Courts and Civil Procedure – Procedure in Particular Actions

Wage Earner Receivership

SECTION 10-18-16

§ 10-18-16. Termination of the plan.

(a) If any payment provided by the plan to be made to the receiver by or on behalf of the debtor is in default or if the debtor has otherwise violated the provisions of this chapter or of the plan, the receiver or any creditor may, and if the default shall have continued for a period of more than thirty (30) days the receiver shall, report the matter to the court. The receiver shall submit a report and his or her recommendations to the court and the court may terminate the plan.

(b) If the addition of any prior creditor included in the plan by reason of the provision in § 10-18-8(a)(2) or of any subsequent creditor by reason of § 10-18-11(a) and (b) shall make continuation of the plan unfeasible, the court may, upon petition of the debtor, the receiver, or any creditor, with notice to all other parties, and upon a hearing, terminate these proceedings.

(c) If the debtor makes preferential payments to creditors participating in the plan during the pendency of the proceedings or appears for any reason to be abusing the privileges of this chapter, the receiver shall promptly report the matter to the court and the court may terminate the plan. If the court finds that preferential payments have been made to those creditors participating in the plan, it shall order those creditors who had received a preferential payment to pay over the amount of the preferential payment to the receiver who shall apply it to reduce the debtor's indebtedness under the plan pro rata, among all creditors participating in the plan. A preferential payment is any payment to a creditor participating in the plan which is, at the time of the payment, in excess of what he or she is entitled to under the plan.

(d) If the plan is terminated prior to completion of the plan, the court shall award a reasonable fee to the receiver which shall be preferred to all other claims against the debtor, except federal or state obligations.

(e) In deciding whether or not to terminate a wage earner receivership plan, whenever the discretion is given, the court shall consider the following criteria:

(1) The feasibility of the plan; whether in light of the debtor's income and the size of the debt incurred it is reasonable for the debt to be paid off on an amortized basis within the time remaining in the plan;

(2) The knowledge which subsequent creditors had, or should have had, when they extended credit of the prior debts of the debtor;

(3) The knowledge which subsequent creditors had, or should have had, when they extended credit, of the insolvency of the debtor;

(4) The intent of the debtor to abuse the plan by unreasonably incurring debts which, if included in the plan, would make the plan unfeasible;

(5) Prejudice to the interests of those creditors who have participated in the plan in not being able to collect their debts by those means proscribed by this chapter during the pendency of the plan.

History of Section.
(P.L. 1972, ch. 186, § 1.)