There are a number of things
that can be done to make your cases go smoother with the Trustee. A number of suggestions will be found below:
Review the pleadings with
your clients prior to signing. Make sure
all questions have been answered.
Key Problem Areas
Key Problem Areas are discussed in detail on the "Debtor Practice" Link under trustee training.
Most cases are no asset cases
(about 90% in this district). You can
help the trustee quickly make that determination by supplying helpful
information that may not be required by the statements and schedules or current
Non-Filing Spouse, Partner
List all joint property on
the statements and schedules and indicate joint ownership. Remember that equitable interests must be
disclosed (such as property acquired after marriage but titled in the other
Clearly indicate your clients percentage of ownership and the value of the entire
property in the description area of the form.
For all joint property that
has debt (or is titled) only in the non-filing spouses or other third parties
name, be sure to note on schedule A or B any debt against the property in the
Prepare a separate list of
all separate property in which your client does not claim an interest. Note that fact at the top of the list.
Be sure to list any non-filer
income, as well as their expenses. That
way a determination of the actual joint budget can be made. A joint schedule I and J is now required
along with form 22.
make, model and mileage. That way we can do a bluebook check before
If an individual (rather than
a financial institution) is the lien holder on a vehicle, have your client
bring a photocopy of the title (or a printout from DMV) to the 341
hearing. Also have them bring a copy of
the contract with the secured party.
If property has been owned in
the past and was disposed of more than a year ago, simply make a notation of
that transfer on schedule A or statement of affairs #10 anyway with an
explanation of what happened and if your client will be entitled to something
from the property in the future. This
saves asking the question at the hearing.
Add the original purchase
price and date in the description box.
If refinanced in the last 2 years, bring a copy of any appraisal that
was part of the refinance to the hearing.
If your client has been
divorced in the last 3 years or if a divorce decree has provisions relating to
the disposition of assets, have your client bring a copy of the decree to the
hearing (as well as any modification orders).
If your client has
transferred property in excess of $600 in value in the last year (or has
transferred an interest in Real Estate at any time), please provide a
description of the property transferred, the value of the property at the time
of transfer, any secured debt against the property at time of transfer, the
consideration received (or to be received) for the transfer, and their
relationship (if any) to the transferee.
In a personal bankruptcy
where the debtor indicates an ownership interest in a business, please provide
the following: (1) a balance sheet showing business assets and liabilities on
the date of filing, (2) copies of business bank statements for the date of
filing, and (3) the business records showing company ownership. You will also need to address the issue of
what business property may be titled in the debtor (rather than the business
name) or what business property may have been purchased from the debtor’s
funds, rather than business funds.
If the business is a sole
proprietorship please provide an itemized list of all business assets including
inventory and accounts receivable with a value for each item or group of
items. Also be sure to include as part
of the pleadings a business budget unless monthly business expenses are less
If the business continues to
operate after the date of filing and is not a sole proprietorship you should
immediately notify the trustee of the fact as soon as you know who the trustee
is. Trustees have special responsibilities
and liabilities in respect to ongoing businesses.
If your client has accounts receivable and believes
they are uncollectible, please so indicate on schedule b. If the accounts receivables
are substantial or your client believes them to be collectible, please bring to
the hearing any documentation that may exist on each account.
If your client is involved in
litigation against any party, please bring a copy of the complaint to the
hearing. In those cases where the client
is suing for what will be exempt funds, disclose the suit on the schedule b and
be sure to indicate the breakdown of damages requested (such as unpaid wages,
pain and suffering, medical expenses, etc.).
As part of the trustees examination of your clients schedules a
determination must be made if there is excess income available that should
place your client in a chapter 13. This
process could be simplified by the following: (1) do not list expenses for
surrendered items such as a car, (2) do not list expenses for items that will
be discharged such as credit card payments, (3) under charitable contributions
list only 1/12 of the contributions made in the last 12 months, (4) watch out
for the entry of medical insurance payments on both I and J, (5) don’t list
reimbursed medical expenses on J, (6) if you have anticipated expenses such as
rent after surrender of a home enter them at the bottom of schedule J as follows:
“anticipated rent ... $900.00,” (7) ensure that the income amounts on question
1 of the statement of financial affairs matches the income amount on schedule
I, and (7) enter only what a chapter 13 trustee would consider a reasonable
amount for food, medical expenses, home maintenance, entertainment, etc. on
Properly prepared pleadings
are easier for the trustee to review prior to the 341 hearing and will result
in shorter 341 examinations because the trustee already has the information he
needs. Always err on the side of full or
additional disclosures. Be aware that
the longer it takes to review your pleadings, the less patience the trustee is
likely to have with you or your clients.
Helpful material on pleading
preparation can be found elsewhere on this web site under Debtor
It is a good idea to meet
with your clients prior to the hearing so they will be adequately prepared and
to ensure that they will bring proper documentation with them. See, Debtor Practice/First Meeting for more
information on this topic
Try to get to the hearings a
little early. That way your client doesn’t
panic and you can review any necessary matters with your client prior to their
case being called.
If you are sending mail to
the Trustee, place the word “Trustee” after his name. This ensures that the mail is opened by the
right person. Trustees are required to
open mail containing funds themselves.
Please respond promptly to
trustee enquiries. You want your clients
cases closed as quickly as possible. In
addition, Trustees have been “strongly” encouraged to “quickly” administer
their cases. As a practical matter this
means that Trustees will be using enforcement tools much sooner to obtain
compliance. The Judges have indicated a
willingness to withhold discharge until the Trustee has all of the information necessary
to administer the case.
The Trustee is happy to take
your calls and assist you as possible.
Because most of the data is now stored electronically, you can assist
the trustee in finding your clients file by giving the case number (preferred
method) or last name, then first name.
However, the most efficient
way to ask quick questions of the trustee is through e-mail. It is quick, efficient, and cheap. You don’t have to play phone tag and you can
tell your client that you have contacted the trustee and are waiting for a
response. Makes you
the good guy. It also allows me
to return messages late at night or early in the morning when you are not in
the office. It’s more efficient than
letting phone calls tie up your best billable hours. Quick questions should come to my personal
e-mail ([email protected]). Documents to the trustee e-mail ([email protected]) address (my
employees attach these to your clients file).
Please try to respond as
quickly as possible. Continued hearings
will be set as appropriate to give you leverage to get the information needed
from your client. If you can’t respond
within the time limits given, please contact us to get an extension. The court expects us to close cases within 60
days of the 341 hearing unless there will be a distribution to creditors and as
soon as possible in all other cases.
Discharge and No Asset
Please be aware that if
something has been requested from a debtor, they are still expected to comply
even if a discharge has been issued or a no asset report filed. If the debtor acquires property in the 180
days post filing [11 USC 541 (a)(5)] the schedules
need to be amended appropriately and a copy sent to the trustee. If a refund of pre-petition tax or other
funds is received after the 341 Hearing and it exceeds $1000.00 it must be
disclosed to the trustee, even if a discharge has been issued.