National / Federal Bankruptcy Changes That Affect Northern California

Because N.D. Cal is subject to federal bankruptcy law and rules, national changes also matter.

1. Amendments to Federal Rules of Bankruptcy Procedure (effective Dec 1, 2025)
   The Supreme Court has approved amendments to Rule 3002.1 (which governs mortgage claims in Chapter 13 cases) and Rule 8006 (governing notices of appeal in adversary proceedings). Supreme Court
   • Under the new Rule 3002.1 changes, creditors will have expanded obligations to notify debtors and trustees of changes in payment, and there are new motion and response forms (e.g. 410C13-M1, 410C13-N, and related response forms). United States CourtsThe new rules apply to cases filed on or after December 1, 2025 (and, to the extent feasible, to pending cases).
   These changes will particularly affect Chapter 13 cases involving mortgages (i.e. home loans), altering how creditors report and debtors respond to payment changes.
2. Restyled and amended Federal Rules – effective December 1, 2024
   A set of restyled rules and amendments to rules such as 1007, 4004, 5009, 7001, 9006, and the introduction of rule 8023.1 went into effect December 1, 2024. Central District of California
   These restyling changes generally clarify formatting, harmonize language, and improve procedural consistency. While many are technical, practitioners must ensure they’re using the correct rule versions and form references.
3. Higher statutory thresholds and adjusted dollar amounts
   As noted above, the statutory dollar amounts in the Bankruptcy Code (for example, certain debt thresholds, claims limits, etc.) were increased on April 1, 2025.
   This means more debtors or claims may qualify under certain tiers or thresholds that were previously out of range.
4. Proposed legislation – Consumer Bankruptcy Reform Act (CBRA) of 2025
   As of mid-2025, a proposed bill (CBRA) would substantially overhaul consumer bankruptcy by consolidating Chapters 7 and 13 into a new “Chapter 10.” If enacted, this would be a major change.
   However, this is not yet law, so its effects (if it passes) would come later.
5. Supreme Court decision on clawbacks of older tax payments
   In 2025, the U.S. Supreme Court held that bankruptcy trustees cannot reclaim allegedly fraudulent federal tax payments made more than two years before the bankruptcy filing, based on sovereign immunity limits. Reuters
   This limits the reach of certain avoidance (clawback) actions in bankruptcy involving federal tax payments made outside that two-year window.
6. Expiration of expanded Subchapter V threshold
   A related national change (though more relevant to business reorganizations) is the rollback of the temporary increase in debt limit for Subchapter V small business reorganizations (falling back to lower thresholds), reducing the number of businesses eligible for the streamlined small business process.

Individual Debtors (Consumers) bankruptcy law changes

• Dollar-amount adjustments (April 1 2025) change eligibility limits and exemption values. These determine:
  • Who can file under Chapter 7 vs. Chapter 13.
  • How much property can be protected (e.g., vehicles, personal items, homesteads).
• Rule 3002.1 amendments (effective Dec 1 2025) affect mortgage borrowers in Chapter 13:
  Creditors must give more frequent and formal notices of changes in mortgage payments (escrow, rate changes), and debtors must respond formally.

Who it affects:

Homeowners filing under Chapter 13, anyone near the asset or income limits, and debtors managing ongoing mortgage payments inside bankruptcy.

Why Trustees should care (Chapter 7, 13, and Subchapter V)

• Trustees must adjust procedures for new dollar thresholds and reporting duties.
• Chapter 13 trustees, especially, must monitor new motion/response forms for mortgage payment changes.
• Changes to Subchapter V debt limits (expiration of temporary thresholds) narrow eligibility — affecting trustee caseloads.

Small Businesses and Business Owners

• The expiration of the expanded Subchapter V threshold reduces which small businesses qualify for simplified reorganizations.
• If Congress reenacts or modifies the Subchapter V limit, eligibility could shift again.
• Business owners with personal guarantees may feel indirect effects through changing consumer exemption limits and filing costs.

Some federal bankruptcy districts in California may see stronger increases than others; local economies, cost of living, and debt burdens differ. Economic stressors (e.g. inflation, interest rates, housing costs) may take time to translate into filings, so some of the increase may be catching up with earlier pressures.

Changes in California bankruptcy law, court backlogs, or local filing practices sometimes affect timing or visibility of filings independently of underlying personal financial distress.