“I Can’t Make My Plan Payments Right Now”: These Policy and Procedure Changes Might Help

Due to the present health and economic crises, we are making changes to the procedures and policies regarding motions to dismiss for nonpayment and probation orders in the EDKY.  These changes will remain effective until further notice.

I will not file motions to dismiss until debtors are at least four (4) months’ delinquent.  The present practice is to file motions to dismiss when the delinquency is at least two (2) months.

After I file a motion to dismiss, debtors can agree to become current within 30, 60, 90, 120, or 150 days.  The new agreed probation orders allowing 120 days or 150 days to become current will be posted on my website by Monday, March 23.  Update:  You can use this Word form that gives you a drop-down option to choose 30, 60, 90, 120, or 150 days to be current, or you can use this PDF-fillable form and insert one of the options. 

Paragraph (3) of Local Form 3070-1(b), the Probation Order Regarding Chapter 13 Plan Payments, and our agreed probation orders, will be changed to add “Unless the Court orders otherwise . . . .”  This will provide some flexibility to alter the terms of the probation order as needed on a case by case basis before I have to tender a probation dismissal order when the debtor misses or is late with a payment.  For example, if the debtor needs an extra 2 weeks to make a particular payment and I have no reason to object, that can be accomplished quickly by an agreed order.

If the debtor becomes current after a motion to dismiss is filed but before the hearing, a probation order will no longer be required when I withdraw my motion to dismiss.

I will not object to any motion asking that the debtor’s plan payments be suspended for up to five (5) months.  I prefer that motions to suspend specify how those suspended payments will be made up (if at all), but I will not object even if no cure is provided.  We can deal with any feasibility problems created by the suspension at a later date.

We cannot do agreed orders to suspend payments because a secured creditor might not be adequately protected and should have the opportunity to object.  However, I see no reason why you cannot request that the objection period be shortened to 7 days.

Even if the debtor is already under a probation order, I will not object to a motion to suspend plan payments.

As to existing probation orders, if the deadline for becoming current has not expired, I am filing motions to extend the deadline for becoming current by 60 days.   Those motions will be filed early next week.

None of these changes will affect a creditor’s right to seek dismissal, relief from stay, or other appropriate relief.

We hope these changes will help struggling debtors remain in chapter 13 if that is their wish.