Cite as: Keith M. Lundin, Lundin On Chapter 13, § 53.17, at ¶ ____, LundinOnChapter13.com (last visited __________).
BAPCPA amended § 342 of the Code to create a new but incomplete statutory definition of “effective notice” in bankruptcy cases.1 New § 342 mandates that many notices by the debtor and by the court in Chapter 13 cases must be sent to addresses that creditors supplied to the debtor before the bankruptcy case2 or to addresses that creditors file with the bankruptcy court in which the Chapter 13 case is pending3 or to the address specified by the creditor in a filing in any bankruptcy court.4
Remarkably absent from new § 342 is any mention of notices by the Chapter 13 trustee. Although the words are not always clear or used consistently, new § 342 states several circumstances in which debtors and courts must give notice to creditors at a specific address else notice will not be “effective” unless “brought to the attention” of the creditor in the manner detailed in the statute.5 There are potentially bad consequences for everyone involved in a Chapter 13 case when notice is not effective.
Chapter 13 practitioners know that Chapter 13 trustees are often the source of important notices in Chapter 13 cases. Though practice varies from district to district, it is common for Chapter 13 trustees to give notice to all creditors of the filing of the case, of the content of the proposed plan, of the dates set for the meeting of creditors and for confirmation of a plan and the like. These notice-giving responsibilities are delegated to the Chapter 13 trustee by the bankruptcy court in many districts because historically Chapter 13 trustees had better technology than did the clerks of the bankruptcy courts. By processing a Chapter 13 filing from the inception, the trustee could more easily accumulate and maintain creditor addresses for noticing purposes. In various places, the Bankruptcy Rules authorize the bankruptcy court to designate the Chapter 13 trustee to give notice.6
Although new § 342 does not mention the Chapter 13 trustee, it is reasonable to speculate that the statutory notice provisions in § 342 will be applied to Chapter 13 trustees—at least when the trustee gives a notice that the Code or Rules contemplate will be given by the debtor or the court. This is not a certain outcome given that “effective notice” is only partially defined in § 342 and the interaction of this new notion of statutory notice with other provisions of the Code and Rules is unexplored by the courts. But Chapter 13 trustees do not want to be responsible for giving notices that fail to be effective when a bankruptcy court determines that new § 342 was applicable. To minimize that bad outcome, Chapter 13 trustees are likely to attempt to apply the statutory notice rules in new § 342 whenever the trustee gives a notice to creditors in a Chapter 13 case.
Chapter 13 trustees are even more dependent than before BAPCPA on the names and addresses for creditors supplied by the debtor in the list of creditors and in the schedules.7 For example, only the debtor knows whether a creditor supplied a correspondence address in at least two communications within 90 days of the petition that contained the current account number of the debtor.8 The debtor and counsel have to figure out whether there were such communications and then list or schedule the correct correspondence address. Effective notice by the Chapter 13 trustee (or the court) to any creditor that jumped through all the § 342 hoops may be dependent on the quality of the debtor’s homework.
Chapter 13 trustees have additional duties with respect to addresses filed by creditors in specific Chapter 13 cases or filed with any bankruptcy court consistent with new § 342(e) and (f).9 New § 342(e) empowers a creditor at any time to “file with the court and serve on the debtor” a notice of address that will provide effective notice to that creditor in an identified Chapter 13 case.10 Foolishly, there is no requirement in new § 342(e) for service on the Chapter 13 trustee. The trustee will have to retrieve these designated addresses from the court or create some mechanism to ensure that addresses filed and served by creditors get to the trustee. In an ECF district, this may be as simple as arranging that any notice filing by a creditor under § 342(e) is populated to all of the appropriate places within the ECF system that are engaged when a Chapter 13 trustee gives a notice to creditors. Because the ECF system is not uniform across all districts and especially the noticing routines within ECF are not used the same ways in all districts, Chapter 13 trustees must investigate these questions on a district-by-district basis.
There may be similar issues with respect to the “national” notice of address authorized by new § 342(f). BAPCPA contemplates a (nonexistent) national noticing system that would permit any entity to file with any bankruptcy court a notice of address to be used by all bankruptcy courts or by particular bankruptcy courts, as specified by the entity, to provide notice in all pending Chapter 7 and Chapter 13 cases.11 Assuming the fantastic logistical problems can be solved, Chapter 13 trustees will have to position themselves within the loop of this new national noticing system so that any time the trustee gives a notice “required to be provided by a court,” the trustee will use the correct § 342(f)(1) national noticing address.
At this writing, the Administrative Office of the United States Courts and its Bankruptcy Noticing Center in Restin, Virginia, are piecing together the national noticing system required by new § 342(f). It should not be assumed that the interests of Chapter 13 trustees will be fully respected in what is sure to be a rocky implementation process. Until an accessible and reliable national noticing system is in place, it is not obvious how a Chapter 13 trustee will determine whether a creditor has filed a national notice address in any bankruptcy court for purposes of new § 342(f).
1 See § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
2 See 11 U.S.C. § 342(c)(2), discussed in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
3 See 11 U.S.C. § 342(e), discussed in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
4 See 11 U.S.C. § 342(f), discussed in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
5 See 11 U.S.C. § 342(g), discussed in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
6 See, e.g., Fed. R. Bankr. P. 2002(o) (“In a voluntary case commenced by an individual debtor whose debts are primarily consumer debts, the clerk or some other person as the court may direct shall give the trustee and all creditors notice by mail of the order for relief within 20 days from the date thereof.”) (emphasis added).
7 See §§ 34.3 [ List of Creditors and Addresses ] § 36.4 List of Creditors and Addresses and 374.1 [ List of Creditors—DSOs and § 342 Considerations ] § 36.5 List of Creditors—DSOs and § 342 Considerations.
8 See 11 U.S.C. § 342(c)(2)(A), discussed in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
9 See 11 U.S.C. § 342(e) and (f), discussed in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
10 11 U.S.C. § 342(e)(1), discussed in more detail in § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.
11 See § 365.1 [ Section 342: Notice in Chapter 13 Cases after BAPCPA ] § 4.3 Section 342: Notice What Didn’t Happen.