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Bankruptcy Chat: Support for Restyled Bankruptcy Rules

During a recent January meeting of the Judicial Conference’s Committee on Rules of Practice and Procedure, a subcommittee leading an initiative to “restyle” the Bankruptcy Rules reported overwhelming support of the effort by those surveyed. However, the Restyling Subcommittee cautioned that significant concerns were raised regarding the protection of certain terms of art used in bankruptcy and the danger of unintended consequences of restyling. The proposed restyling is similar to changes made in recent years to other federal rules that, according to the Committee, have made the rules “simpler, more understandable and easier to use.”

The Subcommittee sent the survey to bankruptcy judges, clerks, and bankruptcy organizations, such as the NCBJ, NACBA, CLLA, NABT, NACTT, ABI, and ABA. The survey also was posted on the website. More than 300 people responded to the survey, including 40 percent of bankruptcy judges and about 50 percent of bankruptcy clerks, according to the report. The survey was drafted in part by the Federal Judicial Center and included a sample restyled version of Rule 4001(a).

The Subcommittee reported that over two-thirds of all respondents in every category supported the idea of restyling the Bankruptcy Rules. The most frequent benefit identified by respondents was that restyling could make the rules clearer and easier to understand, particularly by breaking down long sentences and paragraphs into more manageable components. Many respondents noted that the sample restyled rule provided with the survey was much clearer than the current rule.

The most frequently cited drawback was the potential for restyling to alter the substance of rules while attempting to make only stylistic changes or that case law based on interpretation of the original language of the rule would be called into question. The Subcommittee noted the importance of keeping the restyled rules consistent with the statutory language and terms of art used in bankruptcy practice even when that language or terminology does not comport with best stylistic practices.

The “sheer” quantity of resources that could be involved in the rules restyling process was the next most frequently cited drawback. Clerks in particular noted the additional burden that would be placed on courts because of the need to revise local rules and procedures to make them consistent with restyled rules.

Given the strong support voiced by survey respondents for the restyling project, the Subcommittee determined that the project to restyle the Bankruptcy Rules should go forward. However, the Subcommittee stressed that final decisions on whether to recommend changes to the Bankruptcy Rules will rest with the full Committee on Rules of Practice and Procedure.

Revised Bankruptcy Dollar Amounts

Dollar amounts in several Bankruptcy Code sections and official bankruptcy forms will be adjusted for inflation effective April 1, 2019. The adjustments affect Official Forms 106C, 107, 122A-2, 122C-2, 201, 207, and 410 and Director’s Forms 2000 and 2830. The adjusted dollar amounts also affect:

  • The eligibility of a debtor to file under Chapter 12 or 13
  • The definition of a “small business debtor”
  • Exemption amounts
  • Priority claims
  • The calculation of the “means test”
  • Chapter 13 plan duration
  • Claim minimums to commence an involuntary bankruptcy case
  • Minimum value for trustee avoidance actions
  • Value of nondischargeable “luxury goods and services”

The dollar adjustments reflect the change in the Consumer Price Index for All Urban Consumers published by the U.S. Department of Labor for the three-year period ending December 31, 2018, and are rounded to the nearest $25 — Learn More