Cite as: Keith M. Lundin, Lundin On Chapter 13, § 1.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
There is good news and bad news about Chapter 13 as Lundin on Chapter 13 unfolds at LundinOnChapter13.com. In spite of the destructive and misguided changes to Chapter 13 worked by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),1 enlightened consumer bankruptcy attorneys continue to file between 250,000 and 300,000 Chapter 13 cases each year—somewhere between 30 percent and 40 percent of all consumer bankruptcy cases.
But Chapter 13 is stuck at those numbers and there is no geographic uniformity—people in need of debt relief easily access Chapter 13 in some jurisdictions and hardly at all in others. In some districts, Chapter 13 consistently accounts for 70 percent or more of consumer filings.2 In others, Chapter 13 fails to eke out even 10 percent of filings.3 This patchwork of feast and famine has persisted for decades. Smart people have sliced and diced the data without much success to find the cause(s) of the stunted and nonuniform growth of Chapter 13.4 The strength of “local culture”5 and the resistance of that notion to both study and change probably account for the greatest portion of the bad news in Chapter 13 today.
Lundin on Chapter 13 spans two distinct periods of statutory change for Chapter 13. Between October of 1979 and October of 2005, the Bankruptcy Reform Act of 19786 defined the statutory framework for Chapter 13 practice. In cases filed on or after October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed many key provisions of Chapter 13. Much but not all of the case law and secondary analysis of Chapter 13 prior to BAPCPA remains relevant. In a few respects, BAPCPA so changed Chapter 13—not always in comprehensible ways—that pre-BAPCPA decisions and analysis are of doubtful guidance.
Lundin on Chapter 13 knits together pre- and post-BAPCPA decisions and analysis when it makes sense to do so. Elsewhere, the pre-BAPCPA materials are retained for their historical significance with appropriate warnings about the continued vitality of the older precedents. In a third category of analysis, there are many places in Lundin on Chapter 13 where pre- and post-BAPCPA materials intertwine in uncertain ways because we just don’t yet know how the statutory changes in 2005 will ultimately affect outcomes, or not.
The destructive impact of BAPCPA on Chapter 13 in general can’t be overstated.7 The lobbyists and industry shills who drafted and sold BAPCPA to Congress in 2005 did not tell the truth. BAPCPA has profoundly injured the interests of debtors, creditors and the public. After more than half a decade, the data demonstrate the true effects of BAPCPA: higher costs for all who access bankruptcy; smaller distributions to creditors of all kinds; and no measurable impact on the fraud and dishonesty that supposedly pervaded the system before 2005.8 BAPCPA is a systemic failure. It can only be hoped that there will be another round of “bankruptcy reform” in our lifetimes to undo the mess BAPCPA made of a consumer bankruptcy system that was not broken.
There are a few bright spots on the horizon. A talented and incredibly hardworking Judicial Conference Advisory Committee on Bankruptcy Rules, for several years under the fine leadership of Eugene Wedoff, has been studying and revising Bankruptcy Rules and Forms to make the best that can be for consumer bankruptcy practitioners. This Advisory Committee has been unusually transparent and welcoming of ideas from the bankruptcy community. In 2011, the Advisory Committee produced changes to the filing and allowance of mortgage claims that have fundamentally improved the management of mortgages in Chapter 13 cases.9 A national form for the Chapter 13 plan was attempted10 together with important changes to several Bankruptcy Rules that coherently align the confirmation and claims allowance processes in Chapter 13 cases.11 Perhaps the creep toward a standard form for the Chapter 13 plan will begin to reverse decades of destructive local culture that has strangled the development of Chapter 13 programs in too many jurisdictions.
Lundin on Chapter 13 is available only online and only here at LundinOnChapter13.com. As before, every section is accompanied by a Case Updater that contains citations and summaries of cases relevant to that section that have not yet been integrated into the text. Always check the Updater to be sure you are aware of the latest word from the courts with respect to any Chapter 13 topic. Don't forget that the complete Legislative History of BAPCPA is now available to subscribers at LundinOnChapter13.com.
As always, your comments and suggestions are essential to what we do here at LundinOnChapter13.com. Please let us hear from you at Subscriber.Services@LundinOnChapter13.com.
1 Pub. L. No. 109-8, 119 Stat. 23 (2005).
2 See, e.g., W.D. Tenn., M.D. Ala. and S.D. Ga. at http://www.uscourts.gov/statistics/bankruptcystatistics.
3 See, e.g., N.D. Iowa, D. Idaho, and E.D. Okla. at http://www.uscourts.gov/statistics/bankruptcystatistics.
4 See, e.g., Sullivan, Warren & Westbrook, As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America (1989).
5 See Sullivan, Warren & Westbrook, The Persistence of Local Legal Culture: Twenty Years of Evidence from the Federal Bankruptcy Courts, 17 Harv. J.L. & Pub. Pol’y 801 (1994).
6 Pub. L. No. 95-598, 92 Stat. 2549 (1978).
7 See § 2.2 Brief History, Including “Legislative History,” of BAPCPA, § 3.1 Understanding Chapter 13 after BAPCPA, § 3.2 One: Those Who Can Pay Should Pay, § 3.3 Two: Don’t Trust Debtors, § 3.4 Three: Don’t Trust Judges, § 3.5 Four: Don’t Trust Lawyers, § 3.6 Five: Make the Door Smaller, § 3.7 Six: The Rich Fare Better Than the Poor, § 3.8 Seven: Unsecured Creditors Don’t Count, § 3.9 Eight: Debtors Must Beg for Relief, § 3.10 Nine: Malice or Incompetence?, § 3.11 Ten: The Prior Law Is Still There and § 3.12 Conclusion: The Job Ahead.
8 Lois R. Lupica, Am. Bankr. Inst., The Consumer Bankruptcy Creditor Distribution Study Final Report (2013).
10 See § 72.5 Form of Plan.
11 See § 121.2 Notice and Due Process Considerations, Including Claims Allowance and Valuation for discussion of the problems created by the misalignment of confirmation and the claims allowance process in Chapter 13 cases.