May 11, 2005
To assist counsel in the
proper preparation of pleadings the U.S. Department of Justice has prepared a
set of documents called “Annotated Petition, Statement of Financial Affairs,
and Schedules for Bankruptcy Practitioners.”
These documents are a set of schedules with notes on the most common
errors or omissions seen. It is
anticipated that this material will be available on the web within the next two
months and may be part of Court sponsored CLE later this year.
The Trustees Office in Denver is concerned with under reporting of income. Based upon prior research a high percentage
of cases include substantial unreported income.
Another recent study in Denver found that 47% of Debtors under reported their income
by an average
of $783.00 per month. As a result, all
debtors are being asked to bring the following documents to the 341 hearing:
Statements for each bank account, investment account,
mutual fund, or brokerage account that include the filing date balance.
The most recent pay stub.
The most recently filed complete federal and state tax
Trustees have been asked
again to review Debtor documentation to verify income. As a result, and in anticipation of the new
law, our office will be requiring debtors to appear at the 341 hearing with a
pay stub analysis (on the attached form) and copies of the supporting
documentation beginning later this year.
The Office of the U.S.
Trustee is concerned with the number of individuals using a false social
security number to obtain credit or file bankruptcy. They are actively looking for cases to
have be directed to ask more questions related to ID. If a debtor does not have a social security
number, they will be asked what number they used to obtain their secured
debt. In cases with social security
errors you can expect the IRS, Social Security, and secured creditors to be
consulted. If a debtor has used a false
number to obtain credit or file their petition they will be prosecuted.
Trustee’s have also been asked to accept only “original”
documents as proof of ID. If there is
any suspicion about the identification presented, the trustee has been asked to
make copies of the proffered documents.
Acceptable forms of government-issued picture identification include:
State Drivers License, US Government ID, State ID, Student ID, US Passport, US
Military car and Resident Alien card.
Acceptable forms of proof of social security number include: Social
Security card, Driver’s license with SSN, Medical insurance card, Pay Stub from
employer with SSN, W-2 tax form, IRS form 1099, and Social Security
If the social security number
does not match the 341 Notice, the debtor must submit to the court an amended
verified statement within 10 days, with notice of the correct number to all
creditors, the UST, and the trustee, and must file a redacted copy of the
notice, showing only the last four digits of the SSN, and a certificate of
Recently Purchased Motor
If your client has purchased
a vehicle within the 120 days prior to filing and the title has not be properly
perfected, the Trustees have been asked to file preferences actions against the
financing institution so the vehicle can be administered as an estate
asset. If your client fits into this
category they should not reaffirm the vehicle until this issue has been
resolved. Otherwise, they could have a
post-petition obligation on property that will be sold by the trustee.
If your client purchased a
vehicle in the 120 days prior to filing, they should bring with them to the
first meeting of creditors a copy of the vehicle registration form and the
purchase contract. If
the debtor purchased a vehicle from a friend or relative in the last year, they
should bring with them to the first meeting the same documents.
The Trustees have been
“strongly” encouraged to “quickly” administer their cases. As a practical matter this means that
Trustees have lost some flexibility in negotiating repayment or purchase plans
with Debtors. If you need to propose a
payment plan to the Trustee the period of payment should be 3 to 6 months or
less. At least one Trustee has already
adopted a no payment plan policy.
Because of the complexity of
the new legislation and a desire not to have false starts, the OUST is
providing no direction until they have finalized the procedures they intend to
implement. These procedures may include
changes to the Pacer System and the creation of some on line forms. Further information is expected in July that
will be made available to Debtor’s Counsel in the form of CLE.