Revised: July 3, 2007
CASES UPDATED: January 24, 2020
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 53.20, at ¶ ____, LundinOnChapter13.com (last visited __________).
To generate more useful bankruptcy data, BAPCPA enacted new 28 U.S.C. § 589b, which requires “uniform forms for final reports” from Chapter 13 trustees.1 The new uniform forms for final reports are mandated to contain:
(1) information about the length of time the case was pending;
(2) assets abandoned;
(3) assets exempted;
(4) receipts and disbursements of the estate;
(5) expenses of administration, including for use under section 707(b), actual costs of administering cases under chapter 13 of title 11;
(6) claims asserted;
(7) claims allowed; and
(8) distributions to claimants and claims discharged without payment, in each case by appropriate category and, in cases under chapters 12 and 13 of title 11, date of confirmation of the plan, each modification thereto, and defaults by the debtor in performance under the plan.2
The Attorney General is instructed by new 28 U.S.C. § 589b to issue rules with respect to these new uniform final reports. Together with the statutory requirements listed above, the anticipated rules will require Chapter 13 trustees to capture many new data points in every Chapter 13 case they administer. Substantial changes to existing information technology systems and to the management of Chapter 13 cases will be necessary to comply with the new statutory requirements and forthcoming rules.
Some of the information required by new 28 U.S.C. § 589b(d) will not be easy to gather in Chapter 13 cases. For example, new 28 U.S.C. § 589b(d)(8) requires Chapter 13 trustees to record and report the date of each default by the debtor in performance under a plan. This will be extraordinarily difficult. It is often not obvious whether or when a plan default has occurred. If the plan requires the debtor to pay $100 a month to the Chapter 13 trustee by payroll deduction, and an employer deducts and remits nothing in one month and $200 in the next, has there been a default by the debtor in performance under the plan? If so, when did it occur? If the plan permits payments by the debtor directly to a creditor3 and the debtor fails to make a payment directly to a creditor, how will the trustee record that default in performance under the plan and how will the date of that default be determined?4 Chapter 13 trustees will argue that debtors should not be permitted to make payments directly to creditors because allowing direct payments disables the trustee from performing the new statutory duty in 28 U.S.C. § 589b(d)(8).
New 28 U.S.C. § 589b(d)(5) requires Chapter 13 trustees to collect data with respect to the “actual costs of administering cases under chapter 13.” The “abuse” test in § 707(b)(2) allows individual debtors a deduction from current monthly income (CMI) for the “actual administrative expenses of administering a Chapter 13 plan for the district,” not to exceed 10 percent of payments.5 This deduction is allowed when a Chapter 13 debtor with CMI greater than applicable median family income must determine disposable income in accordance with § 707(b)(2)(A) and (B) at confirmation in a Chapter 13 case.6
It is not clear whether “actual administrative expenses of administering a chapter 13 plan for the district” in § 707(b)(2)(A)(ii)(III) means the same thing as the percentage fee allowed to a Chapter 13 trustee for compensation and expenses under 28 U.S.C. § 586(e).7 That new 28 U.S.C. § 589b(d)(5) directs Chapter 13 trustees to capture and report data on the actual costs of administering cases under Chapter 13 suggests that the deductible amount described in § 707(b)(2)(A)(ii)(III) and the amount allowed by the Attorney General under 28 U.S.C. § 586(e) are not necessarily the same or, at least, that Congress wants more information on the subject.
In tail-wagging-dog fashion, BAPCPA imposes on Chapter 13 trustees new data-gathering and reporting responsibilities that will have repercussions for all Chapter 13 practice. Ramping up to collect and report this new data will be enormously expensive and time consuming for Chapter 13 trustees. Debtors will inevitably be required to produce new and more information to enable the trustees to answer the new statute. It can only be hoped that the Attorney General, through the U.S. Trustee Program, will cooperate with Chapter 13 trustees to find the new resources that will be required.
1 See 28 U.S.C. § 589b(d).
2 28 U.S.C. § 589b(d).
3 See §§ 59.1 [ Make Payments to Creditors Unless Plan or Confirmation Order Provides Otherwise ] § 53.10 Make Payments to Creditors Unless Plan or Confirmation Order Provides Otherwise and 401.1 [ Preconfirmation Payments ] § 44.6 Preconfirmation Payments after BAPCPA.
4 Though hardly intended, this is another reason why Chapter 13 debtors should never make payments directly to creditors. See § 401.1 [ Preconfirmation Payments ] § 44.6 Preconfirmation Payments after BAPCPA.
5 See 11 U.S.C. § 707(b)(2)(A)(ii)(III), discussed in §§ 416.1 [ Compensation and Expenses of Chapter 13 Trustee ] § 54.2 Compensation and Expenses of Chapter 13 Trustee after BAPCPA and 482.1 [ Administrative Expenses, Sorta ] § 95.25 Administrative Expenses, Sorta.
6 See 11 U.S.C. § 1325(b)(2) and (3), discussed beginning at § 94.1 Big Picture: Too Many Issues.
7 See discussion of this issue in §§ 416.1 [ Compensation and Expenses of Chapter 13 Trustee ] § 54.2 Compensation and Expenses of Chapter 13 Trustee after BAPCPA and 482.1 [ Administrative Expenses, Sorta ] § 95.25 Administrative Expenses, Sorta.