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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 returns.


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.


Debtor Identification


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 prosecute.  Trustee’s 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 Administration report.


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 service.


Recently Purchased Motor Vehicles


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.


Case Administration


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.


Bankruptcy Reform


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.