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Frequently Asked Questions (FAQs) for Trustees

The answers to the questions below represent the United States Trustee Program’s interpretation of the provisions of the Bankruptcy Code and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). They are intended to provide guidance to United States Trustee Program staff and to private trustees. A private trustee may have a different interpretation of the meaning of the BAPCPA provisions. If a trustee believes that the law requires him/her to act contrary to the opinions expressed in this document, the trustee should consult with the United States Trustee.

The FAQs are separated into eleven major areas of interest:

Click on the area of interest to view the related questions; then on the question to view the answer.

Questions

Chapter 13-Specific Issues

Credit Counseling/Debtor Education

Debt Relief Agencies

Debtor Duties and Dismissal of Cases

Domestic Support Obligations (DSOs)

Q: Are sample DSO notices available?

Updated: Updated December 2007

Health Care Businesses

Miscellaneous

Ombudsmen

Preferences

Trustee Compensation

Chapter 7 Uniform Final Reports:

Data Entry by Trustees

Modifications to the Forms

TDR

NFR and TFR

Miscellaneous

Answers

Chapter 13-Specific Issues

Q: Are there special requirements for the review of mortgage proofs of claim in chapter 13?

A: Yes. By May 1, 2009, chapter 13 trustees are required to follow the "Guidelines for Reviewing Mortgage Proofs of Claim" developed by the United States Trustee Program [PDF - 12 KB].

Updated: April 2009

Q: How can a chapter 13 trustee verify the filing of tax returns as required by 11 U.S.C. § 1308 if the debtor files the returns with the IRS the day before the § 341 meeting?

A: The trustee may request copies of the returns or transcripts and have the debtor testify under oath that the tax returns were filed with the appropriate taxing authority.

Updated: August 2006

Q: Does 11 U.S.C. § 1308(a) require a debtor to file tax returns with the IRS even if they are not due yet?

A: Section § 1308(a) requires only that a debtor file tax returns he/she was required to file “under applicable nonbankruptcy law.”

Updated: August 2006

Q: When a debtor attempts to cram down debts, is the chapter 13 trustee required to object to confirmation?

A: A trustee should object to a cram down if the case law requires such objections. The United States Trustee will not require the trustee to object to an attempted cram down unless, on its face, it violates the requirements of confirmation.

Updated: August 2006

Q: If the automatic stay in a chapter 13 case is deemed not to be in effect because of prior filings, should the chapter 13 trustee pursue the debtor’s chapter 7 attorney for a cause of action?

A: The question assumes that the chapter 13 trustee has standing to pursue an action against the debtor’s attorney. Unlike a chapter 7 trustee, the duties of a chapter 13 trustee do not include the requirement to collect and reduce to money the property of the estate for which such trustee serves. Moreover, property of the estate is vested in the debtor unless the confirmed plan provides otherwise. Accordingly, the chapter 13 trustee may not have standing to pursue an action against the prior attorney. Three lines of case law exist on the issue of whether a chapter 13 trustee has standing to sue. They are: (1) only the debtor has standing to sue, (2) the chapter 13 has concurrent jurisdiction with the debtor, and (3) the chapter 13 trustee has exclusive standing to sue. Assuming the trustee has standing, it is within the trustee’s discretion as to whether an action against the attorney is justified.

Updated: August 2006

Q: Will a chapter 13 trustee be discharged from a case that is automatically dismissed if a debtor fails to produce all requested documents within 45 days.

A: Unless requested, there may not be an order of dismissal issued in such a case, and it is the dismissal order that usually provides for the discharge of the trustee. Therefore, the trustee may want to request an order as provided by 11 U.S.C. § 521(i)(2).

Updated: August 2006

Q: What are the applicable dates to use relating to the 11 U.S.C. § 1328(f) bar to discharge?

A: The § 1328(f) bar to discharge is from filing date (the date the order of relief was entered) of the first case to the filing date of the second.

Updated: August 2006

Credit Counseling/Debtor Education

Q: What action should a trustee take in a case where the credit counseling certificate is not issued by an approved provider for that district?

A: The chapter 7 trustee or the chapter 13 trustee must refer the matter to the United States Trustee who may file a motion to dismiss based on 11 U.S.C. § 109(h) and § 707(a).

Updated: August 2006

Q: Should a trustee conduct the § 341 meeting of a debtor whose credit counseling certificate is not from an approved provider for that district?

A: The trustee should conduct and conclude the meeting, and refer the matter to the United States Trustee.

Updated: August 2006

Q: If a debtor receives a credit counseling course in one district and then moves to another district where he/she files for bankruptcy within the 180 day period, can the certificate from the provider in the other district be used?

A: A credit counseling certificate must be issued by a provider that is approved for the district where the bankruptcy case is filed. The certificate is portable only if the provider is also approved in the district where the debtor files.

Updated: August 2006

Q: Will the clerk of court enter a discharge in a chapter 13 case if a debtor education certificate is not filed?

A: 11 U.S.C. § 1328(g) provides that a discharge is not to be entered if a debtor has not completed an instructional course concerning personal financial management.

Updated: August 2006

Q: Can a debtor educator file a certificate with the court on behalf of a debtor?

A: No, the debtor must file the information using the appropriate Official Form.

Updated: August 2006

Debt Relief Agencies

Q: Does the fact that an attorney provides pro bono representation on behalf of a client in bankruptcy, without more, qualify the attorney as a “debt relief agency,” as defined in section 101(12A) of the Bankruptcy Code, so as to subject the attorney, or the attorney’s law firm, to the restrictions and affirmative obligations set forth in sections 526-528 of the Bankruptcy Code?

A: Section 101(12A) defines a “debt relief agency” as “any person who provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, or who is a bankruptcy petition preparer under section 110.”  By definition, pro bono counsel do not receive, and do not expect to receive, payment of money from their clients in exchange for their services. The plain language of section 101(12A) states that a person must provide assistance “in return for the payment of money or other valuable consideration” in order to be considered a debt relief agency.  Therefore, the United States Trustee Program’s position is that attorneys who represent debtors pro bono do not qualify as debt relief agencies.  See, e.g., United States Trustee’s Response to Motion Pursuant to 11 U.S.C. §105 Finding that Debtor’s Attorney is not a Debt Relief Agency as that Term is Defined in 11 U.S.C. §101(12A) for Services Rendered in Connection with this Pro Bono Bankruptcy Case, In re Dow, Case no. 06-13460 (Bankr. N.D.N.Y. 2007) [PDF - 557 KB].

Updated: March 2007

Q: Often attorneys or law firms receive credit with state licensing authorities, or general recognition within the community, for their contribution of pro bono services. If an attorney, or law firm, receives such credit or recognition for their pro bono representation of a client in bankruptcy, does that fall within the definition of “other valuable consideration” so as to render the attorney, or their law firm, a “debt relief agency” and subject them to the restrictions and affirmative obligations set forth in sections 526-528 of the Bankruptcy Code?

A: Although not specifically defined under the Bankruptcy Code, “valuable consideration” commonly involves a “pecuniarily beneficial interest.” Black’s Law Dictionary 326 (8th ed. 2004).  In addition, “consideration” is defined as “something (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee” Black’s Law Dictionary 324 (8th ed. 2004).  A client that is represented pro bono does not have any control over the credit given by the state licensing authorities and such credit is not part of the agreement between the attorney and the client.  Similarly, the client has no control over whether the pro bono representation will result in recognition or good will within the community.  Therefore, the United States Trustee Program’s position is that such credit or recognition does not constitute “other valuable consideration” so as to qualify the attorney or the attorney’s law firm as a debt relief agency.  See, e.g., United States Trustee’s Response to Motion Pursuant to 11 U.S.C. §105 Finding that Debtor’s Attorney is not a Debt Relief Agency as that Term is Defined in 11 U.S.C. §101(12A) for Services Rendered in Connection with this Pro Bono Bankruptcy Case, In re Dow, Case no. 06-13460 (Bankr. N.D.N.Y. 2007) [PDF - 557 KB].

Updated: March 2007

Q: Does the attorney certification in 11 U.S.C. § 707(b)(4)(D) extend to the Statement of Financial Affairs?

A: Pursuant to § 707(b)(4)(D), the signature of an attorney on a petition constitutes a certification that the attorney “has no knowledge after an inquiry that the information in the schedules filed with such petition is incorrect.” The section refers only to the schedules and not the Statement of Financial Affairs. However, the Statement of Financial Affairs may be considered as “any paper” filed with the court and could be subject to Rule 9011.

Updated: August 2006

Q: To what property does the $150,000 exclusion from the “assisted person” definition apply?

A: An “assisted person” is defined in 11 U.S.C. § 101(3) to mean “any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $150,000.” Under that definition, a person who owns a home valued at $200,000 and lives in a State with a $45,000 homestead exemption would not qualify as an “assisted person” since the value of the nonexempt property would be $155,000.

Updated: August 2006

Q: Will the United States Trustee give “advisory opinions” on 11 U.S.C. §§ 527 and 528 disclosures?

A: United States Trustees should not and will not pre-approve a debt relief agency’s advertising, contract, or disclosures.

Updated: August 2006

Q: What direction can the United States Trustee give attorneys regarding what constitutes “reasonable inquiry under the circumstances” for purposes of attorney liability?

A: The attorney certification included in 11 U.S.C. § 707(b)(4)(C) is substantially similar to the requirements of Fed. R. Bankr. P. 9011, which is substantially similar to Fed. R. Civ. P. 11. An attorney should look to those rules and the case law interpreting them for guidance.

Updated: August 2006

Debtor Duties and Dismissal of Cases

Q: 11 U.S.C. § 521(e) provides that a debtor must provide the Federal tax return or transcript for the most recent year before the bankruptcy “for which a Federal income tax return was filed.” If the debtor failed to file a tax return in the most recent year before filing bankruptcy, should the trustee accept the last one actually filed?

A: Yes. For example, if a debtor files a case on March 1, 2006, and a 2005 return has been filed, the debtor will need to provide that return pursuant to § 521(e)(2). If, however, the 2005 return has not yet been filed, then the debtor will need to provide the 2004 return or the return of the next earlier year that was filed. If the most recently filed return is too dated to verify the debtor’s present income, then the trustee should request other documentation.

Updated: August 2006

Q: If a trustee discovers that a debtor has not complied with the law to file tax returns, what is the trustee required to do?

A: Chapter 13: If a chapter 13 debtor fails to file tax returns required under 11 U.S.C. § 1308, then, pursuant to § 1325(a)(9), the debtor’s plan cannot be confirmed. The chapter 13 trustee should monitor the filing of tax returns.

Chapter 7: Except for the most recently filed tax return which must be provided to the trustee under 11 U.S.C. § 521(e)(2), if a chapter 7 trustee does not specifically request copies of the unfiled pre-petition tax returns pursuant to § 521(f)(2), or seek them through discovery, the trustee has no obligation to take action regarding the filing of pre-petition tax returns.

With respect to post-petition tax returns, § 521(j) provides a taxing authority with the ability to request dismissal or conversion of the case for a debtor’s failure to file a tax return that becomes due after the commencement of the case. Though the trustee may also request the filing of post-petition tax returns under § 521(f), he/she is not required to do so. Nor is the trustee required to report the non-filing of post-petition tax returns to the United States Trustee.

Updated: August 2006

Q: What is a trustee’s reporting obligation if a debtor fails to provide his/her tax return at least seven days prior to the § 341 meeting?

A: A trustee is expected to require a debtor to provide tax returns as mandated by 11 U.S.C. § 521(e)(2), although a trustee does have discretion as to when to file a motion or take other action. A trustee should take action if the tax return is not produced before or at the § 341 meeting.

Updated: August 2006

Q: If the tax return is not provided before or at the § 341 meeting, should the meeting be continued? If so, should a motion be filed to extend the time for objecting to discharge?

A: Whether a trustee continues the meeting of creditors or moves for dismissal for failure to provide the tax return as required by 11 U.S.C. § 521(e)(2) is within the discretion of the trustee. It is recommended that unless the debtor can show that the failure to comply is beyond his/her control, or unless a continuance is in the best interest of the estate, the trustee should move to dismiss or otherwise take effective action to obtain the return.

Pursuant to Fed. R. Bankr. P. 4004(a), a complaint objecting to discharge in a chapter 7 case must be filed no later than 60 days after the date first set for the § 341 meeting. If the trustee or United States Trustee believes that such a complaint is warranted, then a motion to extend the time to object to discharge should be filed.

Updated: August 2006

Q: Given that 11 U.S.C. § 521(i)(1) provides that a “case shall be automatically dismissed” if the debtor fails to file all mandatory documents, how can a trustee prevent dismissal of a case in which the debtor has assets but has not filed payment advices or other information required under § 521(a)?

A: To prevent automatic case dismissal when assets are available and it is in the best interest of creditors to go forward with a bankruptcy case, the trustee may move under 11 U.S.C. § 521(a)(1)(B) to have the court waive the filing of the mandatory documents.

Updated: August 2006

Q: Is failure to attend the § 341 meeting sufficient grounds to object to the automatic dismissal provision?

A: No. The grounds for automatic dismissal set forth in 11 U.S.C. § 521(i) do not include failure of the debtor to attend the § 341 meeting.

Updated: August 2006

Q: How are cases automatically dismissed by the clerk's office pursuant to 11 U.S.C. § 521(i)(2)?

A: Procedures for dismissal are determined locally. In many districts, dismissals will require no order, but in other districts an order will be entered. Some courts have indicated that a hearing will be noticed in each case. Regardless of the procedure employed in a district, the trustee should be aware of the action necessary to protect asset cases from being automatically dismissed.

Updated: August 2006

Q: Is a year-to-date payment advice that covers a six-month period sufficient?

A: No. 11 U.S.C. § 521(a)(1)(B)(iv) requires a debtor to file with the court copies of all payment advices received within 60 days of filing, and Interim Rule 4002(b)(2)(A) requires the debtor to bring “evidence of current income such as the most recent payment advice” to the § 341 meeting. A year-to-date payment advice that covers a six-month period is not sufficient.

Updated: August 2006

Q: 11 U.S.C. § 1325(b)(3) provides that allowable deductions are determined in accordance with § 707(b)(2), which does not mention charitable contributions; however, 11 U.S.C. § 1325(b)(2)(A)(ii) provides that charitable contributions of up to 15 percent may be deducted from current monthly income before arriving at disposable income. Please clarify.

A: Under the chapter 7 means test, charitable contributions are allowed to be continued as provided in § 707(b)(1), even though § 1325(b)(3) only refers to § 707(b)(2). Sections 707(b)(1) and 707(b)(2) are so entwined that it would be difficult to apply one of the sections without the other. Therefore, Form B22C at line 35 allows the deduction of “continued charitable contributions.” A trustee should allow charitable contributions to be deducted in determining disposable income in a chapter 13 case.

Updated: August 2006

Q: What is the chapter 13 administrative percentage for purposes of the means test?

A: The administrative expense for administering a chapter 13 plan is determined by the United States Trustee Program. It differs by judicial district and the appropriate percentages are posted on the Program’s Internet site at www.usdoj.gov/ust/.

Updated: August 2006

Q: 11 U.S.C. §§ 521(e)(2)(A)(i) and 521(f) refer to filing copies of Federal income tax returns or transcripts. However, in Puerto Rico and the Virgin Islands, individuals are not required to file Federal income tax returns. In addition to looking at payment advices and Schedule I, should a trustee ask debtors in those areas for territory/commonwealth tax returns to confirm income?

A: If a trustee or the United States Trustee does not believe that he/she can accurately confirm income from the information that the debtor is required to provide, then he/she should request appropriate additional information as deemed necessary, such as territory or commonwealth tax returns. Since the Code does not expressly require the production of these documents, the trustee or the United States Trustee may need to seek production through discovery.

Updated: August 2006

Domestic Support Obligations (DSOs)

Q: How does a trustee carry out his/her DSO notice duties if the DSO claimholder does not want the debtor to know where he/she lives?

A: If a DSO claimant’s address does not appear in the bankruptcy schedules and it is still unknown after the trustee’s inquiry at the § 341 meeting, the trustee does not have to send the notice to the DSO claimant. However, if the claimant’s State of residence is known, then the trustee should send the notice to the State agency.

Updated: August 2006

Q: When should the required DSO notices be sent?

A: While BAPCPA is silent on the timing of DSO notices, trustees should send the first notice generally no later than three business days after the § 341 meeting. However, if the information is otherwise available to the trustee, the trustee may send the notice at anytime prior to the § 341 meeting. Trustees must send a second notice to DSO claim holders and State child support enforcement agencies when a discharge is granted.

Updated: December 2007

Q: Can the two required DSO notices be combined?

A: No. Two separate notices are required – an initial notice and a discharge notice.

Updated: August 2006

Q: Does a trustee need to file a DSO notice or a certification of notice with the court?

A: Because of privacy concerns, a trustee should not file DSO notices or certifications of notice with the court. If the court requires filing of the notices or certifications, the trustee should redact all privacy sensitive data. For example, the first five digits of a debtor’s Social Security number must be redacted.

Updated: Updated December 2007

Q: When a DSO does not include a child support component, does the required notice still need to be sent to the State Child Support Enforcement Agency?

A: The definition of domestic support obligations in 11 U.S.C. § 101(14A) includes obligations other than child support, so it is possible to have a DSO without a child support obligation. The obligation of a trustee under both § 704 and § 1302 is to provide notice to the holder of the claim advising “of such claim and of the right of such holder to use the services of the State child support enforcement agency established under sections 464 and 466 of the Social Security Act for the State in which such holder resides, for assistance in collecting child support.” Accordingly, the notice is required regardless of whether a child support obligation exists.

Updated: August 2006

Q: What information is required to be included in the first DSO notice?

A: Sections 704(a)(10) and (c), 1202(b)(6) and (c), and 1302(b)(6) and (d) require trustees to provide written notices to domestic support obligation claim holders concerning their rights to payment in bankruptcy cases, their rights to use the collection services of the State child support enforcement agency of the State where they reside, and contact information for such agencies. These sections also require trustees to notify the State child support enforcement agency established under sections 464 and 466 of the Social Security Act for the State in which the claim holder resides and provide the agency with the claim holders’ contact information.

Updated: December 2007

Q: What information is required to be included in the second DSO notice?

A: Trustees must send a second notice to DSO claim holders and State child support enforcement agencies when discharges are granted. The notice must include the last known addresses for the debtor and the debtor’s employer, as well as contact information for certain creditors whose claims were either reaffirmed or not discharged.

Updated: December 2007

Q: Is a trustee required to send the second DSO notice after the discharge even when a non-dischargeability action is pending against the debtor?

A: 11 U.S.C. §§ 704(c)(1)(C) and 1302(d)(1)(C) provide that a DSO notice is to be sent “at such time as the debtor is granted a discharge.” Accordingly, the discharge notice must be given by the trustee after the discharge is granted. The trustee can determine from the docket the names of creditors asserting § 523(a)(2), (4), or (14A) claims or whose debt was reaffirmed under § 524(c). To the extent an applicable § 523 discharge action has not been resolved, the trustee should proceed to send the discharge notice and include the name of the creditor, with a notation that an action to determine the dischargeability of the creditor’s claim is pending.

Updated: August 2006

Q: To satisfy the requirements in 11 U.S.C. § 704(c)(1)(C) that a trustee list certain debts that were reaffirmed or not discharged in the notice that is sent to a DSO claimant at the time of discharge, can a trustee simply attach the docket to the notice?

A: No. Since only certain creditors are to be listed, the trustee must review the docket, identify the applicable creditors, and specifically set forth their names in the discharge notice.

Updated: August 2006

Q: If a debtor fails to complete an approved course in personal financial management and the case is closed, does a trustee need to be reappointed to give the DSO notice upon entry of the discharge?

A: 11 U.S.C. § 704(c)(1)(C) and 1302(d)(1)(C) require a trustee to send the discharge notice to both the DSO claimant and the State child support enforcement agency “at such time as the debtor is granted a discharge.” If the case is closed without the granting of a discharge because of the debtor’s failure to comply with the debtor education requirement, but the debtor subsequently complies and files the appropriate motion to have the case reopened so that a discharge can be entered, any order reopening the case should direct the United States Trustee to appoint a chapter 7 trustee so the proper DSO notice can be given.

Updated: August 2006

Q: Is the chapter 13 trustee responsible for filing a motion to dismiss on issues related to domestic support obligations?

A: The chapter 13 trustee is responsible for monitoring DSO issues and for taking appropriate action when a debtor fails to meet DSO obligations.

Updated: August 2006

Q: Are sample DSO notices available?

A: Sample DSO notices have been provided to the U.S. Trustee Program’s field offices for dissemination to trustees. They are provided here as well: [PDF - 50 KB].

Updated: Updated December 2007

Q: Should Social Security numbers be shown on DSO notices to State child support enforcement agencies or to the holder of the claim?

A: Full Social Security numbers should be shown on notices going to the State child support enforcement agency. However, notices to the holder of the domestic support obligation claim should not show a debtor’s Social Security number.

Updated: December 2007

Q: Where can the addresses of State child support enforcement agencies be found?

A: The addresses for the State child support enforcement agencies are posted on the Program’s Web site at: http://www.usdoj.gov/ust/eo/private_trustee/ds/index.htm. Each State and territory has two addresses: one for inclusion in the notice going to the domestic support obligation claimant and another for the trustee’s notice to the State agency.

Updated: December 2007

Q: Can the DSO notice simply refer the recipient to a Web site where address and contact information for the State support contacts can be found?

A: No. The address and contact information of the State child support enforcement agency must appear on the notice.

Updated: August 2006

Q: Can DSO notices be sent to the State agencies by email?

A: Notice to the State child support enforcement agency must be sent by United States mail consistent with Fed. R. Bankr. P. 2002(b),(f), and (h).

Updated: August 2006

Q: Does 11 U.S.C. § 1322(a)(4) apply only to DSO’s that have been assigned to a governmental unit for collection?

A: Yes. A chapter 13 plan may provide for less than full payment of a DSO if the plan is for a term of five years, all of the debtor’s projected disposable income is applied to make payments under the plan, and the claim has been assigned to a governmental unit for collection.

Updated: August 2006

Q: Some tribal nations have set up child support collection agencies. Should the required DSO notices be mailed to them?

A: The Bankruptcy Code provides that notices go only the to the “State child support enforcement agency” where the holder of the domestic support obligation resides. Tribal nations are not included in the definition of “State” in the Bankruptcy Code. See 11 U.S.C. § 101(52).

Updated: August 2006

Health Care Businesses

Q: Is a pharmacy a health care business?

A: The term “health care business” is defined in 11 U.S.C. § 101(27)(A) as a public or private entity primarily engaged in offering to the general public services for the diagnosis or treatment of injury, deformity, or disease, and includes any general or specialized hospital; ancillary ambulatory, emergency, or surgical treatment facility; hospice; home health agency; and other similar health institutions. Although dispensing drugs might be considered the “treatment of injury, deformity, or disease,” a pharmacy is not a health institution similar to the ones listed in the statute.

Updated: August 2006

Q: Are billing records included in the term “patient records”?

A: The term “patient records” is defined in 11 U.S.C. § 101(40B) and means “any written document relating to a patient or a record recorded in magnetic, optical, or other form of electronic medium.” Given this broad definition, the term would include billing records.

Updated: August 2006

Q: What is the obligation of a trustee when a health care facility files chapter 7 and it is a no-asset case?

A: If the health care facility is in the process of closing at the time the chapter 7 case is filed, then pursuant to 11 U.S.C. § 704(a)(12) the trustee, in both asset and no-asset cases, must “use all reasonable and best efforts” to transfer patients to another health care business in the vicinity that provides patients with similar services and a reasonable quality of care. Trustees are encouraged to work with the State agency with regulatory authority over the facility to assist with patient transfer. The trustee must obtain an operating order before any patient transfer is accomplished.

Patient records must either be stored by the trustee or, if insufficient estate funds are available, disposed of by following the requirements set forth in § 351. Section 351 procedures requires the trustee to: (i) publish notice that if the patient records are not claimed within 365 days from the date of the notice they will be destroyed; (ii) attempt to notify patients and insurance carriers directly concerning the patient records; and (iii) to the extent the records are not claimed within the 365-day period, mail by certified mail a written request to each appropriate Federal agency seeking permission to deposit the patient records with that agency, which the Federal agency is not required to accept. Any unclaimed patient records that have not been deposited with a Federal agency can then be destroyed in accordance with § 351(3).

Updated: August 2006

Miscellaneous

Q: If a creditor is listed on the debtor’s matrix with an address that is different than the “national” address given to the bankruptcy courts for service, which address should the trustee rely on?

A: A trustee should rely on the most current clerk’s mailing matrix for the addresses of creditors.

Updated: August 2006

Q: When using documents in an evidentiary hearing that contain Social Security and account numbers, what privacy protections are required?

A: Privacy protected information, such as Social Security numbers, should be redacted from documents used at an evidentiary hearing, unless the debtor agrees in writing to the use of the unredacted document or the privacy information is a necessary part of the proof.

Updated: August 2006

Q: 11 U.S.C. § 541(b)(7) excludes from property of the estate amounts withheld by an employer from wages for payment as contribution to certain retirement plans. Are profit sharing plans exempt when the amount is paid directly by the employee and not withheld from wages?

A: The language of § 541(b)(7)(A) clearly refers to only those amounts withheld from an employee’s wages; however, § 541(b)(7)(B) refers to those amounts “received by an employer from employees for payment of contributions.” Subsection (B) appears to address the “direct pay” situation. Accordingly, those contributions paid to an employer (and not simply withheld) do not constitute property of the estate. In addition, they should not be included in disposable income for purposes of 11 U.S.C. § 1325(b)(2).

Updated: August 2006

Ombudsmen

Q: Who will be appointed as an ombudsman and how is the person paid?

A: Both patient care and consumer privacy ombudsmen must be disinterested persons, who are not the United States Trustee. If the debtor is a long-term health care facility, the United States Trustee may appoint the State Long-Term Care Ombudsman appointed under the Older Americans Act of 1965.

Ombudsmen are paid like any other professional. Pursuant to 11 U.S.C. § 330, ombudsmen can be paid reasonable compensation for actual, necessary services rendered and reimbursed for actual, necessary expenses.

Updated: August 2006

Q: When is a privacy ombudsman needed in an 11 U.S.C. § 363 sale or lease?

A: Whenever there is a sale of “personally identifiable information” under § 363(b)(1)(B) the court must direct the United States Trustee to appoint a consumer privacy ombudsman if the sale is not consistent with the debtor’s pre-bankruptcy privacy policy. The appointment must be made not later than five days before the commencement of the hearing on the sale.

Updated: August 2006

Q: Is a panel trustee prohibited from appointment as an ombudsman?

A: If qualified, a panel trustee may serve as an ombudsman.

Updated: August 2006

Preferences

Q: How does the change in the “ordinary course” preference exception of 11 U.S.C. § 547(c)(2) affect a trustee’s ability to recover credit card payments?

A: Before the BAPCPA, some chapter 7 trustees recovered balance transfers or large lump sum payments on credit card debt because, although such payments might be common in the industry, they were not common between the particular debtor and the creditor. As a result, the “ordinary course” exception did not apply. With the change in § 547(c)(2), the ability to recover these payments may be limited.

Updated: August 2006

Trustee Compensation

Q: Is a trustee entitled to full statutory trustee fees in all circumstances?

A: 11 U.S.C. § 330(a)(7) provides that the trustee fee is to be “treated as a commission.” Absent extraordinary factors, the United States Trustee will not object to a trustee receiving full commission on all “moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims.” Extraordinary factors are expected to arise only in rare and unusual circumstances and include situations such as where the trustee’s case administration falls below acceptable standards, or where it appears a trustee has delegated a substantial portion of his duties to an attorney or other professional.

Updated: August 2006

Q: Will a trustee be paid the $60 statutory case fee when the filing fee is waived?

A: Payment of the $60 per case statutory fee is a matter over which the Program has no authority. The Administrative Office of the United States Courts has issued a memorandum that trustees will not be paid the $60 fee in in forma pauperis cases.

Updated: August 2006

Q: Are time records necessary to support a trustee’s compensation?

A: United States Trustees will not require a trustee to provide time records to support trustee compensation with regard to cases filed after October 17, 2005. It may, however, be prudent for a trustee to keep time records to address objections raised by other parties or to satisfy requirements of the court.

Updated: August 2006

Q: Can a trustee be compensated for services where he/she discovered assets and the debtor then converted the case?

A: The Code has not changed with respect to a chapter 7 trustee’s right to compensation when a case converts to chapter 13. However, case law is split on this issue. When a chapter 7 trustee is entitled to compensation for a conversion or dismissal of the debtor’s prior case pursuant to 11 U.S.C. § 707(b), and some portion of that compensation has not been paid, the chapter 7 trustee is entitled to payment (as set forth in § 1326(b)(3)(B)) under the plan. Pursuant to § 1326(d), such compensation is payable even if the debt was discharged in a prior case.

Updated: August 2006

Chapter 7 Uniform Final Reports:

Data Entry by Trustees

Q: Regarding data entry by trustees, will there be any exception for data not currently available in a trustee’s system? An example is scheduled claims for Exhibits 3, 6, and 7 in the Chapter 7 Trustee’s Final Account and Distribution Report (TDR).

A: Generally, trustees are responsible for entering any information for the Chapter 7 Trustee’s Final Report (TFR), Notice of Trustee’s Final Report (NFR), and TDR that the trustee’s software cannot extract or calculate.

With respect to scheduled claims on Exhibits 3, 6, and 7 of the TDR, each scheduled and unscheduled claim should be listed individually with amounts shown for the claim scheduled, claim asserted, claim allowed, and claim paid. Trustees will need to enter this information in their software systems if the data cannot be downloaded or calculated by the software.

An exception with respect to scheduled claims is granted for cases filed prior to April 1, 2008, that have 25 or more claims listed on Schedules D, E, and F. For such cases, trustees may enter the total from the Schedules, rather than listing each individual scheduled claim.

This exception is effective for TDRs submitted to the United States Trustee prior to April 1, 2010. Thereafter, all scheduled claims will need to be entered, unless the United States Trustee grants an exception due to extraordinary circumstances.

Updated: October 1, 2009

Modifications to the Forms

Q: Can the debtor's address be added as a field on the NFR, TFR, or TDR?

A: Yes, if the debtor’s address is required by the court to be part of the caption. Otherwise, it generally should not appear.

Updated: October 1, 2009

Q: May the Notice language on the NFR be modified to accommodate local rules?

A: Yes. A revised version of the NFR, which went into effect on September 1, 2009, allows the noticing provisions to be modified to accommodate local rules or practice.

Updated: October 1, 2009

Q: Can additional information required by the court continue to be included in the final report document – either at the front or back? Examples include the certificate of service, a narrative, or time sheets.

A: No. Additional information required by the court may not be incorporated as part of the uniform final report. Instead, it should be submitted as a separate PDF document. It may be included as part of the same docket entry, but it must be a separate PDF from the final report PDF.

Updated: October 1, 2009

Q: Can the trustee’s request for compensation and expenses and professional fee applications be included in the final report document?

A: No. These documents may not be incorporated as part of the uniform final report. Instead, they should be submitted as separate PDF documents. They may be part of the same docket entry, but they must be separate PDFs from the final report PDF.

Updated: October 1, 2009

Q: A certificate of service is part of the TFR, NFR, and TDR in some jurisdictions. Is it still required and, if so, is it part of the final report PDF?

A: The uniform final reports do not change local practice regarding certificates of service; however, they must be filed as a separate PDF. It may be included as part of the same docket entry, but it must be a separate PDF from the final report PDF.

Updated: October 1, 2009

TDR

Q: Are scheduled claims on the TDR entered only for creditors who file proofs of claim or for every claim on Schedules D, E, and F?

A: Scheduled claims are entered for every claim listed on Schedules D, E, and F, except in certain limited circumstances. See "Data Entry by Trustees".

Updated: October 1, 2009

Q: If real estate valued on the debtor’s schedule (and in column 2 on Form 1– Individual Estate Property Record and Report attached as Exhibit 8 to the TDR) for $15,000 is sold for $12,000, is the $3,000 difference considered abandoned?

A: No. The value listed by the debtor is only an estimated fair market value. The amount realized by the trustee is the actual fair market value. The difference is not an “asset” abandoned by the trustee.

Updated: October 1, 2009

Q: If a claim is listed by the debtor on Schedule D as a secured claim, but the creditor files a priority claim, how is this reflected in Exhibits 3 and 6?

A: Exhibit 3 should list the claim from Schedule D, but should reflect NA for claims asserted, claims allowed, and claims paid.

Exhibit 6 should list the claim and show the proof of claim amount in the claims asserted column. The claims allowed and claims paid column should reflect the amounts allowed and paid, respectively. Claims scheduled should be NA.

Updated: October 1, 2009

Q: If a proof of claim asserts all classes, is it listed as three separate claims on Exhibits 3, 6, and 7?

A: Yes, the portion allocable to each class (secured, priority, and general unsecured) should be shown in these exhibits.

Updated: October 1, 2009

NFR and TFR

Q: For wage claim cases, the proposed distribution currently provides a detailed breakdown of gross pay, payroll deductions, employer payroll taxes, and net pay. Since this information will no longer be shown on the proposed distribution, how will the U.S. Trustee review the employee and employer payroll taxes?

A: The chapter 7 trustee software generates a report similar to a payroll register that shows the breakdown of gross pay, deductions, net pay, and employer payroll taxes for each wage claim proposed for payment. The U.S. Trustee may ask the trustee to provide this report with the TFR, but it will not be filed with the court.

Updated: October 1, 2009

Q: Will the Program specify a format for Exhibit C to the TFR?

A: No. Trustees may continue to use whatever format they currently use.

Updated: October 1, 2009

Q: If there is no Exhibit C to the TFR, should the trustee re-letter subsequent Exhibits?

A: No.

Updated: October 1, 2009

Q: The NFR and TFR do not provide space to propose payment of debtor exemptions and non-estate funds to third parties. Are trustees now required to make these payments prior to submitting the TFR?

A: Yes. The trustee should not wait until the end of the case to disburse these funds. Non-estate property, including exemptions, should be returned to the debtor or third-parties without delay.

Updated: October 1, 2009

Q: Should the bar date for governmental units or the original bar date for other creditors appear in paragraph 6 of the TFR?

A: The original bar date for other creditors should appear in paragraph 6 of the TFR.

Updated: October 1, 2009

Miscellaneous

Q: Are bank statements and canceled checks required to be submitted with TFRs and TDRs?

A: Yes. Trustees must provide original bank statements and canceled checks with TFRs and TDRs submitted to the United States Trustee.

Updated: October 1, 2009

Q: Is the Distribution Report for Closed Asset Cases (Form 4) still required?

A: Currently, yes, although the USTP will be phasing out the Form 4 over the next 18 months. Trustees will be notified when the Form 4 is no longer required.

Updated: October 1, 2009

Q: The TDR for a very large case could exceed the maximum file size prescribed for documents filed in CM/ECF. How can the TDR be filed?

A: If a TDR exceeds a local court’s maximum file size for PDF attachments, the TDR can be split into two PDFs, with Exhibits 8 and 9 (Forms 1 and 2) in a separate PDF file. The rest of the TDR (which is data-enabled) must be kept in a single PDF file. The chapter 7 trustee software vendors have been advised of these requirements.

Updated: October 1, 2009

 

Monday, May 19, 2014 2:40 PM