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Changes in bankruptcy rules

Massachusetts residents who are filing for Chapter 13 bankruptcy should be aware of the new bankruptcy rules that became effective on December 1, 2017. The changes include modifications to federal rules regarding proper bankruptcy procedure and a new plan form.

According to the president of the American Bankruptcy Institute, although a nationwide Chapter 13 plan prohibits the use of a local plan form, the changes are an improvement. The changes will enhance the Chapter 13 bankruptcy process so that it will be more consistent throughout the country. It will also allow Chapter 13 plans to be confirmed and finalized more quickly.

People with a steady stream of income can file for Chapter 13 to resolve their debt and maintain ownership of their property. However, they are required to submit a three-to-five-year payment plan that uses their future income to repay part or all of their debts.

According to amended Rule 3015(c), unless there is a local plan form in place, Chapter 13 filers have to use the official form. Bankruptcy practitioners should verify with the rules, public notices and general orders of the local bankruptcy court whether they are to use the local form. Research has shown that out of 94 districts, 81 of them have elected to not use the new national form.

Amended Rule 3002(c) requires secure creditors to submit proof of claims for Chapters 7, 12 and 13. The claims must be filed 70 days after the bankruptcy petition.

A bankruptcy attorney may advise debtors who qualify for Chapter 13 about how the new bankruptcy rule changes might affect their opportunity to find debt relief. The attorney may assist with devising a payment plan that could pay off all debts within the timeframe allowed by the bankruptcy process.

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