U.S. TRUSTEE PROGRAM ANNOUNCES ENFORCEMENT GUIDELINES
FOR BANKRUPTCY DEBTORS AFFECTED BY NATURAL DISASTERS
WASHINGTON, D.C. - The United States Trustee Program today
announced it has issued bankruptcy enforcement guidelines
that take into account the hardships experienced by victims
of recent hurricanes in the Gulf Coast region.
The Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005 (BAPCPA), which takes effect on October 17, 2005,
contains various new requirements for parties to a bankruptcy
proceeding. The Program announced it is taking the following
steps to address the impact of current law and the BAPCPA
upon victims of natural disaster.
- Document Requirements -Under current
law and the BAPCPA, debtors provide documents such as payment
advices and statements of income. U.S. Trustees will not
file enforcement motions against debtors who cannot produce
documents due to natural disasters, if they are otherwise
eligible for bankruptcy relief.
- Means Test - Under the BAPCPA, individual
debtors undergo a "means test" to determine whether they
are eligible for Chapter 7 relief or whether Chapter 7 relief
is presumed abusive. Generally speaking, the BAPCPA permits
a debtor to rebut that presumption of abuse by showing "special
circumstances." In determining whether to file an enforcement
motion on grounds of presumed abuse, the Program will consider
income loss, expense increase, and other adverse effects
of a natural disaster to constitute "special circumstances."
- Attendance at Creditors' Meetings - U.S.
Trustees will exercise flexibility and provide alternative
means for a debtor to attend the mandatory meeting of creditors
if, due to the adverse effects of a natural disaster, the
debtor cannot appear personally and testify under oath in
the district where the case is filed.
- Venue - U.S. Trustees will not raise
or support venue objections in cases in which the debtor
was displaced due to a natural disaster, unless the filing
constitutes a systemic abuse or presents extraordinary circumstances.
- Small Business Chapter 11 Bankruptcies
-U.S. Trustees will not take enforcement actions against
Chapter 11 small business debtors who, as a result of a
natural disaster, cannot reasonably be expected to perform
statutory duties such as attending an initial debtor interview
and filing financial reports. U.S. Trustees will not seek
conversion or dismissal of a small business Chapter 11 case
if the grounds for filing the case are attributable to a
natural disaster and there are reasonable prospects for
reorganization. U.S. Trustees will not oppose reasonable
and necessary extensions of time to file a disclosure statement
and confirm a reorganization plan, if a small business debtor
cannot comply with the deadlines because of a natural disaster.
The BAPCPA requires individual debtors to undergo credit
counseling before filing for bankruptcy. The BAPCPA
authorizes U.S. Trustees to approve credit counseling agencies
according to criteria set forth in the law. On October
4, 2005, the Program announced a temporary waiver of
the statutory requirements for credit counseling for bankruptcy
filers in Louisiana and the Southern District of Mississippi
due to the effects of Hurricane Katrina.
The U.S. Trustee Program is the component of the Justice
Department that promotes integrity and efficiency in the nation's
bankruptcy system by enforcing bankruptcy laws, providing
oversight of private trustees, and maintaining operational
excellence. The Program has 21 regions and 95 field offices.
Under federal law, the Program is not responsible for overseeing
bankruptcy cases filed in Alabama or North Carolina.
Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees