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Uniformity of Practice in Consumer Bankruptcy Cases

Posted by Content Manager on February 26th, 2018

This is the fourth post in a series describing UpRight’s recommendations to the ABI Commission on Consumer Bankruptcy. Start at the beginning.

The U.S. Constitution authorized Congress to enact uniform bankruptcy laws. But, though the U.S. Bankruptcy Code is a federal statute applicable in all U.S. states, bankruptcy law is far from uniform.

Courts across the 94 federal districts have created local rules, and different courts and appellate districts have interpreted bankruptcy law differently.

The U.S. Courts recently acted to address this issue with a model Chapter 13 plan, but the opt-out provisions of Federal Rule 3015 has undermined the effort to increase uniformity.

Uniformity of practice throughout the United States would promote scale, efficiency, and compliance, and would improve outcomes. The current inconsistency increases complexity and error rates, and introduces inefficiencies that stand in the way of providing the most effective and affordable service to bankruptcy petitioners. These issues are of particular concern in the many jurisdictions where attorneys routinely practice in more than one district. Some examples include:

  • The Chicago metropolitan area, where many attorneys practice in both Illinois and either Wisconsin or Indiana
  • The Cincinnati area, in which many attorneys represent clients in both Ohio and Kentucky
  • The Kansas City area, which covers areas of both Missouri and Kansas
  • The New York area, extending into to Connecticut and New Jersey
  • The Washington, D.C. area, including Maryland and Virginia

The Commission should recommend that Congress empower and direct the Bankruptcy Rules Committee to examine local rules nationwide to identify best practices. The best practices should be incorporated into the Federal Rules of Bankruptcy Procedure, and inconsistent local rules should be eliminated.

Simple changs such as uniformity in motion practices, more uniform application of “notice and hearing” procedures contemplated by the Bankruptcy Code, and even standardization of the form of documents, captions, and case numbering would go a long way toward simplifying bankruptcy practice and lowering costs.

Next Up: The Case for Allowing Post-Petition Payment of Attorney Fees in Chapter 7

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