Unfortunately debtors do not
always cooperate with counsel or the trustee.
Notwithstanding this, the OUST wants trustees to administer their cases
as quickly as possible. As a result, it
has been necessary to adopt a number of procedures to ensure rapid
compliance. A number of these items will
be discussed below.
In order to give both the
trustee and debtor’s counsel some leverage in obtaining information, continued
hearings are held. If the debtor does
not appear, their case can be dismissed for non-appearance. If the debtor does not supply the
information, their case can be dismissed for failure to comply with a trustees
Beginning in June the failure
to appear will result in the filing of a recommendation for dismissal unless it
appears that there are assets to administer.
In all other cases, a Motion to Compel will be filed. There will be no warning letters because
the trustee is required to file his detail 341 Report within 10 days of the
original hearing. If you supply us
with an e-mail address we will send you a message on non-compliance at the
conclusion of the time set for the continued hearing.
If you receive a letter
requesting additional information, that letter will include a deadline. Failure
to comply by that deadline will result in the filing of a Motion to
Compel. There will be no warning
letters. The trustee has found that
giving warnings adds too much time to the process of administration. If you wish to have more time to respond,
either provide the trustee with an e-mail address so you get the requests
sooner or request an extension from the trustee. If you request an extension, be prepared to
give the trustee a date that he can expect compliance by. Failure to comply with any granted extension
will result in a Motion to Compel.
Each directive will include a
compliance date. If the matter has not
been taken care of by that date and an extension has not been arranged, a
Motion to Compel will be filed.
Requests to File Claims
In every potential asset case
a request to file claims will be filed 10 days after the 341 hearing. This is to begin the running of the time
periods so cases can be administered quickly.
Please understand that the case may still be closed as a “no asset”
case. You should warn your clients that
if they receive such a document from the court they should not panic. You can also tell them in a no asset case
that they probably would not have seen such a notice if they had already
provided appropriate information to the trustee.
The trustee is required to
determine if a case has excess income or otherwise violates 11 USC 707(b)
within 10 days of the first meeting of creditors. As a result, it is critical that the
pleadings be properly prepared and that any supplementary material is provided
to the trustee as quickly as possible.
If the trustee cannot determine with certainty the issue, notice will be
provided to the OUST that the case should be investigated for possible
violation of 707(b). Under the new law,
this notice will then be provided by the clerk to all creditors.
In the event that the debtor
needs to repay funds of the estate to the Trustee, a Stipulation will be prepared
setting forth the terms of any agreed repayment plan. These plans should not extend past 6
months. Three is preferable. The trustee has found that payment plans over
four months tend not to work. Please be
aware that the stipulation may include language extending the date of
discharge until compliance is complete.
The Judges are frustrated and tired of Complaints to Dismiss or Revoke
Discharge for non-compliance with payment plans. The trustee has obtained approval of the
court to allow entry of a discharge before the extension date if the debtor has
fully complied upon the filing of a Certificate.
The trustee will seek an
order approving all stipulations with debtors so that the appropriate deadlines
may be extended and requiring turnover as appropriate.
If the debtor fails to comply
with a payment plan, one reminder letter will be sent. Failure to bring the account current within
the deadline set will result in the filing of a motion for immediate turnover
of the balance. The trustee will not go
back to the payment plan unless the account is brought current and payment in
the amount of $380.00 is made to compensate the trustee for additional services
in bringing the motion.
In tax return cases the
trustee understands that the debtor may be at the mercy of the taxing
authorities in determining when a refund will be received and the returns may
not yet be due. However, to ensure that
debtor understand the necessity of actually turning over the refund when it is
received; the debtor will be asked to sign a stipulation for turnover.
Please be aware that in the
interests of efficiency the trustee will be filing combination motions wherever
possible. For example, a motion to
compel will include a request for turnover (if appropriate) and a request to
extend deadlines. In the past separate
motions were filed successively. This
adds too much time to case administration.
In any case in which a Motion
to Compel or to Turnover has not been complied with, an Adversary Proceeding
Objecting to or Revoking Discharge will be filed.
This will be under 11 USC 727(a)(6) or 727(d).
Failure to comply with a Motion to Compel or Turnover creates a prima
facie case and will result in non-dischargeability of
all debts and the inability to re-file on them.