“If you don't like something, change it. If you can't change it, change your attitude.” — Maya Angelou
On Dec. 1, 2015, the new bankruptcy forms went into effect. For creditors’ attorneys, the most notable of these forms is the proof-of-claim form. For debtors’ attorneys, the documents filed to commence the bankruptcy case are the ones that have most drastically changed. My initial impulse was to resist embracing the forms. Over time, as with most changed matters, they are becoming second nature, familiar territory, and as a result are more acceptable to me.
Proof of Claim: Official Form 410
At first glance, the proof-of-claim form seems scary because its look has been revamped. Really, though, the form is user-friendly. Instead of statements like “Name of Creditor,” the form walks the claimant through the process with such detailed questions as, “Who is the current creditor?” The claimant ends up feeling guided and, as a result, more comfortable with the process at the end of the new form because of the gentle wording. The old question 2 harshly demanded, “Basis for Claim,” whereas not only does the new form ask a friendly question (“What is the basis of the claim?”), it provides a list of examples and reminds the claimant to attach redacted copies of supporting documents. The new claim form asks additional information, such as whether the claim is based on a lease.
However, a downside to the forms is that the actual claim amount ends up on the second page. Overall, except for the amount of claim and collateral being listed on the second page, the claim form appears to have improved. Similarly, related forms pertaining to mortgages, such as the Notice of Mortgage Payment Change: Official Form 410S1 and the Notice of Postpetition Mortgage Fees, Expenses and Charges: Official Form 410S2 are easier for the debtor to navigate than previous forms.
Petition, Schedules, Statements and Means Test: Official Form 101, 106, 107, 122C
The forms the debtor is expected to complete are another story. Maybe we are creatures of habit and by this time have memorized by number all of the questions on the statement of financial affairs and are sick that the numbering has changed. Maybe by using the old forms, we could line up Schedules A and B next to Schedule C and easily compare exempt property to nonexempt property. Maybe the changes are as if someone came into our kitchens and rearranged our pantry. At any rate, the forms, although supposedly tailored to assist pro se debtors to be more accurate, are frustrating to the rest of us, and seriously, how many of us are there compared to pro se filers? Should we not be the ones that the forms aim to please?
With that said, information seems to be hidden within the documents and not as readily accessible as in the old documents. For example, the old petition, excluding Exhibit D, was three pages, and most of what the reader needed was contained on page one. Now, the petition is seven pages and credit counseling is buried within the petition. Instead of asking once what chapter the debtor is filing, the new petition asks what chapter the debtor is filing and then has the debtor confirm elsewhere that he or she is not filing under the other chapters; for example, the debtor affirms he is filing chapter 13 but later in the petition represents that he is not filing chapter 7 and later reiterates that he is not filing chapter 11. Are all those expressions really necessary?
Schedules A and B are combined with the relevant information being buried within the typeface, such that one’s eyes have to pan to the left, right and middle of the page, instead of being formatted in column form. The numbering has changed such that automobiles follow real estate instead of listing cash and bank accounts after real estate. If the drafters had been trustee-friendly, they would have found a way to incorporate the value of the debtor’s interest, less secured debt, less exemption for a total nonexempt amount, but they did not.
The drafters added a new question of whether the debtor owns a storage unit. We now report whether the debtor has health insurance and renter’s insurance. On Schedule D, the drafters added a section called Nature of Lien, where the debtor now states whether the lien is by agreement, statutory lien or a judgment. Schedule F has a similar section called Type of Nonpriority Unsecured Claim. The additional notification section comes at the end of the creditors’ listings, so it looks a little disjointed from what we have been used to seeing.
Certainly, attorneys are used to reviewing old schedules with no addresses listed for creditors from pro se debtors, and the new schedules now specifically request addresses. Moreover, the forms offer more specific instruction, such as on G (“fill in all of the information below even if the contracts of [sic] leases are listed on Schedule A/B”). In addition, Schedule G gives examples of leases and contracts the debtor may need to list, such as cell phones. Schedule J has more line items and neatly separates the debtor’s residential expenses from his rental property.
Although I do not like having to relearn the order of the questions, the Statement of Financial Affairs is worded in layman’s terms better than previously. The means test already has stumped me for a debtor going through a divorce, as the categories are limited to “married” and “not married.” The “number of people living in household” question could use some examples for those who may have family members living part-time in the home. The telecommunications question is still obsolete, though: Who do you know pays extra for pagers, call waiting and caller ID? Data allowance might be more relevant today.
Years from now, we will be used to the forms, have the order of the questions memorized, and be used to perusing the forms and extracting relevant data for our cases, but for now it seems we have catered to the masses, as pro se filers are multiplying twice as fast as those who file with attorneys.[1] Part of that reason is affordability. The due diligence required of attorneys is reasonable; after all, filing for bankruptcy is a privilege, and the information about a debtor’s assets, liabilities, transfers and ability to pay should be accessible to the court, trustee and creditors, as well as the debtor’s attorney who is to advise the debtor. But it comes at a cost, and these days, debtors seem more confident to, in the words of Home Depot, “do-it-yourself” instead of calling in a specialist.