New Kansas Chapter 13 Bankruptcy Discharge Procedure Proposed

A new procedure for issuing chapter 13 bankruptcy discharges and administratively closing the cases is being considered in the U.S. Bankruptcy Court for the District of Kansas.  Here is a summary of the procedure from the minutes of the September 17, 2008, Bench and Bar Committee:

• About six months before anticipated plan completion the Chapter 13 Trustees will file a Notice of Plan Approaching Completion.
• If no Financial Management Certificate has been filed by Debtors, the Court’s case management computer software (CM/ECF) will send a notice to Debtor and Debtor(s)’ counsel reminding them that the Financial Management Certificate must be filed prior to making the last payment in a Chapter 13 plan.
• Upon completion of all plan payments, the Trustees will file a Notice of Chapter 13 Plan Completion.
• If no Financial Management Certificate has been filed, the Clerk’s office will issue a Notice of No Discharge, and, upon completion of administration, close the case without entry of a discharge.
• If the Financial Management Certificate has been filed, the Chapter 13 Trustees would like debtor(s)/debtor(s)’ counsel to file a Certificate of Compliance and Motion for Entry of Discharge. This document would require the debtor to assert, under oath, that all of the necessary conditions specified in section 1328 have been met and that the case is ready for discharge.
• If an objection is filed to the Certificate of Compliance, or if the debtor meets either of the conditions specified in 1328(h), a hearing would be held to resolve the issue(s).

Debtors are required to complete a course in personal financial management before paying their last chapter 13 payment.  They must sign a Form 23 certificate and upload it to the Court along with a certificate of debtor education from the education provider.

Under this proposal, all debtors who have completed their plan and are seeking a chapter 13 discharge of their debts will be required to sign and file a 1328(h) certificate with the Court. A motion for discharge will have to be filed and notice with opportunity for hearing sent to all creditors.

Debtors who have 1) domestic support obligations, 2) bankruptcy discharges in previous cases, and 3) felony convictions with exempt property over $125,000, will want to discuss the specifics of their situation with their attorney in detail to determine if they have an issue preventing their chapter 13 bankruptcy discharge.