Consumer Friendly Forms for Bankruptcy

In many respects, bankruptcy is a one-size-fits-all legal process. Yes, there are ample differences in the law (and a world of difference in practice) between the bankruptcy of a large corporation and a typical consumer. But the Bankruptcy Code itself contains plenty of provisions of general applicability. A major example of the one-size-fits-all approach to bankruptcy is the official forms for filing a case. The basic petition and schedules are the same forms for Big Airline Co. and Mr. Joe Blow. The information on the forms is wildly different, with Big Airline Co. listing hundreds or even thousands of creditors, with many more digits in their debts, than Joe Blow. But the form for those debts--Schedule F--is the same form. That may all be changing soon.

The Bankruptcy Rules Committee began a Forms Modernization Project a few years ago, and one of its top agenda items has been creating new forms just for use in consumer bankruptcy cases. Although few people seem to be aware of the effort, a draft version of those new forms is available to the public and to my mind, well worth a look. To see the forms, go here, then click on September 2011, download the file, and look  at pp. 189-315 of the PDF (or tab 7.1 if you use the PDF index.) One thing that is obvious from the page numbers in the prior sentence is that the new forms are really long--way longer than the current forms as completed in the typical consumer case. The added length results in part from the development of extensive instructions for each form. Below is an example of a new form with some commentary on its notable new features.

This is the first page of the draft new form for consumer debtors to report their unsecured debts; this would replace the existing Schedule F. From an aesthetic perspective, note that the form has a larger typeface than the existing form and makes much more use of font characteristics such as bold, underline, boxes, etc. to differentiate content. This is all part of the art of making a form "readable." It also contains lots of little checkboxes rather than columns to hold information like the current form. From a substantive perspective, and before someone makes a comment that I have made a mistake, note that this first page of the form starts by asking the debtor to list priority debts. The form combines Schedules E and F, into a single form for Unsecured Claims. It also lists only the three most common kinds of priority debts in consumer cases--domestic support, taxes, and drunk driving--on the form and uses an "other" box where the debtor could list the kinds of priority debts in Section 507 of the Bankruptcy Code that rarely apply in consumer cases, but frequently come up in businesses cases. This is a great example of how the form departs from one-size-fits-all forms that match where bankruptcy law takes a one-size-fits-all approach in the Bankruptcy Code.

The period for public comment on these forms has not yet begun, and the Bankruptcy Rules Committee may well make changes before then. In future posts, I will say more about what kinds of changes I hope to see and offer some thoughts on whether this initiative is a positive development for the system.