Trustee Relations

 

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:

 

Pleading Preparation

 

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 rules

 

Non-Filing Spouse, Partner or Co-Owner

 

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 parties name).

 

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 description area.

 

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.

 

Motor Vehicles

 

List year, make, model and mileage.  That way we can do a bluebook check before the hearing.

 

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.

 

Real Estate

 

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.

 

Divorce

 

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).

 

Transfers

 

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.

 

Business Interests

 

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 than $200.00.

 

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.

 

Accounts Receivable

 

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.

Litigation

 

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.).

 

Budget Items

 

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 schedule J.

 

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 Practice/Pleading Preparation.

 

Hearing Preparation

 

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

 

Punctuality

 

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.

 

Trustee Communication

 

Correspondence

 

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.

 

Phone Calls

 

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 (PGJones4@Hotmail.com).  Documents to the trustee e-mail (PGJonesT@Hotmail.com) address (my employees attach these to your clients file).

 

Information Requests

 

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 Reports

 

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.