By Cheryl D. Cook, Attorney
As you may be aware, the Eastern District of Michigan adopted a new Model Chapter 13 Plan that became effective January 1, 2013. A copy of that model plan can be found at the Eastern District Bankruptcy Court website: http://www.mieb.uscourts.gov/sites/default/files/forms/Chapter_13_Model_Plan.pdf.
The new model plan contains a prominent notice advising creditors:
YOUR RIGHTS MAY BE AFFECTED. THIS PLAN MAY BE CONFIRMED AND BECOME BINDING WITHOUT FURTHER NOTICE OR HEARING UNLESS A TIMELY WRITTEN OBJECTION IS FILED. READ THIS DOCUMENT CAREFULLY AND SEEK THE ADVICE OF AN ATTORNEY.
In light of the U.S. Supreme Court decision in United Student Aid Funds, Inc. v Espinosa, 559 U. S. ___, 130 S.Ct. 1367, ___ L.Ed.2d. ___ (2010), this notice is intended to give creditors ample warning of the effect of the failure to timely object to plan treatment.
Within the time specified by the Court, creditors should carefully review the provisions of the plan (or forward it to their attorneys for review) to determine whether an objection is required. In the Eastern District of Michigan, the Court will actually schedule a specified deadline for objections. Failure to timely file an objection is likely to result in a waiver of that objection, so it is critical that creditors perform this review right away.
Under the section labeled “Additional Terms, Conditions and Provisions,” the model plan specifies the order of payment of claims by class, and it contains a provision specifying that Class 5.1 and Class 6.1 creditors will receive equal monthly payments to the extent that funds are available at the date of each disbursement.
In addition, according to discussions at a recent bankruptcy conference, Trustees administering this plan interpret the recent Rule 3002.1, read in conjunction with the new model plan, to require a timely proof of claim from secured creditors, as well as unsecured creditors.
In the past, secured creditors may have delayed filing a proof of claim in reliance on their perfected lien, and Trustees would pay those claims according to the debtor’s plan. The Trustees in the Eastern District of Michigan seem to be looking at Rule 3002.1 as imposing an affirmative requirement that such secured claim holders must file a formal proof of claim by the claims bar date, based on the new requirements for filing supplements to the proof of claim.
Cheryl is an attorney in Bankruptcy located in the Detroit office who can be reached at 248-989-3089 and firstname.lastname@example.org.
Fed. R. Bankr. P. 3002.1 requires creditors holding claims that are secured by a security interest in the debtor’s principal residence, and which are provided for under §1322(b)(5) of the debtor’s Chapter 13 Plan to file payment change notices and post-petition fee/expense/charge notices.