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Remarks of Acting Director Ramona D. Elliott at the 57th Annual Seminar of the National Association of Chapter Thirteen Trustees


San Francisco, CA
United States


Good morning! It is my honor to be here with you today to address your 57th Annual Seminar. This is my first trip in more than two years, and I appreciate the opportunity to update you on the work of the U.S. Trustee Program (USTP or Program) and to discuss issues impacting the chapter 13 community. I am joined in the audience today by our U.S. Trustee for Region 17, Tracy Hope Davis, who is based here in San Francisco, and our Assistant Director for Oversight, Bob Gebhard, from headquarters who will be with you for the entire conference.

I begin by extending my appreciation to your outgoing President, Mary Viegelahn, for her leadership of your organization over the past year. She and the NACTT leadership team have been critical to our collective efforts to address the lingering challenges of the pandemic as we prepare for a new normalcy. The USTP has enjoyed a strong partnership with the NACTT for many years, and I am confident that will continue under the leadership of your incoming president, Rusty Simon, who I have had the pleasure of working with through the liaison process for the past several years.

On a personal note, I want to thank you for the warm welcome I received as I stepped into the role of Acting Director. I have been fortunate to work with many of you over the years since joining the USTP in 1994 as a Trial Attorney. I started in the Miami office, then worked in Puerto Rico—which had a heavy chapter 13 docket—and in Greenbelt, Maryland. In 2001, I left for the Federal Trade Commission (FTC) before returning to the Program in 2007 as the Deputy General Counsel and ultimately becoming the Deputy Director/General Counsel.

In my 15 years in the Executive Office, and alongside former Director Cliff White and our experienced trustee oversight team, I have had the pleasure of working with the NACTT’s leadership on myriad issues concerning the administration of chapter 13 cases. And, as the USTP’s liaison to the Judicial Conference’s Advisory Committee on Bankruptcy Rules, I have appreciated the contributions of Deb Miller, Joyce Babin, Nancy Whaley, and others, including in connection with the promulgation and amendments to Rule 3002.1 and, of course, the form chapter 13 plan.

My message to you today is the same as it was to the Program shortly after I became Acting Director. We will continue with “business as usual” in carrying out our mission, including maintaining a productive relationship with the NACTT and its members.


One area where that relationship will be more important than ever relates to the future of section 341 meetings of creditors (341 meetings). All of you who were serving as trustees in early 2020 will recall that, as the pandemic rapidly developed, the USTP and private trustees had to quickly pivot from in-person to virtual 341 meetings, conducted primarily by telephone. Our ability to deftly make this transition, without any significant disruption or negative impact on the efficient administration of cases, speaks to the dedication and skill of our trustee corps. I want to reiterate our appreciation for your flexibility and cooperation during those dynamic times.

The pandemic taught us some lessons about the advantages of virtual 341 meetings, especially in consumer cases. Not only did they result in better debtor attendance at first meetings, but there was greater creditor participation as well. We also heard from many stakeholders, including chapter 7 and 13 trustees, that virtual meetings were generally effective and yielded substantial efficiencies for all participants in terms of both cost and time.

Earlier this year, the USTP confirmed with your organization our plans to implement a new, permanent 341 meeting policy to conduct first meetings of creditors by Zoom videoconference in chapter 7, 12, and 13 cases. In reaching this decision, we carefully reviewed alternatives—including talking with many of you who have been doing video 341 meetings throughout the pandemic—and resolved numerous legal, administrative, technical, security, budgetary, and practical issues. Video meetings have several advantages over telephonic meetings, including providing visual verification of a debtor’s identity, demeanor, and credibility; preserving the evidentiary value of testimony; and retaining the formal and public nature of the meeting.

We also understand the need for limited exceptions to video 341 meetings based on the specific circumstances of a particular case. We will need to continue to allow for alternative arrangements, including participation by phone, when a debtor’s extenuating circumstances do not allow them to participate by video. And there will continue to be a need for in-person meetings. For example, trustees will have discretion to continue a virtual meeting to an in person meeting when necessary to complete the identification of the debtor or to obtain testimony or information necessary to complete the administration of the case. In the rare instances when an in-person continued meeting is warranted, appropriate health and safety protocols will be followed.

This new policy, once fully implemented, represents a major sea change in consumer bankruptcy practice. Importantly, we retain the debtors’ enhanced access to the bankruptcy system by reducing the need to take time from work and incur travel and childcare burdens. Similarly, debtors’ counsel and other meeting participants, including you and your staff, will benefit from added efficiencies. All stakeholders’ ability to participate in the bankruptcy process will be improved and costs across the system will be reduced, while the integrity of the system and your ability to expeditiously administer cases will be protected.

We are preparing to test this new policy in Region 19, which covers the judicial districts of Colorado, Wyoming, and Utah. In conjunction with this test phase, we have formulated interim procedures for trustees in conducting the meetings and developed best practices for parties and their counsel to maintain the solemnity and decorum of the meetings. We are anxious to commence the pilot as soon as we clear the remaining hurdles with the courts in those districts.

We will use the lessons we learn from the pilot to roll out the video 341 meeting policy in all other USTP regions. Until then, meetings will continue to be conducted in accordance with current protocols. The scope of the future nationwide implementation includes coordinating with select vendors, your organization, and others to deliver training on conducting video 341 meetings in compliance with the USTP’s procedures; ensuring that all trustees have the support needed to properly provide secure public access to video 341 meetings; and implementing trustee oversight protocols to ensure that video 341 meetings are conducted fairly, consistently, and in a way that ensures access to debtors, their counsel, and other participants. We have completed much of the necessary groundwork. In addition, as we are doing now for the pilot, we will need to work with the courts locally to ensure that video 341 meetings are adequately noticed to creditors and properly scheduled.

When we expand to conducting these meetings by video nationwide, we will also evaluate the economies of gradually reducing section 341 meeting space requirements. We will be deliberate and transparent as we proceed in making these decisions, which should result in significant savings for taxpayers while better serving debtors, creditors, and the public.

I extend my gratitude to the NACTT leadership team for continuing to collaborate with us as we move towards this permanent video 341 meeting policy. We will continue to update you—and will continue to welcome your input—as we move towards finalizing this significant improvement in the consumer bankruptcy system.


Next, I turn to another major change in the bankruptcy landscape. As most of you know, on June 21 the President signed into law the Bankruptcy Threshold Adjustment and Technical Corrections Act. Among other things, the law made two substantive changes of significance to consumer practitioners and trustees. It temporarily adjusted the thresholds for debtor eligibility by: (1) extending the increased subchapter V debt limit of $7.5 million; and (2) increasing the chapter 13 debt limit to $2.75 million and eliminating the distinction between secured and unsecured debt.

The evolving characteristics of consumer bankruptcy cases—in particular, mortgage amounts in high cost-of-living areas—have been the source of previous stakeholder suggestions for adjustments to the chapter 13 debt limit, including by the American Bankruptcy Institute’s Commission on Consumer Bankruptcy (ABI Commission). And it will be interesting going forward to see which chapter individual business debtors in particular will choose given the concurrent increase in the chapter 13 debt limit and the continued higher debt limit in subchapter V.

Each chapter has its own benefits, but the increase in the chapter 13 debt limit may attract a subset of debtors who otherwise may have elected to proceed under subchapter V. For example, the chapter 13 business owner might not want to run the risk of the trustee operating their business as is possible in subchapter V. In addition, the chapter 13 debtor is not required to meet the plan voting requirements inherent in subchapter V.

Also, many individual business debtors may remain ineligible for subchapter V relief and will need to look to chapter 13 or chapter 11 to save their businesses. An individual business debtor in chapter 13 is not required to meet the 50 percent business debt eligibility requirement of subchapter V. So more individual business debtors may be eligible for chapter 13 than are eligible for subchapter V, including those with high residential mortgage debt, provided their total debts do not exceed the newly expanded chapter 13 debt limit.

We will continue to monitor trends as both subchapter V and chapter 13 practice evolve incident to this new legislation.


The next topic I want to take a few minutes to talk about is best practices for document production. As you all know, in October 2021, the Program amended the Handbooks for chapter 7 and 13 trustees to incorporate the “Best Practices for Document Production Requests by Trustees in Consumer Bankruptcy Cases” (Best Practices). The Best Practices were developed a decade ago by the USTP in collaboration with this organization, the National Association of Bankruptcy Trustees (NABT), and the National Association for Consumer Bankruptcy Attorneys (NACBA). They represent specific, strongly encouraged recommendations for trustees regarding requests for documents and information in consumer bankruptcy cases, and they identify common examples of potentially unreasonable document requests.

It is important to note that the Best Practices by their terms do not interfere with trustees’ ability to exercise their judgment to make reasonable requests consistent with the requirements of the Bankruptcy Code based on the facts and circumstances of a specific case. Rather, they are designed to discourage generalized practices that result in burdensome requests in every case irrespective of any specific need for the information sought.

It is a testament to the Best Practices’ reasonable approach that they have been broadly accepted and followed. In fact, the ABI Commission endorsed them as providing “sound guiding principles” and recommended the Best Practices be incorporated into the trustee Handbooks to enhance their prominence and enforceability—which we ultimately did. We also revised our trustee performance review forms to specifically evaluate compliance in this area and thereby continue to promote a uniform, efficient approach to the administration of cases.


Let me now turn to bankruptcy filing trends. We all know that filings have continued to slip since the outset of the pandemic. For chapter 13 cases specifically, fiscal year (FY) 2022 filings in USTP districts during the first three quarters ending June 30 were lower than three years ago by more than 50 percent. But chapter 13 filings have begun to rebound during FY 2022. While still well below pre pandemic totals, through June 30, filings were more than 20 percent higher than a year ago.

If the chapter 13 filing trend continues upward, it will be important to mind trust operation receipts and make necessary adjustments to ensure the trust operations have appropriate reserves. Collaboration between trustees and their U.S. Trustees remains incredibly important to determine the necessary percentage fee that will allow trustees to maintain an appropriate infrastructure to properly administer rising case levels. As you are aware, throughout the pandemic we have been—and will continue to be—flexible in reviewing individual chapter 13 trustee office budgets and setting percentage fees to provide necessary reserve funding.

We will continue to monitor trust operation receipts. And as we have consistently communicated with your leadership, the existing 25 percent cap on operating reserves will remain suspended until further notice.


Regardless of how and when filing trends shift, the USTP must continue to maintain and support a strong contingent of chapter 13 trustees to address current and future demands. To that end, we are expanding our recruitment efforts, including taking steps to attract trustee candidates who represent a range of personal and professional backgrounds, experiences, and perspectives. This will include, among other things, engaging with various affinity and other professional groups to showcase opportunities for service as a bankruptcy trustee.

I know, too, that the NACTT is doing some important work in this area, including by offering diversity and inclusion focused educational sessions as part of this seminar. And we look forward to working with the NACTT and other organizations such as the NABT, the American College of Bankruptcy, NCBJ, ABI, ABA, and NACBA as part of the newly formed “Bankruptcy Diversity, Equity and Inclusion Consortium” to identify ways that collectively we can advance recruitment efforts to better reach historically underrepresented populations.

Finally, I urge all of you to join in the effort to ensure that the bankruptcy system continues to benefit from the services of a group of superb chapter 12 and 13 trustees who represent this country’s rich diversity.


Next, I want to discuss the Program’s participation in appeals. Over the past six fiscal years, we have participated in almost 600 appellate matters before bankruptcy appellate panels, district courts, courts of appeals, and the Supreme Court. And the fact that more than 95 percent of those were decided in the government’s favor speaks to the skill and professionalism of the Program’s trial and appellate litigators, and our colleagues in the Department of Justice, including the Office of the Solicitor General and the Civil Division.

The goals of the Program’s appellate practice are to clarify the law and ensure that the bankruptcy system works fairly for all stakeholders. Whether as a party or amicus in an appeal, we strive to promote consistency and predictability in the bankruptcy system by developing and advocating uniform legal positions. These and other prudential and practical considerations drive the Program’s decision-making in pursuing appeals. We need to consider, among other things, whether an appeal has framed the legal issues in the best way to advance a consistent reading of the law and whether a case has any jurisdictional defects.

Currently, there are a few significant pending appeals involving consumer bankruptcy issues. One is the cert. petition pending before the Supreme Court in Kinney v. HSBC, No. 21 599 (U.S.), concerning whether the debtor may cure plan defaults after 60 months. I noticed that your agenda includes a panel presentation tomorrow discussing this interesting issue. In that case, the Tenth Circuit affirmed the bankruptcy court’s holding that a debtor may not receive a full chapter 13 discharge if they have not made all plan payments within 60 months. The Court has asked the Solicitor General for the government’s views, which are still under development.

Perhaps of greatest interest to all of you are the multiple circuit-level appeals being litigated on the question of whether chapter 13 trustees may retain percentage fees collected in cases that are dismissed prior to confirmation of a plan. The core legal issue involves interpreting the interplay between 28 U.S.C. § 586(e)(2) and section 1326 of the Bankruptcy Code. We have expressed in the Handbook that, subject to controlling authority, chapter 13 trustees collect the percentage fee from pre-confirmation payments and may retain it if the case is dismissed or converted prior to confirmation. We have consistently reinforced our view of the correct statutory interpretation, including in our successful brief filed in the district court in Soussis v. Macco, which is currently on appeal to the Second Circuit.

The USTP will continue to advance a clear and consistent reading and application of the Bankruptcy Code through our appellate practice, including in appropriate cases that support chapter 13 trustees in their proper administration of bankruptcy cases.


The final matter I want to address is the Program’s commitment to promoting “access to justice” for all participants in the bankruptcy system. True access to justice means not only removing barriers to entry, but also ensuring that parties, including debtors, who seek relief in good faith and comply with the Bankruptcy Code and Rules receive the relief the law affords them.

The upcoming permanent move to video 341 first meetings of creditors is one specific, significant way in which the Program is acting to improve access to the bankruptcy system. The USTP’s release last month of enforcement guidelines to our staff related to bifurcated fee agreements in chapter 7 cases is another. These arrangements have been held to be impermissible by some courts but, where allowed, they provide an alternative to debtors who are unable to pay their chapter 7 attorney’s fees in full before filing who otherwise might file under chapter 13 solely for the purpose of being able to pay their attorney’s fees over time. Nevertheless, bifurcated fee arrangements may also present opportunities for abuse. Our enforcement guidelines strike a balance between providing flexibility to debtors and guarding against misconduct. Additionally, as mentioned by former Director White when he addressed your Mid-Year Meeting in January, the Program continues to develop enforcement strategies to investigate and address patterns of debtor attorney misconduct in chapter 13 cases.

Another aspect is securing environmental justice, which intersects with your administration of cases and our collective efforts to protect the integrity of the bankruptcy system. The Department’s commitment to seeking equal justice under the law includes reducing disproportionate adverse public health and environmental burdens borne by underserved communities, including communities of color, low-income communities, and Tribal and indigenous communities. As you may know, we have developed a trustee training module that focuses on diversity, inclusion, and environmental justice that is being presented as part of this year’s local and regional training programs. The module includes real-life examples that demonstrate the impact these issues have on the bankruptcy system and your role as trustees in addressing environmental justice in underserved and underrepresented communities. Your unique ability to observe and report to us patterns suggesting community-wide environmental issues, particularly in economically distressed communities, is critical to directing federal government resources to address these issues.

I also am pleased to acknowledge and express our appreciation for the NACTT’s own efforts to advance access to justice, including its deployment of, a platform to educate the public on personal financial matters. I know this will be a valuable tool to aid consumers in learning about, and managing, their financial affairs.

Finally, our partnership with chapter 13 trustees is critical to ensuring fair access to the bankruptcy system. Your careful and efficient administration of cases and your referrals of possible fraud and misconduct aid us in our watchdog duties. Your compliance with the Handbook—including, and especially, the revision I previously discussed related to the Best Practices—also serves to advance these goals by ensuring that the bankruptcy system functions smoothly and equitably for the benefit of all its participants. We appreciate your continued cooperation.


To wrap up, I appreciate the invitation to join you today and share some of the USTP’s recent activities. We are excited to continue our collaborative relationship with the NACTT, and I am confident that we will continue to meet the challenges that lay ahead while maintaining and improving the efficient administration of chapter 13 cases.

Thank you.

Updated July 12, 2022