Bankruptcy Practice

Written by Craig D. Robins, Esq.

In my previous two columns, I addressed many common problems that come up at the Meeting of Creditors. In this last part of the three-part series I will cover some additional issues and dilemmas.

Problem No. 16: The U.S. Trustee Decides to Participate Also. As mentioned in a previous article, the Office of the United States Trustee has placed greatly increased priority in its Civil Enforcement Initiative Program. This means that there is a chance that the U.S. Trustee’s Office may red-flag a case for “substantial abuse” and then send one of its attorneys or paralegals to participate in the Meeting of Creditors and ask questions. If this happens, plan for your case to be called out of order, expect a much longer meeting, and fully cooperate. Try to use this opportunity to point out anything which will establish the debtor’s good faith. This usually means demonstrating that the debtor’s budget is reasonable or that a relatively large amount of debt was reasonably incurred.

Problem No. 17: A Creditor Shows Up. It is relatively rare these days for any creditor to appear at the Meeting of Creditors. However the following types of creditors are much more likely to appear: a local individual creditor who may have given a personal loan to the debtor, a separated or divorced spouse who is owed maintenance and support, or a business creditor whose account the debtor personally guaranteed. Such creditors may show up on their own, or with counsel who is not familiar with bankruptcy procedure, or with very experienced bankruptcy counsel. Most creditors who show up are unsophisticated and under the mistaken notion that they are required to appear.

If a creditor appears at the meeting, they are entitled to ask the debtor questions about the debtor’s assets and liabilities. They are not permitted to cross-examine the debtor as if the trustee was a judge. If the creditor (or their inexperienced counsel) asks improper questions or becomes argumentative, you should direct your client not to respond and admonish the creditor or counsel as to the proper scope of questioning. The trustee will probably do so as well. Also, a creditor cannot use the meeting as a fishing expedition to ask the debtor very general questions. Although a creditor has the exact right to do that, it is done pursuant to a Bankruptcy Rule 2004 exam, and not at the meeting of creditors, where time is very limited.

Problem No. 18: The Chapter 13 Trustee Wants to Adjourn the Meeting Because the Trustee Never Received Certain Documents. The Local Rules require all Chapter 13 debtors to provide the trustee, at least ten days prior to the Meeting of Creditors, with certain documents including the last two years of tax returns, one months worth of pay stubs, a real estate valuation if the plan pays unsecured creditors less than 100%, copies of real estate leases, tenants affidavits, affidavits of contribution, and affidavits of changed circumstances. (See Local Rule LR-2003-1). If you neglect to do this, the trustee will refuse to examine the debtor, you will look foolish in front of your client, and you will be told to return. Always make sure you provide the Chapter 13 trustee with the documents in advance. The Chapter 13 trustees are not too sympathetic with attorneys who neglect this rule.

Problem No. 19: There are Pages Missing From the Photocopies of the Petition. All photocopy machines will skip a page or two from time to time. If you sit down for your hearing and realize that all photocopies of the petition are missing an important schedule, you can apologize to the trustee, request a ten minute break, and then run down to the clerk’s office to print out the missing pages, assuming that you filed a full electronic copy.

Problem No. 20: The Debtor has Trouble Understanding English. If the trustee becomes frustrated trying to understand the debtor’s responses in broken English, the trustee will adjourn the hearing and make you re-appear with an interpreter. Therefore, you should anticipate in advance whether the debtor will have difficulty being examined in English. If so, you should arrange for a disinterested interpreter to accompany the debtor to the Meeting of Creditors.

The interpreter can usually be a friend, relative or spouse. However, the trustee has the right to object to the interpreter if the trustee believes the interpreter may be biased or interested. Consider calling the trustee in advance to advise him that an interpreter will be used and to make sure the particular interpreter will not be a problem. At the meeting, the trustee will swear in the interpreter and have them pledge that they will fully and truthfully translate the questions and answers.

If, in your office, the debtor previously seemed to be able to fully communicate without an interpreter, it is possible that the debtor is nervous or that the trustee may be talking too fast. If you sense this, ask the trustee’s indulgence to be patient because the debtor is nervous, and ask the trustee to talk more slowly. I have had some trustees talk so fast that I, myself, needed an interpreter!

Problem No. 21: The Debtor Appears to Be Wearing a Million Dollars Worth of Jewelry. Common sense dictates that out of respect for the proceeding, the debtor should not wear any flashy jewelry, even if it may be worthless rhinestone costume jewelry. If the debtor is wearing expensive-looking jewelry, expect the trustee to ask about it, which is like opening a can of worms. Advise your clients to avoid dressing in an overly flashy manner. It is best to leave all jewelry at home except for the wedding band.

Problem No. 22: You Observe the Debtor Lying Under Oath or Answering Incorrectly. If you observe the debtor answer a question, and you know the answer is incorrect, you have an affirmative duty to speak up. Sometimes the debtor innocently didn’t understand the question, or the trustee asked a series of yes-no questions too quickly. Worse, it may appear that the debtor is fabricating an answer. In any event, counsel should immediately interject, “the debtor might not have understood the last question,” and ask the trustee to ask that question again. You certainly do not want to get into a situation where the debtor can be labeled a perjurer because you didn’t speak up quickly. Even though a trustee’s questions can seem repetitive, you must always pay keen attention.

Debtors must pay close attention also and counsel must be sufficiently prepare them for the examination. For example, a frequent problem is that a trustee will ask a debtor about bank accounts and the debtor will answer in the negative because the debtor does not view a checking account as a “bank account.” All seasoned bankruptcy practitioners should know verbatim just about every possible question a trustee may ask. It is your responsibility to adequately prepare your client for the meeting by reviewing the potential questions with the debtor in advance.

Problem No. 23: The Debtor Has Difficulty Explaining a Complex Situation. Sometimes a trustee may ask the debtor to explain a complicated pre-petition transaction and the debtor has difficulty giving a sufficient answer. When that happens with my clients, I will often interject and offer to provide the trustee with the facts. Most trustees will appreciate this. However, you need to approach this carefully as some trustees will downright resent such efforts and will view it as counsel testifying for the debtor. Try to get a feeling as to how your particular trustee will respond and then consider asking the trustee if he would like you to “clarify” the matter.

Problem No. 24: There is a Snow Storm: Will the Hearing Go On? Is Court Open? On severe weather days the Court will close and is supposed to indicate this on a recording when you call the Court or log onto the Court’s web site. However, many attorneys have been frustrated because this information was not made available until mid-morning or early-afternoon, when it is already too late. Consider calling the trustee’s office. If the weather looks ominous the day before the meeting, make special arrangements with your client to communicate the next morning. Then, if the weather is relatively bad the morning of the meeting, and you cannot confirm whether the meeting will go forward or not, you may decide to tell your client not to go, in which case, you should be able to call the trustee’s office a day later and get an adjourned date. If there are several inches of snow on the roads, and you cannot confirm whether the meeting will go on, counsel can hardly be faulted for not appearing, but you should avoid an embarrassing situation where your client shows up and you do not.

About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the June 2004 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Medford, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.

Written by Craig D. Robins, Esq.

Adversary Proceedings. Even what appears to be the simplest Chapter 7 consumer bankruptcy filing may result in an adversary proceeding which is basically a federal lawsuit brought within a pending bankruptcy proceeding. The Bankruptcy Rules provide that certain contested matters in bankruptcy proceedings must be litigated in this way. Bankruptcy Rule 7001 sets forth ten such matters. They include objections to discharge; determination of the validity, priority, or extent of a lien or interest in property of the estate; actions to recover property of the estate; and proceedings to sell property in which the debtor is only a part owner. Bankruptcy Rule 7001 et. seq., sets forth all of the rules applicable to adversary proceedings.

Proceedings to Determine The Dischargeability of a Debt. These are by far the most common adversary proceedings that the consumer bankruptcy practitioner may encounter. With the proliferation of consumers seeking to discharge credit card debt through bankruptcy, many credit card companies, banks and other lenders are actively reviewing petitions and credit usage histories to determine if the debtor obtained the debt by way of any fraudulent or improper means. Under code section 523, a creditor can contest the dischargeability of a particular debt that was incurred through false pretenses, fraud, use of false financial statements, embezzlement, or larceny.

Contesting the Entire Discharge. Bankruptcy code section 727 allows an interested party to contest the entire discharge for intentional concealment, transfer or destruction of property; unjustified failure to keep books and records; dishonesty in connection with the bankruptcy code; or failure to explain loss of assets. If a trustee requests a debtor to provide documents at the meeting of creditors and the debtor is uncooperative, the trustee will bring an adversary proceeding under this section.

Federal Rules Govern. Virtually all of the Federal Rules of Civil Procedure regarding litigation apply to adversary proceedings. These rules are especially tailored to bankruptcy proceedings by Bankruptcy Rules 9001 et. seq. Leave your C.P.L.R. at home and get a copy of the Federal Rules. Sometimes the general practitioner is at a slight disadvantage because of an unfamiliarity with Federal law.

How Adversary Proceedings Are Commenced. The creditor or trustee will draft a complaint, setting forth the facts and allegations which the plaintiff believes justify the granting of relief against the debtor, and stating the relief requested. All adversary proceedings must be filed electronically through the court’s E.C.F. system. The court will also assign an adversary proceeding case number to the matter, which is different from the original bankruptcy case number. All adversary proceeding documents filed with the court must contain the full adversary proceeding caption, both case number and adversary proceeding case number, the type of chapter, and the name of the judge. The debtor can be referred to as either “debtor” or “defendant.”

Service. Most adversary proceedings are served pursuant to Bankruptcy Rule 7004(b) by first class mail upon both the debtor and his or her attorney, although service can be completed by other means as well. Service must also be made within 10 days of the summons date. Bankruptcy Rule 7004(f).

Be Aware of the Bar Date. In Chapter 7 proceedings, the court sets a statute of limitations for creditors to file objections to discharge. The bar date is 60 days from the date set for the first scheduled meeting of creditors. Bankruptcy Rules 4004 and 4007. Adjournment of the meeting of creditors does not affect the bar date. Failure to timely file a dischargeability adversary proceeding by the bar date will forever bar the creditor from objecting to discharge.

Written by Craig D. Robins, Esq.

In my column last month, I addressed some common problems that come up at the Meeting of Creditors. This month I will focus on additional problems involving the trustee. Many problems can be reduced or eliminated by making sure that you and your client are prepared, by preparing the petition correctly, and by making sure that you and your client are considerate and respectful towards the trustee.

Problem No. 8: The Trustee Thinks the Debtor Is Being Disrespectful. Advise your clients to avoid any sarcasm or joking at the hearing. What may be taken as amusing by one trustee, may be seen as disrespectful and annoying by another. If the trustee reacts in a negative or hostile way towards the debtor for any reason, try to immediately neutralize the situation, perhaps by interjecting that the debtor is nervous and didn’t mean to come across the way that they did.

Problem No. 9: The Trustee Wants to Adjourn the Meeting Because the Trustee Never Received a Copy of the Petition. With the advent of Electronic Case Filing, the debtor’s attorney is obligated to immediately mail a hard copy of the petition to the trustee which should contain the signatures of the debtors and their counsel. If the trustee does not receive a copy sufficiently in advance of the meeting, the trustee may adjourn the hearing and make you come back. Always make sure you timely mail a copy of the petition to the trustee. (Note that you are also required to mail a hard copy to the U.S. Trustee). If the trustee wants to send you home, consider pleading for sympathy and offer the trustee your copy.

Problem No. 10: The Trustee Announces That the Debtor Must Turn Over an Asset. This situation almost only arises when the debtor’s attorney is not a regular bankruptcy practitioner. Counsel must be familiar with the concept of exemptions and how local practice and procedure treats them. For example, if a debtor has a car that contains a large amount of non-exempt equity, it becomes property of the estate and the trustee is theoretically entitled to take possession of it. Almost all trustees will seek to negotiate a settlement to enable the debtor to keep the non-exempt asset. However, if the car is not insured, the trustee may not even let the debtor drive it away. If you have to file a petition in a case where there are significant non-exempt assets, make sure your client knows what to expect. You should review with your client any assets that may not be totally exempt, such as liquid assets and entitlement to tax refunds, pending accident cases or causes of action, and the right to inherit from a pending estate.

Problem No. 11: The Trustee is Going Crazy Because the Debtor Is Speaking Too Softly. All hearings are recorded. The debtor must talk loud enough to make sure his or her voice is being recorded. The debtor must also talk clearly. If the trustee asks a yes-or-no question, the debtor must answer vocally, rather than just nod the head. You should tell your client in advance to speak up, answer all questions, and speak clearly.

Problem No. 12: The Trustee Wants to Adjourn the Meeting and Have Debtor Return to Be Re-Examined. Some debtor situations can be rather complex, and may involve businesses, pre-petition transfers of real estate or other assets, or preferential payments. In such instances, the trustee may want to investigate the information just provided, or may request additional information. If the trustee directs the debtor to re-appear for an adjourned Meeting of Creditors, consider fully cooperating with the trustee by expeditiously providing any additional documents. Then call the trustee a few days prior to the adjourned date to see if the trustee will consider waiving appearances for the adjourned date.

Problem No. 13: The Trustee Announces That He Is Making a “707(b) Referral” to the U.S. Trustee. If a trustee feels that a debtor has filed a petition in bad faith or that the filing is an abuse, the trustee does not have the power to take any further action other than to refer the matter to the Office of the United States Trustee for further review. Sometimes the trustee may tell you, after examining the budget or the amount of debt, that he is making a “707(b) referral.” If that happens, expect to receive a receive a detailed request from the U.S. Trustee to audit and investigate the case.

Problem No. 14: The Trustee is on the War Path. Trustees are human too and can be in a bad mood for a variety of reasons. I have witnessed many trustees in a bad mood, sometimes compounded by frustration caused by recalcitrant debtors or slow-moving calendars. If the trustee is in a bad mood, it is vital not to tick the trustee off. Many a trustee has yelled at attorneys for talking in the hearing room. If you need to talk, take your client or fellow attorney outside the room. Be considerate and use common sense.

Problem No. 15: The Trustee Does Not Like the Way You Prepared the Petition. This is another situation that almost exclusively arises when the debtor’s attorney is not a regular bankruptcy practitioner. Trustees expect a certain level of professionalism. If the petition is sloppily prepared, lacks necessary information or contains incorrect information, contains incorrect exemption statutes, or is not properly prepared, the trustee may direct the attorney to re-do it, and may even refuse to examine the debtor until the petition is done correctly. The trustee can also refer the attorney to the U.S. Trustee’s Office to be investigated, as that office is responsible for maintaining the professionalism of the bankruptcy bar. Remember, one of the purposes of the Meeting of Creditors is for the trustee to check the accuracy of the information in the petition. The bottom line: If you file a petition, make sure you know what you are doing, and do it right. Then proof-read it before having the debtor execute it.

About the Author.  Long Island Bankruptcy Attorney Craig D. Robins, Esq.,  is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the May 2004 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Medford, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.

Written by Craig D. Robins, Esq.

What the Meeting of Creditors Is All About. With most bankruptcies, the Meeting of Creditors is the only real “event” of any importance during the entire case, and it is generally the first and only time that you and your client will have to appear in Court. As creditors rarely show up, it is primarily an opportunity for the trustee to examine the debtor.

Ideally, the actual hearing goes smoothly and routinely, lasting just a few minutes, and then you and your client are happily on your way. However, there are a myriad of things that can go wrong at the meeting much to everyone’s consternation and dismay. Fortunately, most problems can be avoided with proper planning and preparation.

Since every bankruptcy case involves a Meeting of Creditors, and since I regularly witness so many problems that other attorneys are having while waiting for my cases to be called, I will devote the year’s three remaining columns to such problems and how to prevent or handle them.

Problem No. 1: Debtor Brings Insufficient Identification. The Office of the United States Trustee has a policy that requires all debtors to identify themselves with picture identification (typically a driver’s license) and proof of correct Social Security number (typically a Social Security card). What happens if your client fails to have these forms of identification at the hearing?

Trustees should also accept the following items as acceptable photographic identification: passport, legal resident alien card, military identification, or state-issued photo identification card. Trustees should accept the following as satisfactory proof of Social Security number: pay stub, health care card, any correspondence from the Social Security Administration, or a current W-2.

If the debtor fails to have proof of Social Security number, most trustees will examine the debtor but will require counsel to immediately fax a copy of acceptable proof. If the debtor does not have picture identification, most trustees will examine the debtor, but will require the debtor to personally appear later at the trustee’s office with photo identification in hand. However, some trustees may simply refuse to examine the debtor without the satisfactory identification documents and adjourn the meeting.

In my practice, I require all clients to provide me with their driver’s license and Social Security card at the initial intake. I then make a legible photocopy and place it in the file. On numerous occasions these copies have saved the day. Also, by reviewing the debtor’s identification early on, you have time to have debtor obtain satisfactory identification if the debtor does not immediately have it available.

Problem No. 2: The Trustee Sends the Debtor Away For Failing To Read the Trustee Information Sheet. The Bankruptcy Amendment Act of 1994 imposed an obligation on all trustees to make sure that debtors know certain bankruptcy fundamentals, now codified in Code section 341(d). Trustees now meet this obligation by asking each debtor at the beginning of their examination if they read the U.S. Trustee’s Information Sheet which is posted on the wall outside the hearing room. If the debtor states that he has not yet read it, the trustee will refuse to examine the debtor. I give each client a copy of this information sheet when they retain me and I also make it a part of their petition, which I have them sign. Thus all my clients have read this in advance. Nevertheless, I prepare them for this question so that they answer it properly.

Problem No. 3: You Learn that Creditors Were Inadvertently Omitted From the Petition. A debtor will frequently approach his attorney in the minutes before the hearing to advise the attorney that there is a creditor or other information missing from the petition. Sometimes this will come out while the debtor is being examined. You can easily amend the schedules of the petition prior to the closing of the case to add any inadvertently omitted creditors. At the meeting, however, you should immediately respond to one of the trustee’s first questions to the debtor, which is, “Are there any changes or additions that you would like to make to the petition?” Advise the trustee that a creditor was inadvertently omitted and that you will be amending the petition.

Problem No. 4: There Is a Discrepancy with the Social Security Number. If there is any problem with the correctness of the Social Security number as it appears in Court documents, it will probably surface at the Meeting of Creditors. If it turns out that the number on the petition is incorrect, then counsel must prepare and file an application and order correcting the caption to reflect the correct Social Security number. Remember that now, only the last four digits of the Social Security Number can appear in any document that will become part of the Court file. In your application, indicate that you will be sending a hard copy Amended Form 21 (Proof of Social Security Number) directly to the Clerk’s office.

Problem No. 5: You Are Running Late and Will Not Make it to the Hearing on Time (Or At All). The trustee may tell the debtor to call their attorney from the pay phone at the end of the hall. A few trustees may even ask the debtor if they mind being examined without their attorney present If the case seems rather simple. Otherwise, the trustee will adjourn the case for about two weeks. In any event, you should communicate with the trustee as soon as possible.

Problem No. 6: The Debtor Has Young Children Who Are Getting Very Impatient. Most trustees (not all) are understanding and will call certain cases out of order if the situation calls for it. Consider approaching the trustee in between cases and quickly discuss the special courtesy requested.

Problem No. 7: Your Client Fails to Show Up. I observe that this is a constant problem with many attorneys. To ensure that your client appears, always remind them a few days beforehand. I also send them directions and a photograph of the building so that they do not confuse it with the other court buildings nearby. I remind them not to bring cell phones into the building which may cause the U.S. Marshal to send them back to their car. I tell them to be there at least 30 minutes before their hearing, and to sit in the hearing room. If you still don’t see your client, they may be sitting in the wrong room as there are two meeting rooms next to each other. Consider using the pay phone at the end of the hall to call your client or have your office track them down. If all else fails, ask the trustee for an adjournment and then charge your client for having to make a second appearance if the client forgot to go.

About the Author.  Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the April 2004 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Medford, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.

Written by Craig D. Robins, Esq.

Be Prepared for Emergency Filings. It is bound to happen. You receive a phone call from a potential client who says that his house is being auctioned off at a foreclosure auction tomorrow. Or, a creditor is about to file a judgment lien against your client’s property. Or, a creditor is about to immediately enforce a judgment by garnishing wages, restraining a bank account, or padlocking a business. Sometimes the bankruptcy petition must be filed immediately to get the benefit of the automatic stay, but there is insufficient time to prepare the entire petition and supporting schedules. This article will provide some practical information for addressing such an emergency situation.

The Automatic Bankruptcy Stay. The bankruptcy stay becomes effective at the time the petition is filed with the Clerk of the Bankruptcy Court. If you file electronically, the time of filing is basically the time you press the final send button on your computer, which time is then indicated in the E.C.F. (Electronic Case Filing) filing receipt. If you file in person at the bankruptcy court, it is the time that the clerk clocks in your petition with the clerk’s time and date stamping machine.

Filing a Skeletal Petition. The local rules do not require that you file all of the supporting schedules at the time the case is initially filed. Fortunately, you can commence a case by filing just the two-page bankruptcy petition together with a list of creditors and their addresses either in the form of the matrix or by filing the schedules of creditors. You must also pay the filing fee.

The local rules permit you to file the remaining schedules and forms several days thereafter. The Matrix and Social Security Number Statement must be filed within 48 hours. All of the other schedules must be filed within the next 15 days, although the Chapter 7 Statement of Intention (regarding secured assets) and the Statement of Attorney’s Time Pursuant to Local Rule 2017-1 can be filed up to the date of the Meeting of Creditors. If you do not file the remaining schedules during these time periods, the Court has the right to automatically dismiss the case. If you need additional time, you can bring an application seeking additional time during the 15-day period.

As a practical tip, in emergency situations you may have no choice but to file now and amend later. Note that pursuant to Local Rule 1007-1(b), any schedules filed after the filing of the petition may need to be accompanied by an affidavit. Any amendments or late-filed schedules must also be served on the Chapter 7 or 13 trustee, as well as the United States Trustee.

Filing the Petition. The Court now requires all attorneys to file their petitions electronically by E.C.F. If you have computer problems and must file under emergency circumstances, you can still file a petition in person at the clerk’s office. If you do, you should try to convert your papers into P.D.F. files and come to the Court with the files on a 3.5 inch floppy disk. If you are unable to do this, the Clerk’s office maintains a scanner for public use and they will require you to scan your papers into P.D.F. files there. You should also bring exact change for the filing fee.

If there is a line of people waiting to file petitions, the clerk will permit you to move to the front of the line if you declare that you have a true emergency filing with only minutes to spare. Please note that the time and date stamping machine sitting on top of the Court’s “night depository” drop box which is located outside the clerk’s office does not provide an official time and date stamp; only the clerk’s office can provide an official stamp. Therefore, stamping your petition with this machine will not help. If you have a real emergency situation with very little time to spare, and you are unable to file electronically, you should call the clerk’s office for further guidance and to advise them to expect you.

Assess Whether the Situation is Actually A True Emergency. I frequently get calls from potential clients who believe their house is about to be auctioned off in a foreclosure sale. However, many of them mistakenly confuse a motion return date in the foreclosure proceeding with the actual sale date. Before rushing like a madman, take the time to verify that the client’s urgency is well-founded.

Avoid Filing for Sole Purpose of Delay. You should remember that even though a bankruptcy filing will automatically stay any foreclosure sale or judgment execution, the Bankruptcy Code prohibits debtors from filing for the sole purpose of frustrating the legitimate collection rights of creditors. You should only file a petition on behalf of a debtor if it is supported by good faith. Even under emergency situations, a debtor’s attorney is still responsible for diligently ascertaining whether there have been several prior filings which may lead to a conclusion that a new filing is abusive and being done in bad faith. A potential client calling at the last minute may have been in a prior bankruptcy case that was dismissed with a provision that the debtor cannot re-file for a period of 180 days. It is the attorney’s responsibility to determine if any prior filings prohibit a subsequent filing.

Notifying Creditors of the Filing. The reason for an emergency filing is because a particular creditor is about to enforce a judgment. Most commonly, this is a foreclosure sale. It is advisable to contact the creditor’s attorney once you have been retained to advise them that there will be an emergency filing at the last minute. In addition, you should also fax them a letter containing the filing information and verify that they received it.

Try to Avoid Emergency Filings. Whenever possible, it is most advisable to file the entire petition and all supporting schedules at the commencement of the case. Otherwise, it becomes an additional burden to file the remaining documents on time, and extra attention will certainly be required to keep everything in order. Fortunately, however, there is a mechanism for filing a skeletal petition under emergency circumstances, but the emergency should be the result of the client calling you at the last minute, rather than caused by your own procrastination.

About the Author.  Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a regular columnist for the Suffolk Lawyer, the official publication of the Suffolk County Bar Association in New York. This article appeared in the March 2004 issue of the Suffolk Lawyer. Mr. Robins is a bankruptcy lawyer who has represented thousands of consumer and business clients during the past twenty years. He has offices in Medford, Commack, Woodbury and Valley Stream. (516) 496-0800. For information about filing bankruptcy on Long Island, please visit his Bankruptcy web site: http://www.BankruptcyCanHelp.com.

Written by Craig D. Robins, Esq.

The U.S. Trustee Initiative Program. The Office of the United States Trustee has been scouring cases recently, looking for indications that a debtor has the ability to make a reasonable payment to his creditors. The United States Trustee Program launched a nationwide campaign, dubbed the “Civil Enforcement Initiative,” aimed at “advancing and protecting the integrity of the bankruptcy system.” The initiative was developed when, after years of proposed legislation to stop alleged bankruptcy abuse, none of the proposed bankruptcy reforms became law. Thus, the U.S. Trustee’s Office decided to adopt and implement some of the legislative policy themselves.

It appears that the initiative will focus on three key problem areas: ( i) debtors who abuse the bankruptcy system and engage in bankruptcy fraud, by loading up on credit card debt or orchestrating a bust-out; ( ii) debtors who have the ability to repay a reasonable portion of their debts; and (iii) debtors (or their attorneys) who file sloppy schedules, or false and incorrect schedules; and attorneys who provide poor legal representation or charge excessive attorney’s fees.

You can therefore expect to see a heightened amount of activity out of our district U.S. Trustee’s office investigating cases to see if debtors have truly filed in “good faith.” The following are my observations of this practice.

“Substantial Abuse” – Bankruptcy Code Section 707(b). The U.S. Trustee frequently relies on this section and alleges that a debtor is substantially abusing the bankruptcy system when it believes a debtor has not filed in good faith for one of the above reasons.

The Initiative Program Has Become the U.S. Trustee’s Foremost Priority. The Office of the U.S. Trustee is a division of the Department of Justice and has responsibility for overseeing all bankruptcy cases and trustees. Previously, a major portion of that office’s time was devoted to overseeing the administration of Chapter 11 business cases. However, Chapter 11 filings have decreased markedly over the past few years, apparently resulting in the U.S. Trustee’s office shifting their priorities from business cases to consumer cases.

Written by Craig D. Robins, Esq.

Significant Changes in 2003. During the past year, there have been a significant number of changes in the way consumer bankruptcy practitioners practice. This article will highlight some of the changes that have come about over the past year. These include possible bankruptcy reform, the new “initiative” of the Office of the United States Trustee to aggressively audit and investigate cases, the computerization of the bankruptcy court, and new forms and filing fees.

Legislative Status. Congress has vigorously tried to overhaul the Bankruptcy Code for each of the last five years. This reform movement has been fueled by banking and credit card industries who have pumped tens of millions of dollars into lobbying efforts. However, as a result of political squabbles and power shifts, changing administrations, shifting Congressional priorities towards national security issues after September 11th, and bankruptcy law amendments tied to volatile abortion issues, Congress has been most unsuccessful in getting bankruptcy reform signed into law.

Enactment is still possible this year. In the Spring of 2003, the House quickly passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2003. This was the seventh time in recent years that the House passed an omnibus bankruptcy reform measure. Some Senators have announced their determination to focus on the bill before the end of this year’s session, although as of November 25, 2003, the House filed the 2004 Omnibus Appropriations Bill, apparently without the Bankruptcy Reform Act. If Congress adjourns for the end of the year without enacting the new legislation, informed sources expect to see the reform bill come back immediately in 2004.

When and if the Bankruptcy Code is overhauled, it will drastically change consumer bankruptcy law and practice. These changes will be addressed in a future article.

The New, Paperless Bankruptcy Court. Bankruptcy courts around the country have been moving rapidly to implement procedures for electronic filing and computerization of all records. Prior to last year, all bankruptcy attorneys were accustomed to filing their petitions by personally delivering them to the court clerk’s office. However, in January 2003, the Court began pushing attorneys to file their petitions electronically through Electronic Case Filing (“E.C.F.”) over the internet.