Jane E. Finkel


bankruptcy, Chapter XIII, Wage Earner, secured creditors, rule-making


On October 1, 1973 the Supreme Court promulgated rules prescribing the practice and procedure to be followed in cases and proceedings governed by Chapters I-VII and Chapter XIII of the Bankruptcy Act. The procedural changes are extensive, permeating every stage of straight bankruptcy and Chapter XIII Wage Earner proceedings. One of the more important rules is Bankruptcy Rule 13-307(d), which deals with claims of secured creditors in Wage Earner proceedings under Chapter XIII. Secured creditors have challenged the validity of Rule 13-307(d), claiming that the rule modifies the secured party's substantive right to full recovery of the contract price. Thus, they allege that it is a substantive rule of law and outside the Supreme Court's rulemaking power. Various courts have made conflicting decisions. The resolution of this issue will have significant impact on future creditor-purchaser relations and on the future of Chapter XIII Wage Earner proceedings as a viable alternative to straight bankruptcy.



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