By Margaret A. Burks, Chapter 13 Standing Trustee for the Southern District of Ohio (Cincinnati)

Chapter 13 works.

Some people wish to continually criticize Chapter 13.

They criticize the success rate.

They criticize racial bias.

They criticize how Chapter 13 works.

They also criticize the fact that Chapter 13 appears less voluntary than it was before access to Chapter 7 was limited by application of the “means test.” This ignores the fact that many (I suggest still a majority) of Chapter 13 debtors freely choose Chapter 13 – when advised by competent counsel – because they expect to accomplish something.

What is a success?

In Cincinnati I have a high success rate when measured by the obvious metric – Plan completion.

2014 Statistics

53% completed
2% converted pre-confirmation
8% converted post-confirmation
12% dismissed pre-confirmation
24% dismissed post-confirmation

86% of all the cases got confirmed.
Of those confirmed cases:
62% completed
9% converted
28% dismissed

One might ask about the cases which did not complete.

Maybe Debtors let the Chapter 13 dismiss because their son finished high school and they no longer needed the house? Or maybe they lost a job. Or maybe the car was just too expensive to maintain. Those are still successes as Chapter 13 gave the Debtors time to think.

To our naysayers – Come to a 341 Meeting of Creditors. It’s easy now. They are virtual.
Meet the people who are our Debtors.

As we all know, Senators Warren and Nadler introduced the Consumer Bankruptcy Reform Act of 2020 on December 9, 2020.

Contact your Senator or Congressman as the Bill will resurface in 2021.

The proposed Act tears down two chapters of bankruptcy and makes one. This change will cost millions and not improve service to our debtors.

In my opinion, it seems the more we tinker with the Code the more expensive it becomes. We already ask a great deal of debtors’ counsel these days.

I welcome the chance to discuss the new Bill and to discuss with our legislators the GOOD things in the current system.

Chapter 13 has kept people in their homes and kept the economy going during this pandemic.

My simple suggestions for improvement to the Bankruptcy Code are as follows:

1. Pay Chapter 7 Trustees more per case

2. Pay Chapter 7 attorney fees after filing

3. Eliminate no money down Chapter 13’s

4. Eliminate the means test and go with reasonable Schedule J as we did in the past.

5. Raise the debt limits in Chapter 13

If an untruth is repeated often enough – it becomes the truth as my learned Chapter 13 colleague Byron Meredith (Savannah) said to me.

So, refute the naysayers.

And as Chapter 13 Trustee David Peake (Houston) recently said to me,
“Systemic racism is a difficult topic. Any racial disparities in bankruptcy are a symptom of ongoing issues in our society.”

We need to get the real story out.

Chapter 13 works.

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Margaret A. Burks, Esq. was appointed as the Chapter 13 Trustee for the Southern District of Ohio at Cincinnati in July of 1992. Ms. Burks received a Bachelor of Science and a Bachelor of Arts from the University of Cincinnati in 1977, magna cum laude. She is a member of Phi Beta Kappa. She received her Juris Doctor from Salmon P. Chase, College of Law in 1985. While at Chase College of Law, Ms. Burks was a member of the Law Review. She was Law Clerk to Honorable J. Vincent Aug, Jr., U.S. Bankruptcy Judge from 1988 to 1991, and Counsel to PNC Bank in the areas of bankruptcy and commercial law. Ms. Burks has served as Chairperson of the CBA Bankruptcy Committee. She is a past President of the National Association of Ch. 13 Trustees and currently serves on the Board. She has also co-chaired the ABI Consumer Bankruptcy Committee.