Details matter, especially with the Middle District of Georgia’s local bankruptcy plan. The Middle District of Georgia, like the Northern and Southern Districts of Georgia, opted out of the national bankruptcy plan, as did the majority of the federal judicial districts.
What makes the Middle District of Georgia’s local plan different than Georgia’s Northern and Southern Districts’ plans? The surrender provision. Specifically, the termination of the automatic stay as to sections 362 (debtor) and 1301 (co-debtor stay) limits co-debtor stay relief to the collateral and is effective on confirmation. If a creditor plans to proceed against the co-debtor personally, the plain reading of the Middle District of Georgia’s plan requires additional stay relief against the co-debtor. If the lender is interested in the collateral only, no additional relief is needed.
Read the plan provision for yourself and see if you come to the same conclusion
“Surrendered Collateral: The following collateral is surrendered to the creditor. If the debtor(s) is surrendering the collateral for a specific payment credit or in full satisfaction of the debt, a statement explaining the treatment should be indicated in Part 6 Nonstandard Provisions. The debtor(s) agree to termination of the stay under 11 U.S.C. § 362(a) and § 1301 with respect to the collateral, effective upon confirmation of the plan. An allowed unsecured claim resulting from the disposition(s) of the collateral will be treated as unsecured.” Excerpted from the Middle District of Georgia’s local plan.
For more information, contact Tom Sears, Esq.