COMMENTS OF THE NACBA violation of 28 U . S . C . § 2075 and FRBP 9029 . These excessive notices are not , by any means , required by the Supreme Court ’ s ruling in United Student Aid Funds v . Espinosa , 130 S . Ct . 1367 ( 2010 ), but that decision appears to be the basis for many of the lengthier portions of these model plans . We believe these notices are not only unnecessary , but are actually harmful to debtors , enlarge creditors ’ rights , and obscure the operative content of the plan .
NACBA urges that if the proposed rules are adopted , the comments include a reminder to avoid notices that duplicate parts of the 341 notice , explanations of the law , and restatements of data that are included in the petition or schedules . 3 . Adding to or deviating from model plan provisions The mandatory model plans have several different methods of accommodating ( or not ) the debtors ’ right to propose their own plans pursuant to 11 U . S . C . § 1321 . The most glaring violation of § 1321 appears in four jurisdictions , where debtors are strongly admonished against adding or changing any provisions in the model plan without first moving for and obtaining a court order permitting them . Thirteen model plans allowed editing the text throughout the plan , indicating the changes with boldface , underlines , or strike-outs . Four model plans did not seem to have any place to add provisions . The vast majority of the plans used language similar to the proposed National Plan , which limits the changes or additions to a specific section and voids any other changes in the plan . The treatment of additional provisions was unclear in seven plans . The ability of debtors to propose specific provisions and strikeout or change provisions within model plans is crucial . To effectively prevent debtors from so doing is an egregious violation of their basic bankruptcy rights .
Quite a few of the local rules mandating their model plans state that the debtor ’ s plan must “ substantially conform ” to the model plan – which gives the impression that the debtor is still allowed some leeway to propose his / her own plan , as provided in § 1321 . In practice many debtors ’ attorneys find that this rule provision is of no effect and the judges and trustees are not amenable to any deviation at all from the model plan .
As generally indicated in the Summary above , NACBA urges that if the proposed rules are adopted , local model plans be required to permit the debtor to edit , add , delete , and change the text of the plan , with clear notations of those changes ; and to prohibit the court and trustee from delaying plan confirmation or otherwise procedurally disadvantaging debtors who do this .
4 . Re-vesting provisions Re-vesting provisions are , to some , among the least “ interesting ” of the types of plan provisions ; however , they are extremely important to the outcome of many debtors ’ cases . The Code provides that unless otherwise provided in the plan , property of the estate revests in the debtor upon plan confirmation , but it permits the debtor a whole range of possibilities that are completely ignored by most mandatory model plans . 11 U . S . C . § 1322 ( b )( 9 ) permits the debtor to provide for vesting “ on confirmation of the plan or at a later time , in the debtor or in any other entity .” 77 % of the model plans either provided only one revesting provision or provided none , which would default to revesting on plan confirmation . 17 % offered two revesting options . Only 6 % of the model plans allowed the debtor to specify a revesting provision , like the National Model Plan does . The current group of mandatory model plans seriously abridge debtors ’ rights in this regard as well .
NACBA urges that if the proposed rules are adopted , local model plans be required to offer re-vesting options which include the ability for the debtor to describe his / her own provision .
5 . Specification of Projected
Disposable Income ( PDI ) and Best Interest of Creditors ( BIOC ) Test Calculations Many mandatory model plans require the debtor to state the results of the PDI and BIOC tests within the plan . However , some model plans go beyond that to specifying a formula and form to use to calculate those tests . Of the mandatory model plans , 17 % specify BIOC calculations that are arguably incorrect and 14 % of the mandatory model plans prescribe calculations for PDI or designate the use of PDI arguably incorrectly . Because the debtor is theoretically the proponent of the filed plan , s / he could well be bound by these calculations and results – even if they do not comply with the Code ( See Espinosa ).
NACBA urges that if the proposed rules are adopted , comments encourage the avoidance of mandatory worksheets specifying PDI and BIOC calculations .
6 . Methods of Determining Dividends on General Unsecured Claims Nationwide , the great variation in methods of specifying the dividends to be paid on general unsecured claims provided in mandatory model plans is almost beyond imagination . The following options – including combinations of them – are included in the mandatory model plans . Because some plans offer several options , the sum of the identified plan provisions exceeds the number of model plans . a . 26 plans specified or allowed specifying this option : “ funds left over after secured , priority , and administrative claims are paid ” [ on general unsecured claims ] b 26 other plans allowed specifying this option : “ funds left over after secured , priority , and administrative claims are paid ,” combined with one or more other option c . 24 plans specified : “ no less than __” d . 36 plans specified or allowed specifying : “$____”, a dollar dividend combined with one or more other option e . 2 plans allowed specifying : “$____”, a dollar dividend f . 33 plans specified or allowed specifying : “____%”, a percent
National Association of Consumer Bankruptcy Attorneys Winter 2016 CONSUMER BANKRUPTCY JOURNAL 7