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Craig D. Robins, Esq. New York Bankruptcy Attorney, Longisland bankruptcy attorney

“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”

Craig D. Robins, Esq.

Nine Tips to Protect Your Clients From the U.S. Trustee Initiative Program

Posted on Wednesday (March 3, 2004) at 11:00 am to Bankruptcy Practice
Nassau Lawyer

What This Means To You and Your Clients. The initiative’s heightened vigilance has added a whole new wrinkle to bankruptcy practice and made it more complicated. Several types of debtors now seem to be automatically red-flagged for review. Individuals with incomes of about $75,000 or more per year often seem to be targets. If a debtor has a high income, and appears capable of making some payment toward his or her debts, the U.S. Trustee’s office may file a motion to dismiss the Chapter 7 case under Code section 707(b) as a “substantial abuse.” Debtors at that point have the option of either disputing the U.S. Trustee’s position (which could result in extensive litigation and additional counsel fees for the debtor), converting the debtor’s case to one under Chapter 13, or agreeing to let the case be dismissed. If the debtor converts the case to one under Chapter 13, the

U.S. Trustee’s Office will not pursue its inquiry of the debtor’s finances since the Chapter 13 trustee’s office is capable of performing that function.
The U.S. Trustee’s Office also seems to be red-flagging almost all cases in which scheduled unsecured consumer debts add up to over $100,000. In either of these situations, the U.S. Trustee’s Office will seek to audit and investigate the case before commencing any motions practice and will send out a highly-itemized document demand request. The time for the U.S. Trustee to object to dischargeability is the same deadline that the court sets for all creditors, which is 60 days from the date of the first-scheduled meeting of creditors.

Tip #1: Become Informed. By reading this article, you will become more familiar with the basics of the initiative and you will be in a better position to avoid having one of your cases become a target. Certainly, staying up-to-date with developments is also important. Consider learning more by periodically visiting bankruptcy law web sites and joining the following organizations: the American Bankruptcy Institute (abi.org) has an excellent monthly journal (703-739-0800); the National Association for Consumer Bankruptcy Attorneys (nacba.org) is having this year’s annual convention in Boston in April and they have already scheduled a seminar devoted to this issue entitled: “Civil Enforcement Initiative – Has the U.S. Trustee’s Office Gone Too Far?” You can also easily read case law containing Bankruptcy Code 707(b) issues even if you do not subscribe to any research services. Try doing a Google search for “substantial abuse” + “707(b). Subscribe to Consumer Bankruptcy News (800-341-7874). Once you know what to expect and anticipate from the United States Trustee’s Office, and how the courts interpret issues that they may raise, you can better assist your clients.

Tip #2: Advise Your Clients About the Initiative. When you conduct an initial intake with a client, it is important to discuss the initiative. In any gray-area case, make sure your client is aware of the possibility that the U.S. Trustee may audit and investigate their case. Have your client acknowledge this in a letter.

Tip #3: Ask Your Client if They Previously Filed. One of the priorities of the initiative is to look for and investigate abusive serial filings. A debtor who has received a Chapter 7 discharge is not entitled to receive another one for a period of six years. Some Chapter 13 debtors are notorious serial filers in an effort to stave off a foreclosure proceeding. Some serial filers have filed numerous times within a relatively short period and have gotten away with it because they filed in different districts, possibly using slight variations of their name to avoid detection. Accordingly, make sure you question your client about any prior bankruptcy filings.

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Craig D. Robins, Esq. is a Long Island bankruptcy lawyer, who is focused primarily on helping individuals and families, find solutions to their debt problems. Read more »


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Craig D. Robins, Esq.
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