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Changes to bankruptcy rules

Massachusetts creditors and debtors alike should know about the modifications made to the Federal Rules of Bankruptcy Procedure. The changes, which became effective on Dec. 1, 2017, pertain to Chapter 13 bankruptcy cases and can impact creditors who have judgment liens and secured and unsecured claims against the debtors in bankruptcy.

Secured creditors are now required to submit proof of claims in order for the claims to be recognized in the Chapter 13 plans. While the failure to file the proof of claim will not cancel the creditor's lien, no plan payments will be allocated to the creditor.

Creditors also have less time to file proofs of claims, which must be filed no more than 70 days after the bankruptcy was filed. The previous deadline was no more than 90 days after the meeting of creditors. Creditors who have claims that are secured by a primary residence have 50 extra days to provide supplemental documentation that verify the claims.

Debtors are now able to request that a creditor's judicial lien be removed in the same motion they file for their Chapter 13 plan. Previously, debtors had to submit the request in another motion. Notices of confirmation hearings will be issued to creditors 28 days before the hearing takes place. Objections to the hearings have to be filed no later than seven days before the hearing takes place. In order to have their secured debts declared satisfied, debtors can now file a motion at the end of their bankruptcy case. This is applicable to those filing Chapter 7, 12 or 13 bankruptcies.

While these new Chapter 13 rules don't have a significant effect on actions that filers need to take, they might benefit from them if their creditors are not paying attention. An attorney could explain additional ramifications of these rules to a client who is considering filing under this chapter.

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