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Consumer Bankruptcy Law and Practice: 2011 Advisory Committee Note on Form 10 (Supplement 2)

This form is new and applies in chapter 13 cases. It implements Rule 3002.1, which requires the holder of a claim secured by a security interest in the debtor’s principal residence—or the holder’s agent—to file a notice of all postpetition fees, expenses, and charges within 180 days after they are incurred. The notice must be filed as a supplement to the claim holder’s proof of claim, and it must be served on the debtor, debtor’s counsel, and the trustee.

Consumer Bankruptcy Law and Practice: About the Form

This form sets out the caption for the case. Pursuant to Federal Rules of Bankruptcy Procedure 9004(b) and 1005, Official Form 416A (formerly Form 16A) includes the title of the case, the debtor’s name, all names the debtor used within eight years prior to the commencement of the case, and the last four digits of the debtor’s Social Security or tax identification numbers. The full caption form also notes the chapter of the Bankruptcy Code under which the case is filed.

Consumer Bankruptcy Law and Practice: 2005–2007 Advisory Committee Note on Form 16A

The form is amended to require that the title of the case include all names used by the debtor within the last eight years in conformity with § 727(a)(8) as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23 (April 20, 2005), extending from six years to eight years the period during which a debtor is barred from receiving successive discharges. In conformity with Rule 9037, the filer is directed to provide only the last four digits of any individual debtor’s taxpayer-identification number.

Consumer Bankruptcy Law and Practice: About the Form

The short title form of caption is prescribed for general use in filing papers in bankruptcy cases. It should not be used on the petition, the notice of the meeting of creditors, the order of discharge, and the documents relating to a chapter 11 plan (Official Forms 101, 309, 312, 313, 314, 315, and 318), which require the full caption set out in Official Form 416A. See Fed. R. Bankr. P. 2002(m). The title specifies that this form can be used when section 342(c) of the Bankruptcy Code is not applicable.

Consumer Bankruptcy Law and Practice: 17.4.3.2 Exemptions for “Tools of Trade” and “Livestock”

The federal exemptions and almost all state-formulated exemptions provide protection for “tools of trade.”287 This category is of special interest to farmers, allowing exemption of the tools utilized in the farming operation.288 A minority of courts exempt farm implements as “tools of trade” only if they are smaller, hand-held tools,289 but the majority view is that farm equipment and implements may be exempted under a functional or “use” test subj

Consumer Bankruptcy Law and Practice: 17.4.3.3 Lien Avoidance Under Section 522(f)

Section 522(f) lien avoidance provisions for exempt property and tools of trade impaired by judicial liens and non-possessory, non-purchase money security interests are available for farmers under all bankruptcy chapters.297 In many cases, a farmer will be able to recapture some farm equipment and reduce the amount of repayment to a secured creditor because a blanket non-purchase money interest covers the equipment.298 However, lien avoidance in this situation will be limited to farm eq

Consumer Bankruptcy Law and Practice: 17.4.3.4 Section 552 Lien Dissolution

Section 552 governs the postpetition effect of a security interest, dissolving that interest with respect to most collateral obtained after filing. This protection is particularly important in farm bankruptcy in that most farm security agreements include an “after-acquired” property clause that provides that the security interest will attach to property that the debtor acquires in the future. Section 552(a) automatically cuts off the creditor’s security interest in certain after-acquired property.

Consumer Bankruptcy Law and Practice: 17.4.3.5.1 Introduction

A chapter 12 debtor-in-possession has the same powers to avoid liens and recapture property as trustees under chapters 7 and 11 and debtors-in-possession under chapter 11.317 These avoidance and recapture abilities are analyzed elsewhere in this treatise.318 This subsection concentrates on avoidance and recapture issues of special interest to farmers.

Consumer Bankruptcy Law and Practice: 17.4.3.5.3 Preferential transfers

Several kinds of transfers to farm creditors may be preferential, subject to recapture under section 547(b). Recovery of preferences can provide the farmer with needed working capital, can redistribute the debtor’s assets more equitably among creditors, or can go to satisfy secured debts.

Consumer Bankruptcy Law and Practice: 17.4.3.5.4 Avoidance of improperly perfected security interests and statutory liens

The chapter 12 debtor-in-possession also is entitled to use the “strong-arm powers” of a trustee, including the power to avoid unperfected security interests.332 Attorneys for farmers are well advised to check all creditors’ security interests to determine whether they have properly attached and were perfected.333

The debtor may also be able to avoid a statutory lien if the requirements of section 545 of the Code are met.334

Consumer Bankruptcy Law and Practice: 17.5.9 Other Plan Provisions

Section 1222(b)(11) specifically authorizes the inclusion of any appropriate provision in a chapter 12 plan so long as it does not contravene the confirmation standards of sections 1222 and 1225.701 This allows for quite a bit of creativity in fashioning a workable chapter 12 plan. Nevertheless, counsel should never let this creativity obscure the primary—and pragmatic—goal of confirmation.

Consumer Bankruptcy Law and Practice: 17.6 Denial of Confirmation

In the event confirmation of a chapter 12 plan is denied, the court may dismiss the case under 11 U.S.C. § 1208(c)(5).720 This is the anticipated route when it appears to the court that no feasible plan can be constructed or when confirmation standards cannot possibly be met given the factual circumstances of a case.

Consumer Bankruptcy Law and Practice: 17.7.1 Scope of the Chapter 12 Discharge

The chapter 12 discharge is a hybrid of some of the discharge provisions available in other chapters.724 Like chapters 7 and 11, but unlike chapter 13, the discharge in chapter 12 excepts debts that are nondischargeable pursuant to section 523(a).725 Like chapter 13, the chapter 12 discharge excepts long-term indebtedness when the maturity date is beyond the life of the chapter 12 plan.726 The chapter 12 discharge also excepts secured indebtedness

Consumer Bankruptcy Law and Practice: 17.7.3 Revocation of Discharge

Revocation of discharge in chapter 12 cases is addressed by section 1228(d). On request of a party in interest and notice and hearing within one year after discharge under this section, the court may revoke such discharge only if such discharge was obtained by the debtor through fraud, and the requesting party did not learn of such fraud until after the discharge was granted. Unlike chapter 11, in which the discharge is issued at confirmation, the discharge in a chapter 12 case is issued at the end of the case.