An industry that has been through some significant regulatory changes in the last few years will see more in the not-too-distant future. The Federal Standing Committee on Rules and Procedure has approved bankruptcy form changes proposed by the Judicial Conference Advisory Committee on Bankruptcy Rules, and awaits further consideration of rules changes and a national Chapter 13 form plan that have been referred back to the Advisory Committee for further study and refinement. [paragraph] Across the default servicing world, industry professionals have been following these developments with interest. Many have been active participants in the development of and debate over these new rules, contributing ideas and constructive criticism as the proposals gradually moved through the committee review process. [paragraph] With one set of changes set to go into effect on Dec. 1, 2015, and another set in the hopper for implementation no sooner than December 2016, it is important to appreciate how and why these new rules and forms were introduced, what changes will result in the wake of their passage and what the long-term implications might be for the industry.
Two significant changes to the existing bankruptcy rules were originally submitted to the Federal Standing Committee on Rules and Procedure for review and consideration. While these proposals are often discussed in tandem, they are actually two separate initiatives.
The first proposal is a national forms modernization initiative--a proposal that would amend the existing Proof of Claim form filed by creditors to identify the basis for a claim against the debtor, the amount owed as of the petition date and the type of claim (secured or unsecured), and require a new loan history attachment.
As was expected by many industry professionals and observers, those changes have been approved by the Federal Standing Committee and the revised Proof of Claim form with the new loan attachment will go into effect at the beginning of December 2015.
The Proof of Claim form (renumbered as Form 410) will remain materially the same, whereas the new 410A attachment is a significant change from the current attachment, functioning as essentially a payment history back to the first date of the current default.
The second proposal has been somewhat more contentious: This amendment to existing bankruptcy rules would introduce changes that include a national model Chapter 13 plan and substantially reduce the...