedcashreceiptsanddisbursements,andmustreportwhetheritisincompliancewiththeBankruptcyCodeandtheFederalRulesofBankruptcyProcedureandwhetherithaspaiditstaxesandfileditstaxreturns.11U.S.C.§§308,1116.

Incontrasttootherchapter11debtors,thesmallbusinessdebtorissubjecttoadditionaloversightbytheU.S.trustee.Earlyinthecase,thesmallbusiness

debtormustattendan"initialinterview"withtheU.S.trusteeatwhichtimetheU.S.trusteewillevaluatethedebtor'sviability,inquireaboutthedebtor'sbusinessplan,andexplaincertaindebtorobligationsincludingthedebtor'sresponsibilitytofilevariousreports.28U.S.C.§586(a)(7).TheU.S.trusteewillalsomonitortheactivitiesofthesmallbusinessdebtorduringthecasetoidentifyaspromptlyaspossiblewhetherthedebtorwillbeunabletoconfirmaplan.

Becausecertainfilingdeadlinesaredifferentandextensionsaremoredifficulttoobtain,acasedesignatedasasmallbusinesscasenormallyproceedsmorequicklythanotherchapter11cases.Forexample,onlythedebtormayfileaplanduringthefirst180daysofasmallbusinesscase.11U.S.C.§1121(e).This"exclusivityperiod"maybeextendedbythecourt,butonlyto300days,andonlyifthedebtordemonstratesbyapreponderanceoftheevidencethatthecourtwillconfirmaplanwithinareasonableperiodoftime.Whenthecaseisnotasmallbusinesscase,however,thecourtmayextendtheexclusivityperiod"forcause"upto18months.

TheSingleAssetRealEstateDebtor

SingleassetrealestatedebtorsaresubjecttospecialprovisionsoftheBankruptcyCode.Theterm"singleassetrealestate"isdefinedas"asinglepropertyorproject,otherthanresidentialrealpropertywithfewerthanfourresidentialunits,whichgeneratessubstantiallyallofthegrossincomeofadebtorwhoisnotafamilyfarmerandonwhichnosubstantialbusinessisbeingconductedbyadebtorotherthanthebusinessofoperatingtherealproperty

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andactivitiesincidental."11U.S.C.§101(51B).TheBankruptcyCodeprovidescircumstancesunderwhichcreditorsofasingleassetrealestatedebtormayobtainrelieffromtheautomaticstaywhicharenotavailabletocreditorsinordinarybankruptcycases.11U.S.C.§362(d).Onrequestofacreditorwithaclaimsecuredbythesingleassetrealestateandafternoticeandahearing,thecourtwillgrantrelieffromtheautomaticstaytothecreditorunlessthedebtorfilesafeasibleplanofreorganizationorbeginsmakinginterestpaymentstothecreditorwithin90daysfromthedateofthefilingofthecase,orwithin30daysofthecourt'sdeterminationthatthecaseisasingleassetrealestatecase.Theinterestpaymentsmustbeequaltothenon‐defaultcontractinterestrateonthevalueofthecreditor'sinterestintherealestate.11U.S.C.§362(d)(3).

AppointmentorElectionofaCaseTrustee

Althoughtheappointmentofacasetrusteeisararityinachapter11case,apartyininterestortheU.S.trusteecanrequesttheappointmentofacasetrusteeorexamineratanytimepriortoconfirmationinachapter11case.Thecourt,onmotionbyapartyininterestortheU.S.trusteeandafternoticeandhearing,shallordertheappointmentofacasetrusteeforcause,includingfraud,dishonesty,incompetence,orgrossmismanagement,orifsuchanappointmentisintheinterestofcreditors,anyequitysecurityholders,andotherinterestsoftheestate.11U.S.C.§1104(a).Moreover,theU.S.trusteeisrequiredtomoveforappointmentofatrusteeiftherearereasonablegroundstobelievethatanyofthepartiesincontrol

ofthedebtor"participatedinactualfraud,dishonestyorcriminalconductinthemanagementofthedebtororthedebtor'sfinancialreporting."11U.S.C.§1104(e).ThetrusteeisappointedbytheU.S.trustee,afterconsultationwithpartiesininterestandsubjecttothecourt'sapproval.Fed.R.Bankr.P.2007.1.Alternatively,atrusteeinacasemaybeelectedifapartyininterestrequeststheelectionofatrusteewithin30daysafterthecourtorderstheappointmentofatrustee.Inthatinstance,theU.S.trusteeconvenesameetingofcreditorsforthepurposeofelectingapersontoserveastrusteeinthecase.11U.S.C.§1104(b).

Thecasetrusteeisresponsibleformanagementofthepropertyoftheestate,operationofthedebtor'sbusiness,and,ifappropriate,thefilingofaplanofreorganization.Section1106oftheBankruptcyCoderequiresthetrusteetofileaplan"assoonaspracticable"or,alternatively,tofileareportexplainingwhyaplanwillnotbefiledortorecommendthatthecasebeconvertedtoanotherchapterordismissed.11U.S.C.§1106(a)(5).

UpontherequestofapartyininterestortheU.S.trustee,thecourtmayterminatethetrustee'sappointmentandrestorethedebtorinpossessiontomanagementofbankruptcyestateatanytimebeforeconfirmation.11U.S.C.§1105.

TheRoleofanExaminer

Theappointmentofanexaminerinachapter11caseisrare.Theroleofanexaminerisgenerallymorelimitedthanthatofatrustee.Theexaminerisauthorizedtoperformtheinvestigatoryfunctionsofthetrusteeandisrequiredtofileastatementofanyinvestigation

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conducted.Iforderedtodosobythecourt,however,anexaminermaycarryoutanyotherdutiesofatrusteethatthecourtordersthedebtorinpossessionnottoperform.11U.S.C.§1106.Eachcourthastheauthoritytodeterminethedutiesofanexaminerineachparticularcase.Insomecases,theexaminermayfileaplanofreorganization,negotiateorhelpthepartiesnegotiate,orreviewthedebtor'sschedulestodeterminewhethersomeoftheclaimsareimproperlycategorized.Sometimes,theexaminermaybedirectedtodetermineifobjectionstoanyproofsofclaimshouldbefiledorwhethercausesofactionhavesufficientmeritsothatfurtherlegalactionshouldbetaken.Theexaminermaynotsubsequentlyserveasatrusteeinthecase.11U.S.C.§321.

TheAutomaticStay

Theautomaticstayprovidesaperiodoftimeinwhichalljudgments,collectionactivities,foreclosures,andrepossessionsofpropertyaresuspendedandmaynotbepursuedbythecreditorsonanydebtorclaimthatarosebeforethefilingofthebankruptcypetition.AswithcasesunderotherchaptersoftheBankruptcyCode,astayofcreditoractionsagainstthechapter11debtorautomaticallygoesintoeffectwhenthebankruptcypetitionisfiled.11U.S.C.§362(a).Thefilingofapetition,however,doesnotoperateasastayforcertaintypesofactionslistedunder11U.S.C.§362(b).Thestayprovidesabreathingspellforthedebtor,duringwhichnegotiationscantakeplacetotrytoresolvethedifficultiesinthedebtor'sfinancialsituation.

Underspecificcircumstances,thesecuredcreditorcanobtainanorderfromthecourtgrantingrelieffromtheautomatic

stay.Forexample,whenthedebtorhasnoequityinthepropertyandthepropertyisnotnecessaryforaneffectivereorganization,thesecuredcreditorcanseekanorderofthecourtliftingthestaytopermitthecreditortoforecloseontheproperty,sellit,andapplytheproceedstothedebt.11U.S.C.§362(d).

TheBankruptcyCodepermitsapplicationsforfeestobemadebycertainprofessionalsduringthecase.Thus,atrustee,adebtor'sattorney,oranyprofessionalpersonappointedbythecourtmayapplytothecourtatintervalsof120daysforinterimcompensationandreimbursementpayments.Inverylargecaseswithextensivelegalwork,thecourtmaypermitmorefrequentapplications.Althoughprofessionalfeesmaybepaidifauthorizedbythecourt,thedebtorcannotmakepaymentstoprofessionalcreditorsonprepetitionobligations,i.e.,obligationswhicharosebeforethefilingofthebankruptcypetition.Theordinaryexpensesoftheongoingbusiness,however,continuetobepaid.

WhoCanFileaPlan

Thedebtor(unlessa"smallbusinessdebtor")hasa120‐dayperiodduringwhichithasanexclusiverighttofileaplan.11U.S.C.§1121(b).Thisexclusivityperiodmaybeextendedorreducedbythecourt.Butinnoeventmaytheexclusivityperiod,includingallextensions,belongerthan18months.11U.S.C.§1121(d).Aftertheexclusivityperiodhasexpired,acreditororthecasetrusteemayfileacompetingplan.TheU.S.trusteemaynotfileaplan.11U.S.C.§307.

Achapter11casemaycontinueformanyyearsunlessthecourt,theU.S.trustee,

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thecommittee,oranotherpartyininterestactstoensurethecase'stimelyresolution.Thecreditors'righttofileacompetingplanprovidesincentiveforthedebtortofileaplanwithintheexclusivityperiodandactsasacheckonexcessivedelayinthecase.

AvoidableTransfers

Thedebtorinpossessionorthetrustee,asthecasemaybe,haswhatarecalled"avoiding"powers.Thesepowersmaybeusedtoundoatransferofmoneyorpropertymadeduringacertainperiodoftimebeforethefilingofthebankruptcypetition.Byavoidingaparticulartransferofproperty,thedebtorinpossessioncancancelthetransactionandforcethereturnor"disgorgement"ofthepaymentsorproperty,whichthenareavailabletopayallcreditors.Generally,andsubjecttovariousdefenses,thepowertoavoidtransfersiseffectiveagainsttransfersmadebythedebtorwithin90daysbeforefilingthepetition.Buttransfersto"insiders"(i.e.,relatives,generalpartners,anddirectorsorofficersofthedebtor)madeuptoayearbeforefilingmaybeavoided.11U.S.C.§§101(31),101(54),547,548.Inaddition,under11U.S.C.§544,thetrusteeisauthorizedtoavoidtransfersunderapplicablestatelaw,whichoftenprovidesforlongertimeperiods.Avoidingpowerspreventunfairprepetitionpaymentstoonecreditorattheexpenseofallothercreditors.

CashCollateral,AdequateProtectionandOperatingCapital

Althoughthepreparation,confirmation,andimplementationofaplanofreorganizationisattheheartofachapter

11case,otherissuesmayarisethatmustbeaddressedbythedebtorinpossession.Thedebtorinpossessionmayuse,sell,orleasepropertyoftheestateintheordinarycourseofitsbusiness,withoutpriorapproval,unlessthecourtordersotherwise.11U.S.C.§363(c).Iftheintendedsaleoruseisoutsidetheordinarycourseofitsbusiness,thedebtormustobtainpermissionfromthecourt.

Adebtorinpossessionmaynotuse"cashcollateral"withouttheconsentofthesecuredpartyorauthorizationbythecourt,whichmustfirstexaminewhethertheinterestofthesecuredpartyisadequatelyprotected.11U.S.C.§363.Section363defines"cashcollateral"ascash,negotiableinstruments,documentsoftitle,securities,depositaccounts,orothercashequivalents,wheneveracquired,inwhichtheestateandanentityotherthantheestatehaveaninterest.Itincludestheproceeds,products,offspring,rents,orprofitsofpropertyandthefees,charges,accountsorpaymentsfortheuseoroccupancyofroomsandotherpublicfacilitiesinhotels,motels,orotherlodgingpropertiessubjecttoacreditor'ssecurityinterest.

When"cashcollateral"isused(spent),thesecuredcreditorsareentitledtoreceiveadditionalprotectionundersection363oftheBankruptcyCode.Thedebtorinpossessionmustfileamotionrequestinganorderfromthecourtauthorizingtheuseofthecashcollateral.Pendingconsentofthesecuredcreditororcourtauthorizationforthedebtorinpossession'suseofcashcollateral,thedebtorinpossessionmustsegregateandaccountforallcashcollateralinitspossession.11U.S.C.§363(c)(4).Apartywithaninterestinpropertybeingusedbythedebtormayrequestthatthecourt

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prohibitorconditionthisusetotheextentnecessarytoprovide"adequateprotection"tothecreditor.

Adequateprotectionmayberequiredtoprotectthevalueofthecreditor'sinterestinthepropertybeingusedbythedebtorinpossession.Thisisespeciallyimportantwhenthereisadecreaseinvalueoftheproperty.Thedebtormaymakeperiodicorlumpsumcashpayments,orprovideanadditionalorreplacementlienthatwillresultinthecreditor'spropertyinterestbeingadequatelyprotected.11U.S.C.§361.

Whenachapter11debtorneedsoperatingcapital,itmaybeabletoobtainitfromalenderbygivingthelenderacourt‐approved"superpriority"overotherunsecuredcreditorsoralienonpropertyoftheestate.11U.S.C.§364.

Motions

Beforeconfirmationofaplan,severalactivitiesmaytakeplaceinachapter11case.Continuedoperationofthedebtor'sbusinessmayleadtothefilingofanumberofcontestedmotions.Themostcommonarethoseseekingrelieffromtheautomaticstay,theuseofcashcollateral,ortoobtaincredit.Theremayalsobelitigationoverexecutory(i.e.,unfulfilled)contractsandunexpiredleasesandtheassumptionorrejectionofthoseexecutorycontractsandunexpiredleasesbythedebtorinpossession.11U.S.C.§365.Delaysinformulating,filing,andobtainingconfirmationofaplanoftenpromptcreditorstofilemotionsforrelieffromstay,toconvertthecasetochapter7,ortodismissthecasealtogether.

AdversaryProceedings

Frequently,thedebtorinpossessionwillinstitutealawsuit,knownasanadversaryproceeding,torecovermoneyorpropertyfortheestate.Adversaryproceedingsmaytaketheformoflienavoidanceactions,actionstoavoidpreferences,actionstoavoidfraudulenttransfers,oractionstoavoidpost‐petitiontransfers.TheseproceedingsaregovernedbyPartVIIoftheFederalRulesofBankruptcyProcedure.Attimes,acreditors'committeemaybeauthorizedbythebankruptcycourttopursuetheseactionsagainstinsidersofthedebtoriftheplanprovidesforthecommitteetodosoorifthedebtorhasrefusedademandtodoso.Creditorsmayalsoinitiateadversaryproceedingsbyfilingcomplaintstodeterminethevalidityorpriorityofalien,revokeanorderconfirmingaplan,determinethedischargeabilityofadebt,obtainaninjunction,orsubordinateaclaimofanothercreditor.

Claims

TheBankruptcyCodedefinesaclaimas:(1)arighttopayment;(2)orarighttoanequitableremedyforafailureofperformanceifthebreachgivesrisetoarighttopayment.11U.S.C.§101(5).Generally,anycreditorwhoseclaimisnotscheduled(i.e.,listedbythedebtoronthedebtor'sschedules)orisscheduledasdisputed,contingent,orunliquidatedmustfileaproofofclaim(andattachevidencedocumentingtheclaim)inordertobetreatedasacreditorforpurposesofvotingontheplananddistributionunderit.Fed.R.Bankr.P.3003(c)(2).Butfilingaproofofclaimisnotnecessaryifthecreditor'sclaimisscheduled(butisnotlistedasdisputed,contingent,or

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unliquidatedbythedebtor)becausethedebtor'sschedulesaredeemedtoconstituteevidenceofthevalidityandamountofthoseclaims.11U.S.C.§1111.Ifascheduledcreditorchoosestofileaclaim,aproperlyfiledproofofclaimsupersedesanyschedulingofthatclaim.Fed.R.Bankr.P.3003(c)(4).Itistheresponsibilityofthecreditortodeterminewhethertheclaimisaccuratelylistedonthedebtor'sschedules.Thedebtormustprovidenotificationtothosecreditorswhosenamesareaddedandwhoseclaimsarelistedasaresultofanamendmenttotheschedules.Thenotificationalsoshouldadvisesuchcreditorsoftheirrighttofileproofsofclaimandthattheirfailuretodosomaypreventthemfromvotinguponthedebtor'splanofreorganizationorparticipatinginanydistributionunderthatplan.Whenadebtoramendsthescheduleofliabilitiestoaddacreditororchangethestatusofanyclaimstodisputed,contingent,orunliquidated,thedebtormustprovidenoticeoftheamendmenttoanyentityaffected.Fed.R.Bankr.P.1009(a).

EquitySecurityHolders

Anequitysecurityholderisaholderofanequitysecurityofthedebtor.Examplesofanequitysecurityareashareinacorporation,aninterestofalimitedpartnerinalimitedpartnership,orarighttopurchase,sell,orsubscribetoashare,security,orinterestofashareinacorporationoraninterestinalimitedpartnership.11U.S.C.§101(16),(17).Anequitysecurityholdermayvoteontheplanofreorganizationandmayfileaproofofinterest,ratherthanaproofofclaim.Aproofofinterestisdeemedfiledforanyinterestthatappearsinthe

debtor'sschedules,unlessitisscheduledasdisputed,contingent,orunliquidated.11U.S.C.§1111.Anequitysecurityholderwhoseinterestisnotscheduledorisscheduledasdisputed,contingent,orunliquidatedmustfileaproofofinterestinordertobetreatedasacreditorforpurposesofvotingontheplananddistributionunderit.Fed.R.Bankr.P.3003(c)(2).Aproperlyfiledproofofinterestsupersedesanyschedulingofthatinterest.Fed.R.Bankr.P.3003(c)(4).Generally,mostoftheprovisionsthatapplytoproofsofclaim,asdiscussedabove,arealsoapplicabletoproofsofinterest.

ConversionorDismissal

Adebtorinacaseunderchapter11hasaone‐timeabsoluterighttoconvertthechapter11casetoacaseunderchapter7unless:(1)thedebtorisnotadebtorinpossession;(2)thecaseoriginallywascommencedasaninvoluntarycaseunderchapter11;or(3)thecasewasconvertedtoacaseunderchapter11otherthanatthedebtor'srequest.11U.S.C.§1112(a).Adebtorinachapter11casedoesnothaveanabsoluterighttohavethecasedismisseduponrequest.

Apartyininterestmayfileamotiontodismissorconvertachapter11casetoachapter7case"forcause."Generally,ifcauseisestablishedafternoticeandhearing,thecourtmustconvertordismissthecase(whicheverisinthebestinterestsofcreditorsandtheestate)unlessitspecificallyfindsthattherequestedconversionordismissalisnotinthebestinterestofcreditorsandtheestate.11U.S.C.§1112(b).Alternatively,thecourtmaydecidethatappointmentofachapter11trusteeoranexaminerisin

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thebestinterestsofcreditorsandtheestate.11U.S.C.§1104(a)(3).Section1112(b)(4)oftheBankruptcyCodesetsforthnumerousexamplesofcausethatwouldsupportdismissalorconversion.Forexample,themovingpartymayestablishcausebyshowingthatthereissubstantialorcontinuinglosstotheestateandtheabsenceofareasonablelikelihoodofrehabilitation;grossmismanagementoftheestate;failuretomaintaininsurancethatposesarisktotheestateorthepublic;orunauthorizeduseofcashcollateralthatissubstantiallyharmfultoacreditor.

Causefordismissalorconversionalsoincludesanunexcusedfailuretotimelycompliancewithreportingandfilingrequirements;failuretoattendthemeetingofcreditorsorattendanexaminationwithoutgoodcause;failuretotimelyprovideinformationtotheU.S.trustee;andfailuretotimelypaypost‐petitiontaxesortimelyfilepost‐petitionreturnsFed.R.Bankr.P.2004.Additionally,failuretofileadisclosurestatementortofileandconfirmaplanwithinthetimefixedbytheBankruptcyCodeororderofthecourt;inabilitytoeffectuateaplan;denialorrevocationofconfirmation;inabilitytoconsummateaconfirmedplanrepresent"cause"fordismissalunderthestatute.Inanindividualcase,failureofthedebtortopaypost‐petitiondomesticsupportobligationsconstitutes"cause"fordismissalorconversion.

Section1112(c)oftheBankruptcyCodeprovidesanimportantexceptiontotheconversionprocessinachapter11case.Underthisprovision,thecourtisprohibitedfromconvertingacaseinvolvingafarmerorcharitableinstitutiontoaliquidationcaseunder

chapter7unlessthedebtorrequeststheconversion.

TheDisclosureStatement

Generally,thedebtor(oranyplanproponent)mustfileandgetcourtapprovalofawrittendisclosurestatementbeforetherecanbeavoteontheplanofreorganization.Thedisclosurestatementmustprovide"adequateinformation"concerningtheaffairsofthedebtortoenabletheholderofaclaimorinteresttomakeaninformedjudgmentabouttheplan.11U.S.C.§1125.Inasmallbusinesscase,however,thecourtmaydeterminethattheplanitselfcontainsadequateinformationandthataseparatedisclosurestatementisunnecessary.11U.S.C.§1125(f).Afterthedisclosurestatementisfiled,thecourtmustholdahearingtodeterminewhetherthedisclosurestatementshouldbeapproved.Acceptanceorrejectionofaplanusuallycannotbesoliciteduntilthecourthasfirstapprovedthewrittendisclosurestatement.11U.S.C.§1125(b).Anexceptiontothisruleexistsiftheinitialsolicitationofthepartyoccurredbeforethebankruptcyfiling,aswouldbethecaseinso‐called"prepackaged"bankruptcyplans(i.e.,wherethedebtornegotiatesaplanwithsignificantcreditorconstituenciesbeforefilingforbankruptcy).Continuedpost‐filingsolicitationofsuchpartiesisnotprohibited.Afterthecourtapprovesthedisclosurestatement,thedebtororproponentofaplancanbegintosolicitacceptancesoftheplan,andcreditorsmayalsosolicitrejectionsoftheplan.

Uponapprovalofadisclosurestatement,theplanproponentmustmailthefollowingtotheU.S.trusteeandall

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creditorsandequitysecurityholders:(1)theplan,oracourtapprovedsummaryoftheplan;(2)thedisclosurestatementapprovedbythecourt;(3)noticeofthetimewithinwhichacceptancesandrejectionsoftheplanmaybefiled;and(4)suchotherinformationasthecourtmaydirect,includinganyopinionofthecourtapprovingthedisclosurestatementoracourt‐approvedsummaryoftheopinion.Fed.R.Bankr.P.3017(d).Inaddition,thedebtormustmailtothecreditorsandequitysecurityholdersentitledtovoteontheplanorplans:(1)noticeofthetimefixedforfilingobjections;(2)noticeofthedateandtimeforthehearingonconfirmationoftheplan;and(3)aballotforacceptingorrejectingtheplanand,ifappropriate,adesignationforthecreditorstoidentifytheirpreferenceamongcompetingplans.Id.Butinasmallbusinesscase,thecourtmayconditionallyapproveadisclosurestatementsubjecttofinalapprovalafternoticeandacombineddisclosurestatement/planconfirmationhearing.11U.S.C.§1125(f).

AcceptanceofthePlanofReorganization

Asnotedearlier,onlythedebtormayfileaplanofreorganizationduringthefirst120‐dayperiodafterthepetitionisfiled(orafterentryoftheorderforrelief,ifaninvoluntarypetitionwasfiled).Thecourtmaygrantextensionofthisexclusiveperiodupto18monthsafterthepetitiondate.Inaddition,thedebtorhas180daysafterthepetitiondateorentryoftheorderforrelieftoobtainacceptancesofitsplan.11U.S.C.§1121.Thecourtmayextend(upto20months)orreducethisacceptanceexclusiveperiodforcause.11U.S.C.§1121(d).Inpractice,debtors

typicallyseekextensionsofboththeplanfilingandplanacceptancedeadlinesatthesametimesothatanyordersoughtfromthecourtallowsthedebtortwomonthstoseekacceptancesafterfilingaplanbeforeanycompetingplancanbefiled.

Iftheexclusiveperiodexpiresbeforethedebtorhasfiledandobtainedacceptanceofaplan,otherpartiesininterestinacase,suchasthecreditors'committeeoracreditor,mayfileaplan.Suchaplanmaycompetewithaplanfiledbyanotherpartyininterestorbythedebtor.Ifatrusteeisappointed,thetrusteemustfileaplan,areportexplainingwhythetrusteewillnotfileaplan,orarecommendationforconversionordismissalofthecase.11U.S.C.§1106(a)(5).Aproponentofaplanissubjecttothesamerequirementsasthedebtorwithrespecttodisclosureandsolicitation.

Inachapter11case,aliquidatingplanispermissible.Suchaplanoftenallowsthedebtorinpossessiontoliquidatethebusinessundermoreeconomicallyadvantageouscircumstancesthanachapter7liquidation.Italsopermitsthecreditorstotakeamoreactiveroleinfashioningtheliquidationoftheassetsandthedistributionoftheproceedsthaninachapter7case.

Section1123(a)oftheBankruptcyCodeliststhemandatoryprovisionsofachapter11plan,andsection1123(b)liststhediscretionaryprovisions.Section1123(a)(1)providesthatachapter11planmustdesignateclassesofclaimsandinterestsfortreatmentunderthereorganization.Generally,aplanwillclassifyclaimholdersassecuredcreditors,unsecuredcreditorsentitledto

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priority,generalunsecuredcreditors,andequitysecurityholders.

Undersection1126(c)oftheBankruptcyCode,anentireclassofclaimsisdeemedtoacceptaplaniftheplanisacceptedbycreditorsthatholdatleasttwo‐thirdsinamountandmorethanone‐halfinnumberoftheallowedclaimsintheclass.Undersection1129(a)(10),ifthereareimpairedclassesofclaims,thecourtcannotconfirmaplanunlessithasbeenacceptedbyatleastoneclassofnon‐insiderswhoholdimpairedclaims(i.e.,claimsthatarenotgoingtobepaidcompletelyorinwhichsomelegal,equitable,orcontractualrightisaltered).Moreover,undersection1126(f),holdersofunimpairedclaimsaredeemedtohaveacceptedtheplan.

Undersection1127(a)oftheBankruptcyCode,theplanproponentmaymodifytheplanatanytimebeforeconfirmation,buttheplanasmodifiedmustmeetalltherequirementsofchapter11.Whenthereisaproposedmodificationafterballotinghasbeenconducted,andthecourtfindsafterahearingthattheproposedmodificationdoesnotadverselyaffectthetreatmentofanycreditorwhohasnotacceptedthemodificationinwriting,themodificationisdeemedtohavebeenacceptedbyallcreditorswhopreviouslyacceptedtheplan.Fed.R.Bankr.P.3019.Ifitisdeterminedthattheproposedmodificationdoeshaveanadverseeffectontheclaimsofnon‐consentingcreditors,thenanotherballotingmusttakeplace.

Becausemorethanoneplanmaybesubmittedtothecreditorsforapproval,everyproposedplanandmodificationmustbedatedandidentifiedwiththenameoftheentityorentitiessubmittingtheplanormodification.Fed.R.Bankr.P.3016(b).Whencompetingplansare

presentedthatmeettherequirementsforconfirmation,thecourtmustconsiderthepreferencesofthecreditorsandequitysecurityholdersindeterminingwhichplantoconfirm.

Anypartyininterestmayfileanobjectiontoconfirmationofaplan.TheBankruptcyCoderequiresthecourt,afternotice,toholdahearingonconfirmationofaplan.Ifnoobjectiontoconfirmationhasbeentimelyfiled,theBankruptcyCodeallowsthecourttodeterminewhethertheplanhasbeenproposedingoodfaithandaccordingtolaw.Fed.R.Bankr.P.3020(b)(2).Beforeconfirmationcanbegranted,thecourtmustbesatisfiedthattherehasbeencompliancewithalltheotherrequirementsofconfirmationsetforthinsection1129oftheBankruptcyCode,evenintheabsenceofanyobjections.Inordertoconfirmtheplan,thecourtmustfind,amongotherthings,that:(1)theplanisfeasible;(2)itisproposedingoodfaith;and(3)theplanandtheproponentoftheplanareincompliancewiththeBankruptcyCode.Inordertosatisfythefeasibilityrequirement,thecourtmustfindthatconfirmationoftheplanisnotlikelytobefollowedbyliquidation(unlesstheplanisaliquidatingplan)ortheneedforfurtherfinancialreorganization.

TheDischarge

Section1141(d)(1)generallyprovidesthatconfirmationofaplandischargesadebtorfromanydebtthatarosebeforethedateofconfirmation.Aftertheplanisconfirmed,thedebtorisrequiredtomakeplanpaymentsandisboundbytheprovisionsoftheplanofreorganization.Theconfirmedplancreatesnew

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contractualrights,replacingorsupersedingpre‐bankruptcycontracts.

Thereare,ofcourse,exceptionstothegeneralrulethatanorderconfirmingaplanoperatesasadischarge.Confirmationofaplanofreorganizationdischargesanytypeofdebtor–corporation,partnership,orindividual–frommosttypesofprepetitiondebts.Itdoesnot,however,dischargeanindividualdebtorfromanydebtmadenondischargeablebysection523oftheBankruptcyCode.1Moreover,exceptinlimitedcircumstances,adischargeisnotavailabletoanindividualdebtorunlessanduntilallpaymentshavebeenmadeundertheplan.11U.S.C.§1141(d)(5).Confirmationdoesnotdischargethedebtoriftheplanisaliquidationplan,asopposedtooneofreorganization,unlessthedebtorisanindividual.Whenthedebtorisanindividual,confirmationofaliquidationplanwillresultinadischarge(afterplanpaymentsaremade)unlessgroundswouldexistfordenyingthedebtoradischargeifthecasewere 1 Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor's operation of a motor vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders.11 U.S.C. § 523(a). The debtor will continue to be liable for these types of debts to the extent that they are not paid in the chapter 11 case. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared nondischargeable. 11 U.S.C. § 523(c); Fed. R. Bankr. P. 4007(c).

proceedingunderchapter7insteadofchapter11.11U.S.C.§§727(a),1141(d).

PostconfirmationModificationofthePlan

Atanytimeafterconfirmationandbefore"substantialconsummation"ofaplan,theproponentofaplanmaymodifytheplanifthemodifiedplanwouldmeetcertainBankruptcyCoderequirements.11U.S.C.§1127(b).Thisshouldbedistinguishedfrompreconfirmationmodificationoftheplan.Amodifiedpostconfirmationplandoesnotautomaticallybecometheplan.Amodifiedpostconfirmationplaninachapter11casebecomestheplanonly"ifcircumstanceswarrantsuchmodification"andthecourt,afternoticeandhearing,confirmstheplanasmodified.Ifthedebtorisanindividual,theplanmaybemodifiedpostconfirmationupontherequestofthedebtor,thetrustee,theU.S.trustee,ortheholderofanallowedunsecuredclaimtomakeadjustmentstopaymentsdueundertheplan.11U.S.C.§1127(e).

PostconfirmationAdministration

Notwithstandingtheentryoftheconfirmationorder,thecourthastheauthoritytoissueanyotherordernecessarytoadministertheestate.Fed.R.Bankr.P.3020(d).Thisauthoritywouldincludethepostconfirmationdeterminationofobjectionstoclaimsoradversaryproceedings,whichmustberesolvedbeforeaplancanbefullyconsummated.Sections1106(a)(7)and1107(a)oftheBankruptcyCoderequireadebtorinpossessionoratrusteetoreportontheprogressmadeinimplementingaplanafterconfirmation.Achapter11

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trusteeordebtorinpossessionhasanumberofresponsibilitiestoperformafterconfirmation,includingconsummatingtheplan,reportingonthestatusofconsummation,andapplyingforafinaldecree.

RevocationofConfirmationOrder

Revocationoftheconfirmationorderisanundoingorcancellationoftheconfirmationofaplan.Arequestforrevocationofconfirmation,ifmadeatall,mustbemadebyapartyininterestwithin180daysofconfirmation.Thecourt,afternoticeandhearing,may

revokeaconfirmationorder"ifandonlyifthe[confirmation]orderwasprocuredbyfraud."11U.S.C.§1144.

TheFinalDecree

Afinaldecreeclosingthecasemustbeenteredaftertheestatehasbeen"fullyadministered."Fed.R.Bankr.P.3022.Localbankruptcycourtpoliciesgenerallydeterminewhenthefinaldecreeisenteredandthecaseclosed.

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WhatCreditorsShouldKnowAboutChapter12:FamilyFarmerorFamilyFishermanBankruptcy

ThechapteroftheBankruptcyCodeprovidingforadjustmentofdebtsofa"familyfarmer,"ora"familyfisherman"asthosetermsaredefinedintheBankruptcyCode.

Background

Chapter12isdesignedfor"familyfarmers"or"familyfishermen"with"regularannualincome."Itenablesfinanciallydistressedfamilyfarmersandfishermentoproposeandcarryoutaplantorepayallorpartoftheirdebts.Underchapter12,debtorsproposearepaymentplantomakeinstallmentstocreditorsoverthreetofiveyears.Generally,theplanmustprovideforpaymentsoverthreeyearsunlessthecourtapprovesalongerperiod"forcause."Butunlesstheplanproposestopay100%ofdomesticsupportclaims(i.e.,childsupportandalimony)ifanyexist,itmustbeforfiveyearsandmustincludeallofthedebtor'sdisposableincome.Innocasemayaplanprovideforpaymentsoveraperiodlongerthanfiveyears.11U.S.C.§1222(b)‐(c).

Intailoringbankruptcylawtomeettheeconomicrealitiesoffamilyfarmingandthefamilyfisherman,chapter12eliminatesmanyofthebarrierssuchdebtorswouldfaceifseekingtoreorganizeundereitherchapter11or13oftheBankruptcyCode.Forexample,chapter12ismorestreamlined,lesscomplicated,andlessexpensivethanchapter11,whichisbettersuitedtolargecorporatereorganizations.Inaddition,fewfamilyfarmersorfishermenfind

chapter13tobeadvantageousbecauseitisdesignedforwageearnerswhohavesmallerdebtsthanthosefacingfamilyfarmers.Inchapter12,CongresssoughttocombinethefeaturesoftheBankruptcyCodewhichcanprovideaframeworkforsuccessfulfamilyfarmerandfishermanreorganizations.

TheBankruptcyCodeprovidesthatonlyafamilyfarmerorfamilyfishermanwith"regularannualincome"mayfileapetitionforreliefunderchapter12.11U.S.C.§§101(18),101(19A),109(f).Thepurposeofthisrequirementistoensurethatthedebtor'sannualincomeissufficientlystableandregulartopermitthedebtortomakepaymentsunderachapter12plan.Butchapter12makesallowanceforsituationsinwhichfamilyfarmersorfishermenhaveincomethatisseasonalinnature.Reliefunderchapter12isvoluntary,andonlythedebtormayfileapetitionunderthechapter.

UndertheBankruptcyCode,"familyfarmers"and"familyfishermen"fallintotwocategories:(1)anindividualorindividualandspouseand(2)acorporationorpartnership.Farmersorfishermenfallingintothefirstcategorymustmeeteachofthefollowingfourcriteriaasofthedatethepetitionisfiledinordertoqualifyforreliefunderchapter12:

Theindividualorhusbandandwifemustbeengagedinafarmingoperationoracommercialfishingoperation.

Thetotaldebts(securedandunsecured)oftheoperationmustnotexceed$4,031,575(ifafarmingoperation)or$1,868,200(ifacommercialfishingoperation).

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Ifafamilyfarmer,atleast50%,andiffamilyfishermanatleast80%,ofthetotaldebtsthatarefixedinamount(exclusiveofdebtforthedebtor'shome)mustberelatedtothefarmingorcommercialfishingoperation.

Morethan50%ofthegrossincomeoftheindividualorthehusbandandwifefortheprecedingtaxyear(or,forfamilyfarmersonly,foreachofthe2ndand3rdpriortaxyears)musthavecomefromthefarmingorcommercialfishingoperation.

Inorderforacorporationorpartnershiptofallwithinthesecondcategoryofdebtorseligibletofileasfamilyfarmersorfamilyfishermen,thecorporationorpartnershipmustmeeteachofthefollowingcriteriaasofthedateofthefilingofthepetition:

Morethanone‐halftheoutstandingstockorequityinthecorporationorpartnershipmustbeownedbyonefamilyorbyonefamilyanditsrelatives.

Thefamilyorthefamilyanditsrelativesmustconductthefarmingorcommercialfishingoperation.

Morethan80%ofthevalueofthecorporateorpartnershipassetsmustberelatedtothefarmingorfishingoperation.

Thetotalindebtednessofthecorporationorpartnershipmustnotexceed$4,031,575(ifafarmingoperation)or$1,868,200(ifacommercialfishingoperation).

Atleast50%forafarmingoperationor80%forafishingoperationofthecorporation'sorpartnership'stotaldebtswhicharefixedinamount(exclusiveofdebtforonehomeoccupiedbyashareholder)mustberelatedtothefarmingorfishingoperation.

Ifthecorporationissuesstock,thestockcannotbepubliclytraded.

Adebtorcannotfileunderchapter12(oranyotherchapter)ifduringthepreceding180daysapriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourtorwasvoluntarilydismissedaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)and(e).Inaddition,noindividualmaybeadebtorunderchapter12oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trustee(orbankruptcyadministrator)hasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.

HowChapter12Works

Achapter12casebeginsbyfilingapetitionwiththebankruptcycourtservingtheareawheretheindividuallivesorwherethecorporationorpartnershipdebtorhasitsprincipalplace

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ofbusinessorprincipalassets.Unlessthecourtordersotherwise,thedebtoralsoshallfilewiththecourt(1)schedulesofassetsandliabilities,(2)ascheduleofcurrentincomeandexpenditures,(3)ascheduleofexecutorycontractsandunexpiredleases,and(4)astatementoffinancialaffairs.Fed.R.Bankr.P.1007(b).Ahusbandandwifemayfileajointpetitionorindividualpetitions.11U.S.C.§302(a).(TheOfficialFormsmaybepurchasedatlegalstationerystoresordownloadedfromtheInternetatwww.uscourts.gov/bkforms/index.html.Theyarealsoavailablefromthecourt.)

AsofOctober17,2005,afilingfee.Informationaboutfilingfeesmaybefoundonthecourt’swebsite.Normallythefeesshouldbepaidtotheclerkofthecourtuponfiling.Withthecourt'spermission,however,individualdebtorsmayrequesttopaythefilingfeeininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);BankruptcyCourtMiscellaneousFeeSchedule,Item8.Thenumberofsuchinstallmentsislimitedtofourandthedebtormustmakethefinalinstallmentnolaterthan120daysafterfilingthepetition.Fed.R.Bankr.P.1006(b).Forcauseshown,thecourtmayextendthetimeofanyinstallment,providedthatthelastinstallmentispaidnotlaterthan180daysafterthefilingofthepetition.Id.Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§1208(c)(2).

InordertocompletetheOfficialBankruptcyFormswhichmakeupthepetition,statementoffinancialaffairs,andschedules,thedebtorwillneedtocompilethefollowinginformation:

Alistofallcreditorsandtheamountsandnatureoftheirclaims;



Adetailedlistofthedebtor'smonthlyfarmingandlivingexpenses,i.e.,food,shelter,utilities,taxes,transportation,medicine,feed,fertilizer,etc.

Marriedindividualsmustgatherthisinformationforeachspouseregardlessofwhethertheyarefilingajointpetition,separateindividualpetitions,orevenifonlyonespouseisfiling.Inasituationwhereonlyonespousefiles,theincomeandexpensesofthenon‐filingspousearerequiredsothatthecourt,thetrustee,andthecreditorscanevaluatethehousehold'sfinancialposition.

Whenachapter12petitionisfiled,animpartialtrusteeisappointedtoadministerthecase.11U.S.C.§1202.Insomedistricts,theU.S.trusteeappointsastandingtrusteetoserveinallchapter12cases.28U.S.C.§586(b).Asinchapter13,thetrusteebothevaluatesthecaseandservesasadisbursingagent,collectingpaymentsfromthedebtorandmakingdistributionstocreditors.11U.S.C.§1202.

Filingthepetitionunderchapter12"automaticallystays"(stops)mostcollectionactionsagainstthedebtororthedebtor'sproperty.11U.S.C.§362.Filingthepetitiondoesnot,however,staycertaintypesofactionslistedunder11U.S.C.§362(b).Undercertaincircumstances,thestaymaybelimited,ormaynottakeeffectatall.11U.S.C.§362(c).Thestayarisesbyoperationof

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lawandrequiresnojudicialaction.Aslongasthestayisineffect,creditorsgenerallycannotinitiateorcontinueanylawsuits,wagegarnishments,oreventelephonecallsdemandingpayments.Thebankruptcyclerkgivesnoticeofthebankruptcycasetoallcreditorswhosenamesandaddressesareprovidedbythedebtor.

Chapter12alsocontainsaspecialautomaticstayprovisionthatprotectsco‐debtors.Unlessthebankruptcycourtauthorizesotherwise,acreditormaynotseektocollecta"consumerdebt"fromanyindividualwhoisliablewiththedebtor.11U.S.C.§1201(a).Consumerdebtsarethoseincurredbyanindividualprimarilyforapersonal,family,orhouseholdpurpose.11U.S.C.§101(8).

Between20to35daysafterthepetitionisfiled,thechapter12trusteewillholda"meetingofcreditors."IftheU.S.trusteeorbankruptcyadministratorschedulesthemeetingataplacethatdoesnothaveregularU.S.trusteeorbankruptcyadministratorstaffing,themeetingmaybeheldnomorethan60daysafterthedebtorfiles.Duringthemeetingthetrusteeputsthedebtorunderoathandboththetrusteeandcreditorsmayaskquestions.Thedebtormustattendthemeetingandanswerquestionsregardingthedebtor'sfinancialaffairsandtheproposedtermsofthedebtor'srepaymentplan.11U.S.C.§343;Fed.R.Bankr.P.4002.Ifahusbandandwifehavefiledajointpetition,theybothmustattendthecreditors'meeting.Inordertopreservetheirindependentjudgment,bankruptcyjudgesareprohibitedfromattending.11U.S.C.§341(c).Thepartiestypicallyresolveproblemswiththeplaneitherduringorshortlyafterthecreditors'meeting.Generally,thedebtor

canavoidproblemsbymakingsurethatthepetitionandplanarecompleteandaccurate,andbyconsultingwiththetrusteepriortothemeeting.

Inachapter12case,toparticipateindistributionsfromthebankruptcyestate,unsecuredcreditorsmustfiletheirclaimswiththecourtwithin90daysafterthefirstdatesetforthemeetingofcreditors.Fed.R.Bankr.P.3002(c).Agovernmentalunit,however,has180daysfromthedatethecaseisfiledfileaproofofclaim.11U.S.C.§502(b)(9).

Afterthemeetingofcreditors,thedebtor,thechapter12trustee,andinterestedcreditorswillattendahearingonconfirmationofthedebtor'schapter12repaymentplan.

TheChapter12PlanandConfirmationHearing

Unlessthecourtgrantsanextension,thedebtormustfileaplanofrepaymentwiththepetitionorwithin90daysafterfilingthepetition.11U.S.C.§1221.Theplan,whichmustbesubmittedtothecourtforapproval,providesforpaymentsoffixedamountstothetrusteeonaregularbasis.Thetrusteethendistributesthefundstocreditorsaccordingtothetermsoftheplan,whichtypicallyofferscreditorslessthanfullpaymentontheirclaims.

Therearethreetypesofclaims:priority,secured,andunsecured.Priorityclaimsarethosegrantedspecialstatusbythebankruptcylaw,suchasmosttaxesandthecostsofbankruptcyproceeding.2

2 Section507setsforth10categoriesofunsecuredclaimswhichCongresshas,forpublicpolicyreasons,givenpriorityofdistributionoverotherunsecuredclaims.

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Securedclaimsarethoseforwhichthecreditorhastherighttoliquidatecertainpropertyifthedebtordoesnotpaytheunderlyingdebt.Incontrasttosecuredclaims,unsecuredclaimsaregenerallythoseforwhichthecreditorhasnospecialrightstocollectagainstparticularpropertyownedbythedebtor.

Achapter12planusuallylaststhreetofiveyears.Itmustprovideforfullpaymentofallpriorityclaims,unlessaprioritycreditoragreestodifferenttreatmentoftheclaimor,inthecaseofadomesticsupportobligation,unlessthedebtorcontributesall"disposableincome"‐discussedbelow‐toafive‐yearplan.11U.S.C.§1222(a)(2),(4).

Securedcreditorsmustbepaidatleastasmuchasthevalueofthecollateralpledgedforthedebt.OneofthefeaturesofChapter12isthatpaymentstosecuredcreditorscansometimescontinuelongerthanthethree‐to‐five‐yearperiodoftheplan.Forexample,ifthedebtor'sunderlyingdebtobligationwasscheduledtobepaidovermorethanfiveyears(i.e.,anequipmentloanoramortgage),thedebtormaybeabletopaytheloanoffovertheoriginalloanrepaymentscheduleaslongasanyarrearageismadeupduringtheplan.

Theplandoesnothavetopayunsecuredclaimsinfull,aslongasitcommitsallofthedebtor'sprojected"disposableincome"(orpropertyofequivalentvalue)toplanpaymentsovera3to5yearperiod,andaslongastheunsecuredcreditorsaretoreceiveatleastasmuchastheywouldreceiveifthedebtor'snonexemptassetswereliquidatedunderchapter7.11U.S.C.§1225."Disposableincome"isdefinedasincomenotreasonablynecessaryforthemaintenanceorsupportofthedebtorordependentsor

formakingpaymentsneededtocontinue,preserve,andoperatethedebtor'sbusiness.11U.S.C.§1225(b)(2).

Within45daysafterfilingtheplan,thepresidingbankruptcyjudgedecidesata"confirmationhearing"whethertheplanisfeasibleandmeetsthestandardsforconfirmationundertheBankruptcyCode.11U.S.C.§§1224,1225.Creditors,whoreceive20days'notice,mayappearatthehearingandobjecttoconfirmation.Fed.R.Bankr.P.2002(a)(8).Whileavarietyofobjectionsmaybemade,thetypicalargumentsarethatpaymentsofferedundertheplanarelessthancreditorswouldreceiveifthedebtor'sassetswereliquidated,orthattheplandoesnotcommitallofthedebtor'sdisposableincomeforthethree‐to‐five‐yearperiodoftheplan.

Ifthecourtconfirmstheplan,thechapter12trusteewilldistributefundsreceivedinaccordancewiththetermsoftheplan.11U.S.C.§1226(a).Ifthecourtdoesnotconfirmtheplan,thedebtormayfileamodifiedplan.11U.S.C.§1223.Thedebtormayalsoconvertthecasetoaliquidationunderchapter7.311U.S.C.§1208(a).Ifthedebtorfailstoconfirmaplanandthecaseisdismissed,thecourtmayauthorizethetrusteetokeepsomeofthefundsforcosts,butthetrusteemustreturnallremainingfundstothedebtor(otherthanfundsalreadydisbursedtocreditors).11U.S.C.§1226(a).

Onoccasion,changedcircumstanceswillaffectthedebtor'sabilitytomakeplanpayments.Acreditormayobjectorthreatentoobjecttoaplan,orthedebtor

3Thereisafeechargedforconvertingacaseunderchapter12toacaseunderchapter7.Informationaboutfilingfeesmaybefoundonthecourt’swebsite.

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mayinadvertentlyhavefailedtolistallcreditors.Insuchinstances,theplanmaybemodifiedeitherbeforeorafterconfirmation.11U.S.C.§§1223,1229.Modificationafterconfirmationisnotlimitedtoaninitiativebythedebtor,butmayalsobemadeattherequestofthetrusteeoranunsecuredcreditor.11U.S.C.§1229(a).

MakingthePlanWork

Theprovisionsofaconfirmedplanbindthedebtorandeachcreditor.11U.S.C.§1227.Oncethecourtconfirmstheplan,thedebtormustmaketheplansucceed.Thedebtormustmakeregularpaymentstothetrustee,whichwillrequireadjustmenttolivingonafixedbudgetforaprolongedperiod.Furthermore,whileconfirmationoftheplanentitlesthedebtortoretainpropertyaslongaspaymentsaremade,thedebtormaynotincuranysignificantnewdebtwithoutconsultingthetrustee,becauseadditionaldebtmaycompromisethedebtor'sabilitytocompletetheplan.11U.S.C.§§1222(a)(1),1227.Inanyevent,failuretomaketheplanpaymentsmayresultindismissalofthecase.11U.S.C.§1208(c).Inaddition,thecourtmaydismissthecaseorconvertthecasetoaliquidationcaseunderchapter7oftheBankruptcyCodeuponashowingthatthedebtorhascommittedfraudinconnectionwiththecase.11U.S.C.§1208(d).


Thecourtmaygranta"hardshipdischarge"toachapter12debtoreven

thoughthedebtorhasfailedtocompleteplanpayments.11U.S.C.§1228(b).Generally,ahardshipdischargeisavailableonlytoadebtorwhosefailuretocompleteplanpaymentsisduetocircumstancesbeyondthedebtor'scontrolandthroughnofaultofthedebtor.Creditorsmusthavereceivedatleastasmuchastheywouldhavereceivedinachapter7liquidationcase,andthedebtormustbeunabletomodifytheplan.Forexample,injuryorillnessthatprecludesemploymentsufficienttofundevenamodifiedplanmayserveasthebasisforahardshipdischarge.Thehardshipdischargedoesnotapplytoanydebtsthatarenondischargeableinachapter7case.11U.S.C.§523.

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WhatCreditorsShouldKnowAboutChapter13:

IndividualDebtAdjustment

ThechapteroftheBankruptcyCodeprovidingforadjustmentofdebtsofanindividualwithregularincome.(Chapter13allowsadebtortokeeppropertyandpaydebtsovertime,usuallythreetofiveyears.)

Background

Achapter13bankruptcyisalsocalledawageearner'splan.Itenablesindividualswithregularincometodevelopaplantorepayallorpartoftheirdebts.Underthischapter,debtorsproposearepaymentplantomakeinstallmentstocreditorsoverthreetofiveyears.Ifthedebtor'scurrentmonthlyincomeislessthantheapplicablestatemedian,theplanwillbeforthreeyearsunlessthecourtapprovesalongerperiod"forcause."1Ifthedebtor'scurrentmonthlyincomeisgreaterthantheapplicablestatemedian,theplangenerallymustbeforfiveyears.Innocasemayaplanprovideforpaymentsoveraperiodlongerthanfive

1 The"currentmonthlyincome"receivedbythedebtorisadefinedtermintheBankruptcyCodeandmeanstheaveragemonthlyincomereceivedoverthesixcalendarmonthsbeforecommencementofthebankruptcycase,includingregularcontributionstohouseholdexpensesfromnondebtorsandincludingincomefromthedebtor'sspouseifthepetitionisajointpetition,butnotincludingsocialsecurityincomeorcertainpaymentsmadebecausethedebtoristhevictimofcertaincrimes.11U.S.C.§101(10A).

years.11U.S.C.§1322(d).Duringthistimethelawforbidscreditorsfromstartingorcontinuingcollectionefforts.

Thischapterdiscussessixaspectsofachapter13proceeding:theadvantagesofchoosingchapter13,thechapter13eligibilityrequirements,howachapter13proceedingworks,makingtheplanwork,andthespecialchapter13discharge.

AdvantagesofChapter13

Chapter13offersindividualsanumberofadvantagesoverliquidationunderchapter7.Perhapsmostsignificantly,chapter13offersindividualsanopportunitytosavetheirhomesfromforeclosure.Byfilingunderthischapter,individualscanstopforeclosureproceedingsandmaycuredelinquentmortgagepaymentsovertime.Nevertheless,theymuststillmakeallmortgagepaymentsthatcomedueduringthechapter13planontime.Anotheradvantageofchapter13isthatitallowsindividualstoreschedulesecureddebts(otherthanamortgagefortheirprimaryresidence)andextendthemoverthelifeofthechapter13plan.Doingthismaylowerthepayments.Chapter13alsohasaspecialprovisionthatprotectsthirdpartieswhoareliablewiththedebtoron"consumerdebts."Thisprovisionmayprotectco‐signers.Finally,chapter13actslikeaconsolidationloanunderwhichtheindividualmakestheplanpaymentstoachapter13trusteewhothendistributespaymentstocreditors.Individualswillhavenodirectcontactwithcreditorswhileunderchapter13protection.

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Chapter13Eligibility

Anyindividual,evenifself‐employedoroperatinganunincorporatedbusiness,iseligibleforchapter13reliefaslongastheindividual'sunsecureddebtsarelessthan$383,175andsecureddebtsarelessthan$1,149,525.11U.S.C.§109(e).2Theseamountsareadjustedperiodicallytoreflectchangesintheconsumerpriceindex.Acorporationorpartnershipmaynotbeachapter13debtor.Id.Anindividualcannotfileunderchapter13oranyotherchapterif,duringthepreceding180days,apriorbankruptcypetitionwasdismissedduetothedebtor'swillfulfailuretoappearbeforethecourtorcomplywithordersofthecourtorwasvoluntarilydismissedaftercreditorssoughtrelieffromthebankruptcycourttorecoverpropertyuponwhichtheyholdliens.11U.S.C.§§109(g),362(d)and(e).

Inaddition,noindividualmaybeadebtorunderchapter13oranychapteroftheBankruptcyCodeunlessheorshehas,within180daysbeforefiling,receivedcreditcounselingfromanapprovedcreditcounselingagencyeitherinanindividualorgroupbriefing.11U.S.C.§§109,111.ThereareexceptionsinemergencysituationsorwheretheU.S.trustee(orbankruptcyadministrator)hasdeterminedthatthereareinsufficientapprovedagenciestoprovidetherequiredcounseling.Ifadebtmanagementplanisdevelopedduringrequiredcreditcounseling,itmustbefiledwiththecourt.

2 ThesedollaramountsareeffectiveforcasesfiledafterApril1,2013.

HowChapter13Works

Achapter13casebeginsbyfilingapetitionwiththebankruptcycourtservingtheareawherethedebtorhasadomicileorresidence.Unlessthecourtordersotherwise,thedebtormustalsofilewiththecourt:(1)schedulesofassetsandliabilities;(2)ascheduleofcurrentincomeandexpenditures;(3)ascheduleofexecutorycontractsandunexpiredleases;and(4)astatementoffinancialaffairs.Fed.R.Bankr.P.1007(b).

Thedebtormustalsofileacertificateofcreditcounselingandacopyofanydebtrepaymentplandevelopedthroughcreditcounseling;evidenceofpaymentfromemployers,ifany,received60daysbeforefiling;astatementofmonthlynetincomeandanyanticipatedincreaseinincomeorexpensesafterfiling;andarecordofanyinterestthedebtorhasinfederalorstatequalifiededucationortuitionaccounts.11U.S.C.§521.Thedebtormustfileevidenceofcurrentandsufficientliabilityandpropertyinsurancewithrespecttoanyrealestateormotorvehiclethatthedebtorhasaninterestin.3Thisdoesnotincludeinsurancethatmayhavebeenobtainedbyapartyholdingasecurityinterestintheproperty.

Thedebtormustprovidethechapter13casetrusteewithacopyofthetaxreturnortranscriptsforthemostrecenttaxyearaswellastaxreturnsfiledduringthecase(includingtaxreturnsforprioryearsthathadnotbeenfiledwhenthecasebegan).Id.Creditorsmayalsorequestthisinformationfromthedebtor.11U.S.C.§521(e)(2)(A).Amarriedcouplemayfileajointpetitionorindividualpetitions.11U.S.C.§302(a).(TheOfficialFormsmay 3 SeeLocalRules,Appendix1,Chapter13Rule13‐2.

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bepurchasedatlegalstationerystoresordownloadedfromtheInternetatwww.uscourts.gov/bkforms/index.html.Theyarealsoavailablefromthecourt.)

Thecourtsmustchargeafilingfee.Informationaboutfilingfeesmaybefoundonthecourt’swebsite.Normallythefeesmustbepaidtotheclerkofthecourtuponfiling.Withthecourt'spermission,however,theymaybepaidininstallments.28U.S.C.§1930(a);Fed.R.Bankr.P.1006(b);BankruptcyCourtMiscellaneousFeeSchedule,Item8.Thenumberofinstallmentsislimitedtofour,andthedebtormustmakethefinalinstallmentnolaterthan120daysafterfilingthepetition.Fed.R.Bankr.P.1006(b);seealso,LocalRule1006‐1,1006‐2.Forcauseshown,thecourtmayextendthetimeofanyinstallment,aslongasthelastinstallmentispaidnolaterthan180daysafterfilingthepetition.Id.Ifajointpetitionisfiled,onlyonefilingfeeandoneadministrativefeearecharged.Debtorsshouldbeawarethatfailuretopaythesefeesmayresultindismissalofthecase.11U.S.C.§1307(c)(2).

InordertocompletetheOfficialBankruptcyFormsthatmakeupthepetition,statementoffinancialaffairs,andschedules,thedebtormustcompilethefollowinginformation:

Alistofallcreditorsandtheamountsandnatureoftheirclaims;



Adetailedlistofthedebtor'smonthlylivingexpenses,i.e.,food,

clothing,shelter,utilities,taxes,transportation,medicine,etc.

Marriedindividualsmustgatherthisinformationfortheirspouseregardlessofwhethertheyarefilingajointpetition,separateindividualpetitions,orevenifonlyonespouseisfiling.Inasituationwhereonlyonespousefiles,theincomeandexpensesofthenon‐filingspouseisrequiredsothatthecourt,thetrusteeandcreditorscanevaluatethehousehold'sfinancialposition.

Whenanindividualfilesachapter13petition,animpartialtrusteeisappointedtoadministerthecase.11U.S.C.§1302.Insomedistricts,theU.S.trusteeorbankruptcyadministratorappointsastandingtrusteetoserveinallchapter13cases.28U.S.C.§586(b).Thechapter13trusteebothevaluatesthecaseandservesasadisbursingagent,collectingpaymentsfromthedebtorandmakingdistributionstocreditors.11U.S.C.§1302(b).

Filingthepetitionunderchapter13"automaticallystays"(stops)mostcollectionactionsagainstthedebtororthedebtor'sproperty.11U.S.C.§362.Filingthepetitiondoesnot,however,staycertaintypesofactionslistedunder11U.S.C.§362(b),andthestaymaybeeffectiveonlyforashorttimeinsomesituations.Seee.g.,11U.S.C.§362(c).Thestayarisesbyoperationoflawandrequiresnojudicialaction.Aslongasthestayisineffect,creditorsgenerallymaynotinitiateorcontinuelawsuits,wagegarnishments,orevenmaketelephonecallsdemandingpayments.Thebankruptcyclerkgivesnoticeofthebankruptcycasetoallcreditorswhosenamesandaddressesareprovidedbythedebtor.

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Chapter13alsocontainsaspecialautomaticstayprovisionthatprotectsco‐debtors.Unlessthebankruptcycourtauthorizesotherwise,acreditormaynotseektocollecta"consumerdebt"fromanyindividualwhoisliablealongwiththedebtor.11U.S.C.§1301(a).Consumerdebtsarethoseincurredbyanindividualprimarilyforapersonal,family,orhouseholdpurpose.11U.S.C.§101(8).

Individualsmayuseachapter13proceedingtosavetheirhomefromforeclosure.Theautomaticstaystopstheforeclosureproceedingassoonastheindividualfilesthechapter13petition.Theindividualmaythenbringthepast‐duepaymentscurrentoverareasonableperiodoftime.Nevertheless,thedebtormaystilllosethehomeifthemortgagecompanycompletestheforeclosuresaleunderstatelawbeforethedebtorfilesthepetition.11U.S.C.§1322(c).Thedebtormayalsolosethehomeifheorshefailstomaketheregularmortgagepaymentsthatcomedueafterthechapter13filing.

Between20and50daysafterthedebtorfilesthechapter13petition,thechapter13trusteewillholdameetingofcreditors.IftheU.S.trusteeorbankruptcyadministratorschedulesthemeetingataplacethatdoesnothaveregularU.S.trusteeorbankruptcyadministratorstaffing,themeetingmaybeheldnomorethan60daysafterthedebtorfiles.Fed.R.Bankr.P.2003(a).Duringthismeeting,thetrusteeplacesthedebtorunderoath,andboththetrusteeandcreditorsmayaskquestions.Thedebtormustattendthemeetingandanswerquestionsregardinghisorherfinancialaffairsandtheproposedtermsoftheplan.11U.S.C.§343.Ifamarriedcouplefilesajointpetition,theybothmustattendthecreditors'meetingandanswerquestions.

Inordertopreservetheirindependentjudgment,bankruptcyjudgesareprohibitedfromattendingthecreditors'meeting.11U.S.C.§341(c).Thepartiestypicallyresolveproblemswiththeplaneitherduringorshortlyafterthecreditors'meeting.Generally,thedebtorcanavoidproblemsbymakingsurethatthepetitionandplanarecompleteandaccurate,andbyconsultingwiththetrusteepriortothemeeting.

Inachapter13case,toparticipateindistributionsfromthebankruptcyestate,unsecuredcreditorsmustfiletheirclaimswiththecourtwithin90daysafterthefirstdatesetforthemeetingofcreditors.Fed.R.Bankr.P.3002(c).Agovernmentalunit,however,has180daysfromthedatethecaseisfiledfileaproofofclaim.11U.S.C.§502(b)(9).Creditorsshouldconsultwithcounseltoensurethattheirproofsofclaimsatisfytherequirementsoftherulesandthecode.Seee.g.,Fed.R.Bankr.P.3001,etseq.;LocalRule,Appendix1,Chapter13Rule13‐13.

Chapter13PlanandConfirmationHearing

Unlessthecourtgrantsanextension,thedebtormustfilearepaymentplanwiththepetitionorwithin15daysafterthepetitionisfiled.Fed.R.Bankr.P.3015.Aplanmustbesubmittedforcourtapprovalandmustprovideforpaymentsoffixedamountstothetrusteeonaregularbasis,typicallymonthly.Thetrusteethendistributesthefundstocreditorsaccordingtothetermsoftheconfirmedplan,whichmayoffercreditorslessthanfullpaymentontheirclaims.

Therearethreetypesofclaims:priority,secured,andunsecured.Priorityclaimsarethosegrantedspecialstatusbythe

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bankruptcylaw,suchasmosttaxesandthecostsofbankruptcyproceeding.5Securedclaimsarethoseforwhichthecreditorhastherighttakebackcertainproperty(i.e.,thecollateral)ifthedebtordoesnotpaytheunderlyingdebt.Incontrasttosecuredclaims,unsecuredclaimsaregenerallythoseforwhichthecreditorhasnospecialrightstocollectagainstparticularpropertyownedbythedebtor.

Theplanmustpaypriorityclaimsinfullunlessaparticularprioritycreditoragreestodifferenttreatmentoftheclaimor,inthecaseofadomesticsupportobligation,unlessthedebtorcontributesall"disposableincome"‐discussedbelow‐toafive‐yearplan.11U.S.C.§1322(a).

Ifthedebtorwantstokeepthecollateralsecuringaparticularclaim,theplanmustprovidethattheholderofthesecuredclaimreceiveatleastthevalueofthecollateral.Iftheobligationunderlyingthesecuredclaimwasusedtobuythecollateral(e.g.,acarloan),andthedebtwasincurredwithincertaintimeframesbeforethebankruptcyfiling,theplanmustprovideforfullpaymentofthedebt,notjustthevalueofthecollateral(whichmaybelessduetodepreciation).Paymentstocertainsecuredcreditors(i.e.,thehomemortgagelender),maybemadeovertheoriginalloanrepaymentschedule(whichmaybelongerthantheplan)solongasanyarrearageismadeupduringtheplan.Thedebtorshouldconsultanattorneytodeterminethepropertreatmentofsecuredclaimsintheplan.

5 Section507setsforth10categoriesofunsecuredclaimswhichCongresshas,forpublicpolicyreasons,givenpriorityofdistributionoverotherunsecuredclaims.

Theplanneednotpayunsecuredclaimsinfullaslongitprovidesthatthedebtorwillpayallprojected"disposableincome"overan"applicablecommitmentperiod,"andaslongasunsecuredcreditorsreceiveatleastasmuchundertheplanastheywouldreceiveifthedebtor'sassetswereliquidatedunderchapter7.11U.S.C.§1325.Inchapter13,"disposableincome"isincome(otherthanchildsupportpaymentsreceivedbythedebtor)lessamountsreasonablynecessaryforthemaintenanceorsupportofthedebtorordependentsandlesscharitablecontributionsupto15%ofthedebtor'sgrossincome.Ifthedebtoroperatesabusiness,thedefinitionofdisposableincomeexcludesthoseamountswhicharenecessaryforordinaryoperatingexpenses.11U.S.C.§1325(b)(2)(A)and(B).

The"applicablecommitmentperiod"dependsonthedebtor'scurrentmonthlyincome.Theapplicablecommitmentperiodmustbethreeyearsifcurrentmonthlyincomeislessthanthestatemedianforafamilyofthesamesize‐andfiveyearsifthecurrentmonthlyincomeisgreaterthanafamilyofthesamesize.11U.S.C.§1325(d).Theplanmaybelessthantheapplicablecommitmentperiod(threeorfiveyears)onlyifunsecureddebtispaidinfulloverashorterperiod.

Within30daysafterfilingthebankruptcycase,eveniftheplanhasnotyetbeenapprovedbythecourt,thedebtormuststartmakingplanpaymentstothetrustee.11U.S.C.§1326(a)(1).Ifanysecuredloanpaymentsorleasepaymentscomeduebeforethedebtor'splanisconfirmed(typicallyhomeandautomobilepayments),thedebtormustmakeadequateprotectionpaymentsdirectlytothesecuredlenderorlessor‐

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deductingtheamountpaidfromtheamountthatwouldotherwisebepaidtothetrustee.Id.

Creditorsmayobjecttoconfirmationoftheplaneither30daysafterthefirstdatesetofthefirstmeetingofcreditors,or30daysafterthereceiptofanamendedplan.TheprocedureisfoundintheLocalRules,Appendix1,Chapter13Rule13‐8.Nolaterthan45daysafterthemeetingofcreditors,thebankruptcyjudgemustholdaconfirmationhearinganddecidewhethertheplanisfeasibleandmeetsthestandardsforconfirmationsetforthintheBankruptcyCode.11U.S.C.§§1324,1325;seealso,LocalRule,Appendix1,Chapter13Rule13‐11.Creditorswillreceive25days'noticeofthehearingandmayobjecttoconfirmation.Fed.R.Bankr.P.2002(b).Whileavarietyofobjectionsmaybemade,themostfrequentonesarethatpaymentsofferedundertheplanarelessthancreditorswouldreceiveifthedebtor'sassetswereliquidatedorthatthedebtor'splandoesnotcommitallofthedebtor'sprojecteddisposableincomeforthethreeorfiveyearapplicablecommitmentperiod.

Ifthecourtconfirmstheplan,thechapter13trusteewilldistributefundsreceivedundertheplan"assoonasispracticable."11U.S.C.§1326(a)(2).Ifthecourtdeclinestoconfirmtheplan,thedebtormayfileamodifiedplan.11U.S.C.§1323.Thedebtormayalsoconvertthecasetoaliquidationcaseunderchapter7.611U.S.C.§1307(a).Ifthecourtdeclinestoconfirmtheplanorthemodifiedplanandinsteaddismissesthecaseorconvertthecasetochapter7,thecourtmayauthorize 6 Thereisafeechargedforconvertingacaseunderchapter13toacaseunderchapter7.Informationonfeesisavailableonthecourt’swebsite.

thetrusteetokeepsomefundsforcosts,butthetrusteemustreturnallremainingfundstothedebtor(otherthanfundsalreadydisbursedorduetocreditors).See11U.S.C.§1326(a)(2).

Occasionally,achangeincircumstancesmaycompromisethedebtor'sabilitytomakeplanpayments.Forexample,acreditormayobjectorthreatentoobjecttoaplan,orthedebtormayinadvertentlyhavefailedtolistallcreditors.Insuchinstances,theplanmaybemodifiedeitherbeforeorafterconfirmation.11U.S.C.§§1323,1329.Modificationafterconfirmationisnotlimitedtoaninitiativebythedebtor,butmaybeattherequestofthetrusteeoranunsecuredcreditor.11U.S.C.§1329(a).

MakingthePlanWork

Theprovisionsofaconfirmedplanbindthedebtorandeachcreditor.11U.S.C.§1327.Oncethecourtconfirmstheplan,thedebtormustmaketheplansucceed.Thedebtormustmakeregularpaymentstothetrusteeeitherdirectlyorthroughpayrolldeduction,whichwillrequireadjustmenttolivingonafixedbudgetforaprolongedperiod.Furthermore,whileconfirmationoftheplanentitlesthedebtortoretainpropertyaslongaspaymentsaremade,thedebtormaynotincurnewdebtwithoutconsultingthetrustee,becauseadditionaldebtmaycompromisethedebtor'sabilitytocompletetheplan.11U.S.C.§§1305(c),1322(a)(1),1327.

Ifthedebtorfailstomakethepaymentsdueundertheconfirmedplan,thecourtmaydismissthecaseorconvertittoaliquidationcaseunderchapter7oftheBankruptcyCode.11U.S.C.§1307(c).Thecourtmayalsodismissorconvertthe

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debtor'scaseifthedebtorfailstopayanypost‐filingdomesticsupportobligations(i.e.,childsupport,alimony),orfailstomakerequiredtaxfilingsduringthecase.11U.S.C.§§1307(c)and(e),1308,521.

PaymentstoCreditors

Planpaymentsaremadetothetrustee,andthetrusteedistributestheplanpaymentspursuanttothetermsoftheconfirmedchapter13plan.TheCourthasnotroleinthedisbursementofpayments.QuestionsaboutpaymentsshouldbemadedirectlytotheofficeoftheChapter13Trusteeassignedtothecase.


Thebankruptcylawregardingthescopeofthechapter13dischargeiscomplexandhasrecentlyundergonemajorchanges.Therefore,debtorsandcreditorsshouldconsultcompetentlegalcounselpriortofilingregardingthescopeofthechapter13discharge.

Achapter13debtorisentitledtoadischargeuponcompletionofallpaymentsunderthechapter13plansolongasthedebtor:(1)certifies(ifapplicable)thatalldomesticsupportobligationsthatcameduepriortomakingsuchcertificationhavebeenpaid;(2)hasnotreceivedadischargeinapriorcasefiledwithinacertaintimeframe(twoyearsforpriorchapter13casesandfouryearsforpriorchapter7,11and12cases);and(3)hascompletedanapprovedcourseinfinancialmanagement(iftheU.S.trusteeorbankruptcyadministratorforthedebtor'sdistricthasdeterminedthatsuchcoursesareavailabletothedebtor).11U.S.C.§1328.

Thecourtwillnotenterthedischarge,however,untilitdetermines,afternoticeandahearing,thatthereisnoreasontobelievethereisanypendingproceedingthatmightgiverisetoalimitationonthedebtor'shomesteadexemption.11U.S.C.§1328(h).

Thedischargereleasesthedebtorfromalldebtsprovidedforbytheplanordisallowed(undersection502),withlimitedexceptions.Creditorsprovidedforinfullorinpartunderthechapter13planmaynolongerinitiateorcontinueanylegalorotheractionagainstthedebtortocollectthedischargedobligations.

Asageneralrule,thedischargereleasesthedebtorfromalldebtsprovidedforbytheplanordisallowed,withtheexceptionofcertaindebtsreferencedin11U.S.C.§1328.Debtsnotdischargedinchapter13includecertainlongtermobligations(suchasahomemortgage),debtsforalimonyorchildsupport,certaintaxes,debtsformostgovernmentfundedorguaranteededucationalloansorbenefitoverpayments,debtsarisingfromdeathorpersonalinjurycausedbydrivingwhileintoxicatedorundertheinfluenceofdrugs,anddebtsforrestitutionoracriminalfineincludedinasentenceonthedebtor'sconvictionofacrime.Totheextentthattheyarenotfullypaidunderthechapter13plan,thedebtorwillstillberesponsibleforthesedebtsafterthebankruptcycasehasconcluded.Debtsformoneyorpropertyobtainedbyfalsepretenses,debtsforfraudordefalcationwhileactinginafiduciarycapacity,anddebtsforrestitutionordamagesawardedinacivilcaseforwillfulormaliciousactionsbythedebtorthatcausepersonalinjuryordeathtoapersonwillbedischargedunlessacreditortimelyfilesandprevailsinanactiontohavesuch

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debtsdeclarednondischargeable.11U.S.C.§§1328,523(c);Fed.R.Bankr.P.4007(c).

Thedischargeinachapter13caseissomewhatbroaderthaninachapter7case.Debtsdischargeableinachapter13,butnotinchapter7,includedebtsforwillfulandmaliciousinjurytoproperty(asopposedtoaperson),debtsincurredtopaynondischargeabletaxobligations,anddebtsarisingfrompropertysettlementsindivorceorseparationproceedings.11U.S.C.§1328(a).

TheChapter13HardshipDischarge

Afterconfirmationofaplan,circumstancesmayarisethatpreventthedebtorfromcompletingtheplan.Insuchsituations,thedebtormayaskthecourttogranta"hardshipdischarge."11U.S.C.§1328(b).Generally,suchadischargeisavailableonlyif:(1)thedebtor'sfailuretocompleteplanpaymentsisduetocircumstancesbeyondthedebtor'scontrolandthroughnofaultofthedebtor;(2)creditorshavereceivedatleastasmuchastheywouldhavereceivedinachapter7liquidationcase;and(3)modificationoftheplanisnotpossible.Injuryorillnessthatprecludesemploymentsufficienttofundevenamodifiedplanmayserveasthebasisforahardshipdischarge.Thehardshipdischargeismorelimitedthanthedischargedescribedaboveanddoesnotapplytoanydebtsthatarenondischargeableinachapter7case.11U.S.C.§523.

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GLOSSARY

ADVERSARYPROCEEDING

AlawsuitarisinginabankruptcycasethatiscommencedbythefilingofacomplaintintheBankruptcyCourt.

AFFIDAVIT

Awrittenstatementoffacts,confirmedbytheoathtakenbeforeanofficerhavingauthoritytoadministersuchoath(suchasanotarypublic)oraffirmationofthepartyingmakingit.SeealsoVERIFICATION.

ANSWER

Adefendant’sresponsetoacomplaintfiledinanadversaryproceeding.Sincethedefendantmaybeaplaintiff,butalsoadefendantincounterclaim,theresponseisalsocalledanAnswer.

APPELLANT

Thepartywhofilesandseeksanappealofajudge’sdecision.

APPELLEE

Thepartagainstwhomtheappealhasbeentaken.Theappelleeisthepartywhohasnointerestinobjectingtothecourt’sjudgment,decisionororder.

APPLICATION

Aformalrequest,usuallyinwriting,tothecourttograntcertainrelief.Seealso,MOTION.

BARDATE

Traditionallythelastdatesettotakeaspecificaction.

CONFIRMATION

Approvalofaplanforadebtortopaycreditorsprovidedthatthespecificcriteriaaremet.

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CONTINGENTCLAIM

Aclaimthatmaybeowedbythedebtorundercertaincircumstances,forexample,wherethedebtorisacosigneronanotherperson’sloanandthatpersonfailstopay.

DISCOVERY

Theprocesswherepartiesexchangeandobtaininformationabouttheirrespectivepositions.SeeFed.R.Bankr.P.7026,etseq.

DISMISSAL

Anorderorjudgmentterminatingamotion,adversaryproceedingorbankruptcycase.

DISMISSALWITHPREJUDICE

Anorderorjudgmentterminatingamotion,adversaryproceedingorbankruptcycasethatprohibitsthepartyfrombringingthesamecase,claimorcauseofactionagain,orforaspecificperiodoftime(seee.g.§109(g)).

EXECUTORYCONTRACTORLEASE

Contractsorleasesunderwhichbothpartiestotheagreementhavedutiesremainingtobeperformedorhavenotbeenfullycompleted.Ifacontractorleaseisexecutory,adebtormaycontinuetofulfillthetermsofthecontractorlease(“assume”it)orchoosetocancelthecontractorlease(“reject”it).Examplesofanexecutorycontractare:aleaseforaresidence,carorequipment;anemploymentagreement;ahomeimprovementcontract;aservicecontract;oracontractfordeliveryofgoodsinthefuture.

FRAUDULENTCONVEYANCE

Atransferofdebtor’spropertymadewithintenttodefraudorforwhichthedebtorreceiveslessthanthetransferredproperty’svalue.

INSIDER

Arelative,friend,co‐workerorotherpersonofcloserelationofanindividualdebtororapersonwithacloserelationshiptothedebtor.

JURISDICTION

ThelegalauthoritytheCourthastohearanddecideacase.

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LIEN

Achargeuponspecificpropertydesignedtosecurepaymentfromadebtororperformanceofanobligation.

LIQUIDATE

Toconvertassetsintocash.

LIQUIDATEDCLAIM

Acreditor’sclaimforafixedamountofmoney.

MOTION

AnapplicationforrelieforrequestforanorderoftheCourtpresentedtotheCourt.Certainmotionshavearesponsedeadlinebywhichanotherpartyshallrespondorobjecttothereliefrequestedinthemotion.

MOTIONFORRELIEFFROMSTAY

Arequestbyacreditorforanorderterminatingand/orlimitingtheautomaticstaytoenablethecreditortotakeanactionthatwouldotherwisebeprohibitedbytheautomaticstay.

NONDISCHARGEABLEDEBT

Adebtthatwillnotbesubjecttothedischarge.See11U.S.C.§§523(a),1328(a).

OBJECTIONTODISCHARGE

Anobjection,filedbyapartyininterest,tothedebtorbeingreleasedfrompersonalliabilityforanyoralldebts.ThisisbroughtbyanADVERSARYPROCEEDING.

OBJECTIONTOEXEMPTION

Atrustee’sorcreditor’sobjectiontoadebtor’sattempttoclaimcertainpropertyasexempt.

ORDER

AnorderisajudicialdecreeresolvinganissueorquestionraisedbeforetheCourtthatgrantsrelief,deniesrelief,ordirectsapartytoperformanactionortorefrainfromtakingaction.

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ORDERFORRELIEF

Aninjunctionthatstopsallproceedingsagainstthedebtorandthedebtor’sproperty.Theorderforrelief,orautomaticstayiseffectiveimmediatelyuponthefilingofavoluntarypetition,subjecttothelimitationssetforthin§362.

PARTYININTEREST

Apartywhoisactuallyandsubstantiallyinterestedinthesubjectmatter,asdistinguishedfromonewhohasonlyanominalortechnicalinterestinit.

PLEADING

Awrittendocumentwhereapartyallegesand/orcounterallegesfactsgivingrisetoalegalactionorrequestforrelief.

PREFERENCE

Certainpaymentsortransfersofadebtor’spropertytoacreditorwithin90daysbeforethefilingofthebankruptcycasemaybeconsideredpreferential,andatrusteemayseektorecoverthosepaymentsonbehalfoftheestate.See§547.

PRIORITYCLAIM

Aclaimthatisentitledtobepaidbeforegeneralunsecuredclaims.See§507.

PROOFOFCLAIM

Awrittenstatementidentifyingtheamountandreasonadebtorowesacreditormoney.SeeOfficialForm10.

REAFFIRMATIONAGREEMENT

Anagreementbetweenadebtorandacreditorinwhichthedebtoragreestopayalloraportionofadebtthatwouldbeotherwisedischargeable.

REDEMPTION

Wherethedebtorpaysthecreditorthefullcurrentor“marketvalue”ofpropertythatissecuredbyapurchasemoneysecurityagreement.Inexchange,thelienonthepropertyisextinguished.

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SETOFF

Aclaimbyadebtorthatthecreditorowesthedebtormoneywhichshouldbesubtractedfromtheamountclaimedbycreditor.Byclaimingasetoffthedebtordoesnotnecessarilydisputethecreditor’sclaim,buthe/sheclaimstherighttoprovethatthecreditoroweshim/heranamountofmoneyfromsomeothertransactionandthattheamountshouldbedeductedfromthecreditor’sclaim.

STIPULATION

Avoluntaryagreementbetweenopposingparties.

SUMMONS

Anofficialcourtdocumentinformingthepartyservedthatanactionhasbeenfiledagainstthem,thecourtwherethesummonsoriginatedandthatthepartyisrequiredtoappear,onthedateindicatedonthesummons,andanswerthecomplaintinsuchaction.

TRANSCRIPT

AwrittenrecordpreparedbythecourtreporteroftheproceedingsthatoccurredinCourt.

UNITEDSTATESTRUSTEE

AnofficeroftheDepartmentofJusticewhosupervisestrusteesandtheadministrationofbankruptcyestates.TheU.S.Trusteeappointstrustees,andmonitorsplans,disclosurestatements,creditors’committees,applicationsforcompensation,andtheprocessofbankruptcycase,inadditiontoperformingotherstatutoryduties(see28U.S.C.§586).

UNDERSECUREDCLAIM

Aclaimsecuredbypropertythathasavaluelessthantheamountowed.

UNLIQUIDATEDCLAIM

Aclaimforwhichaspecificvaluehasnotbeendetermined.

UNSCHEDULEDDEBT

AdebtthatshouldhavebeenlistedintheschedulesfiledwiththeCourtbutwasnot.

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UNSECUREDCLAIM

Aclaimwithrespecttoadebt,thepaymentofwhichisnotbackedupbycollateraloralienonpropertyofthedebtor.

UNSECUREDDEBT

Afinancialobligationthatisnotbackedbyasecurityagreementoralienonpropertyofthedebtor.

VACATE

Tocancel,annulorrenderofnoeffect.Ifajudgmentororderisvacated,itisasiftheorderorjudgmentwasneverentered.

VENUE

Theproperlocalityofalegalproceeding.

VERIFICATION

Confirmationofthecorrectness,truth,orauthenticityofacomplaint,statementordocument.FederalRulesofBankruptcyProcedure1008requiresthatbankruptcypetitions,lists,schedules,statements,andamendmentstobeverifiedasprovidedin28U.S.C.§1746.

ForadditionaldefinitionsoftermsusedinBankruptcy,pleasereferto11U.S.C.§101.

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UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS

EASTERN DIVISION

_________________________________________

In re:

JOHN AND MARY DOE, CHAPTER 7 Case no. 13-66233 (ABC) Debtors. _________________________________________

NOTICE OF APPERANCE AND REQUEST FOR NOTICE

Please take notice that John Smith, Creditor in the above-captioned case, hereby requests that

notice of all matters arising in this case of which notice is sent to any creditor, party in interest, creditor’s

committee or a member of any creditors’ committee be sent to:

John Smith 424 Main Street Boston, MA 02000 DATED:__________ Respectfully submitted: __________________________________ John Smith 424 Main Street Boston, MA 02000

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B10 (Official Form 10) (04/13)

UNITED STATES BANKRUPTCY COURT PROOF OF CLAIM

Name of Debtor: Case Number:

COURT USE ONLY

NOTE: Do not use this form to make a claim for an administrative expense that arises after the bankruptcy filing. You may file a request for payment of an administrative expense according to 11 U.S.C. § 503.

Name of Creditor (the person or other entity to whom the debtor owes money or property):

Name and address where notices should be sent:

Telephone number: email:

Check this box if this claim amends a previously filed claim.

Court Claim Number:______________ (If known)

Filed on:_____________________

Name and address where payment should be sent (if different from above):

Telephone number: email:

Check this box if you are aware that anyone else has filed a proof of claim relating to this claim. Attach copy of statement giving particulars.

1. Amount of Claim as of Date Case Filed: $_______________________________

If all or part of the claim is secured, complete item 4.

If all or part of the claim is entitled to priority, complete item 5.

Check this box if the claim includes interest or other charges in addition to the principal amount of the claim. Attach a statement that itemizes interest or charges.

2. Basis for Claim: _________________________________________________________________ (See instruction #2)

3. Last four digits of any number by which creditor identifies debtor:

3a. Debtor may have scheduled account as:

_____________________________ (See instruction #3a)

3b. Uniform Claim Identifier (optional):

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ (See instruction #3b)

4. Secured Claim (See instruction #4) Check the appropriate box if the claim is secured by a lien on property or a right of setoff, attach required redacted documents, and provide the requested information.

Nature of property or right of setoff: Real Estate Motor Vehicle OtherDescribe:

Value of Property: $________________

Annual Interest Rate_______% Fixed or Variable(when case was filed)

Amount of arrearage and other charges, as of the time case was filed, included in secured claim, if any:

$__________________

Basis for perfection: _______________________________________

Amount of Secured Claim: $__________________

Amount Unsecured: $__________________

5. Amount of Claim Entitled to Priority under 11 U.S.C. § 507 (a). If any part of the claim falls into one of the following categories, check the box specifying the priority and state the amount.

Domestic support obligations under 11 U.S.C. § 507 (a)(1)(A) or (a)(1)(B).

Wages, salaries, or commissions (up to $12,475*) earned within 180 days before the case was filed or the debtor’s business ceased, whichever is earlier – 11 U.S.C. § 507 (a)(4).

Contributions to an employee benefit plan – 11 U.S.C. § 507 (a)(5).

Amount entitled to priority:

$______________________ Up to $2,775* of deposits toward purchase, lease, or rental of property or services for personal, family, or household use – 11 U.S.C. § 507 (a)(7).

Taxes or penalties owed to governmental units – 11 U.S.C. § 507 (a)(8).

Other – Specify applicable paragraph of 11 U.S.C. § 507 (a)(__).

*Amounts are subject to adjustment on 4/01/16 and every 3 years thereafter with respect to cases commenced on or after the date of adjustment.

6. Credits. The amount of all payments on this claim has been credited for the purpose of making this proof of claim. (See instruction #6)

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B10 (Official Form 10) (04/13) 27. Documents: Attached are redacted copies of any documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments, mortgages, security agreements, or, in the case of a claim based on an open-end or revolving consumer credit agreement, a statement providing the information required by FRBP 3001(c)(3)(A). If the claim is secured, box 4 has been completed, and redacted copies of documents providing evidence of perfection of a security interest are attached. If the claim is secured by the debtor's principal residence, the Mortgage Proof of Claim Attachment is being filed with this claim. (See instruction #7, and the definition of “redacted”.)

DO NOT SEND ORIGINAL DOCUMENTS. ATTACHED DOCUMENTS MAY BE DESTROYED AFTER SCANNING.

If the documents are not available, please explain:

8. Signature: (See instruction #8)

Check the appropriate box.

I am the creditor. I am the creditor’s authorized agent. I am the trustee, or the debtor, or their authorized agent. (See Bankruptcy Rule 3004.)

I am a guarantor, surety, indorser, or other codebtor. (See Bankruptcy Rule 3005.)

I declare under penalty of perjury that the information provided in this claim is true and correct to the best of my knowledge, information, and reasonable belief.

Print Name: _________________________________________________ Title: _________________________________________________ Company: _________________________________________________ Address and telephone number (if different from notice address above): _________________________________________________ _________________________________________________ _________________________________________________ Telephone number: email:

(Signature) (Date)

Penalty for presenting fraudulent claim Fine of up to $500,000 or imprisonment for up to 5 years, or both. 18 U.S.C. §§ 152 and 3571.

INSTRUCTIONS FOR PROOF OF CLAIM FORM The instructions and definitions below are general explanations of the law. In certain circumstances, such as bankruptcy cases not filed voluntarily by the debtor,

exceptions to these general rules may apply. Items to be completed in Proof of Claim form

Court, Name of Debtor, and Case Number: Fill in the federal judicial district in which the bankruptcy case was filed (for example, Central District of California), the debtor’s full name, and the case number. If the creditor received a notice of the case from the bankruptcy court, all of this information is at the top of the notice.

Creditor’s Name and Address: Fill in the name of the person or entity asserting a claim and the name and address of the person who should receive notices issued during the bankruptcy case. A separate space is provided for the payment address if it differs from the notice address. The creditor has a continuing obligation to keep the court informed of its current address. See Federal Rule of Bankruptcy Procedure (FRBP) 2002(g).

1. Amount of Claim as of Date Case Filed:State the total amount owed to the creditor on the date of the bankruptcy filing. Follow the instructions concerning whether to complete items 4 and 5. Check the box if interest or other charges are included in the claim.

2. Basis for Claim: State the type of debt or how it was incurred. Examples include goods sold, money loaned, services performed, personal injury/wrongful death, car loan, mortgage note, and credit card. If the claim is based on delivering health care goods or services, limit the disclosure of the goods or services so as to avoid embarrassment or the disclosure of confidential health care information. You may be required to provide additional disclosure if an interested party objects to the claim.

3. Last Four Digits of Any Number by Which Creditor Identifies Debtor: State only the last four digits of the debtor’s account or other number used by the creditor to identify the debtor.

3a. Debtor May Have Scheduled Account As:Report a change in the creditor’s name, a transferred claim, or any other information that clarifies a difference between this proof of claim and the claim as scheduled by the debtor.

3b. Uniform Claim Identifier:If you use a uniform claim identifier, you may report it here. A uniform claim identifier is an optional 24-character identifier that certain large creditors use to facilitate electronic payment in chapter 13 cases.

4. Secured Claim: Check whether the claim is fully or partially secured. Skip this section if the

claim is entirely unsecured. (See Definitions.) If the claim is secured, check the box for the nature and value of property that secures the claim, attach copies of lien documentation, and state, as of the date of the bankruptcy filing, the annual interest rate (and whether it is fixed or variable), and the amount past due on the claim.

5. Amount of Claim Entitled to Priority Under 11 U.S.C. § 507 (a). If any portion of the claim falls into any category shown, check the appropriate box(es) and state the amount entitled to priority. (See Definitions.) A claim may be partly priority and partly non-priority. For example, in some of the categories, the law limits the amount entitled to priority.

6. Credits:An authorized signature on this proof of claim serves as an acknowledgment that when calculating the amount of the claim, the creditor gave the debtor credit for any payments received toward the debt.

7. Documents:Attach redacted copies of any documents that show the debt exists and a lien secures the debt. You must also attach copies of documents that evidence perfection of any security interest and documents required by FRBP 3001(c) for claims based on an open-end or revolving consumer credit agreement or secured by a security interest in the debtor’s principal residence. You may also attach a summary in addition to the documents themselves. FRBP 3001(c) and (d). If the claim is based on delivering health care goods or services, limit disclosing confidential health care information. Do not send original documents, as attachments may be destroyed after scanning.

8. Date and Signature:The individual completing this proof of claim must sign and date it. FRBP 9011. If the claim is filed electronically, FRBP 5005(a)(2) authorizes courts to establish local rules specifying what constitutes a signature. If you sign this form, you declare under penalty of perjury that the information provided is true and correct to the best of your knowledge, information, and reasonable belief. Your signature is also a certification that the claim meets the requirements of FRBP 9011(b). Whether the claim is filed electronically or in person, if your name is on the signature line, you are responsible for the declaration. Print the name and title, if any, of the creditor or other person authorized to file this claim. State the filer’s address and telephone number if it differs from the address given on the top of the form for purposes of receiving notices. If the claim is filed by an authorized agent, provide both the name of the individual filing the claim and the name of the agent. If the authorized agent is a servicer, identify the corporate servicer as the company. Criminal penalties apply for making a false statement on a proof of claim.

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B10 (Official Form 10) (04/13) 3

__________DEFINITIONS__________ ______INFORMATION______

Debtor A debtor is the person, corporation, or other entity that has filed a bankruptcy case.

Creditor A creditor is a person, corporation, or other entity to whom debtor owes a debt that was incurred before the date of the bankruptcy filing. See 11 U.S.C. §101 (10).

ClaimA claim is the creditor’s right to receive payment for a debt owed by the debtor on the date of the bankruptcy filing. See 11 U.S.C. §101 (5). A claim may be secured or unsecured.

Proof of Claim A proof of claim is a form used by the creditor to indicate the amount of the debt owed by the debtor on the date of the bankruptcy filing. The creditor must file the form with the clerk of the same bankruptcy court in which the bankruptcy case was filed.

Secured Claim Under 11 U.S.C. § 506 (a)A secured claim is one backed by a lien on property of the debtor. The claim is secured so long as the creditor has the right to be paid from the property prior to other creditors. The amount of the secured claim cannot exceed the value of the property. Any amount owed to the creditor in excess of the value of the property is an unsecured claim. Examples of liens on property include a mortgage on real estate or a security interest in a car. A lien may be voluntarily granted by a debtor or may be obtained through a court proceeding. In some states, a court judgment is a lien.

A claim also may be secured if the creditor owes the debtor money (has a right to setoff).

Unsecured Claim An unsecured claim is one that does not meet the requirements of a secured claim. A claim may be partly unsecured if the amount of the claim exceeds the value of the property on which the creditor has a lien.

Claim Entitled to Priority Under 11 U.S.C. § 507 (a) Priority claims are certain categories of unsecured claims that are paid from the available money or property in a bankruptcy case before other unsecured claims.

RedactedA document has been redacted when the person filing it has masked, edited out, or otherwise deleted, certain information. A creditor must show only the last four digits of any social-security, individual’s tax-identification, or financial-account number, only the initials of a minor’s name, and only the year of any person’s date of birth. If the claim is based on the delivery of health care goods or services, limit the disclosure of the goods or services so as to avoid embarrassment or the disclosure of confidential health care information.

Evidence of PerfectionEvidence of perfection may include a mortgage, lien, certificate of title, financing statement, or other document showing that the lien has been filed or recorded.

Acknowledgment of Filing of ClaimTo receive acknowledgment of your filing, you may either enclose a stamped self-addressed envelope and a copy of this proof of claim or you may access the court’s PACER system (www.pacer.psc.uscourts.gov) for a small fee to view your filed proof of claim.

Offers to Purchase a ClaimCertain entities are in the business of purchasing claims for an amount less than the face value of the claims. One or more of these entities may contact the creditor and offer to purchase the claim. Some of the written communications from these entities may easily be confused with official court documentation or communications from the debtor. These entities do not represent the bankruptcy court or the debtor. The creditor has no obligation to sell its claim. However, if the creditor decides to sell its claim, any transfer of such claim is subject to FRBP 3001(e), any applicable provisions of the Bankruptcy Code (11 U.S.C. § 101 et seq.), and any applicable orders of the bankruptcy court.

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