When Congress created the Bankruptcy Code in 1978, it left open several gaps that needed to be resolved through the judicial system. One of these gaps concerns the process behind the present-value analysis required by Section 1325, which states that debtors must pay creditors the present value of their claims over the course of the debtor’s Chapter 13 bankruptcy plan. This process implicitly dictated that debtors must pay a discount rate to properly compensate their creditors. Because Congress never indicated how this discount rate should be calculated, bankruptcy courts created several different solutions to the problem. This left the bankruptcy system in a state of chaos as the rules varied substantially from district to district. This Comment argues that these local rules violate the Rules Enabling Act because they alter the substantive rights of debtors.
The Problem with Present-Value: How Local Bankruptcy Rules Impose Heavy Burdens on Chapter 13 Debtors,
Emory L. J.
Available at: https://scholarlycommons.law.emory.edu/elj/vol69/iss3/4