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Ensuring Compliance




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.


Continued Hearings.


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 directive.


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.


Information Requests


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.


707(b) Issues


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. 


Adversary Proceedings


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.