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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

Tip #8: Cooperate with U.S. Trustee on a Timely Basis. The U.S. Trustee’s office often rifles off an inquiry letter merely because a case contains a red flag. If you quickly respond to the inquiry, you will have satisfied the U.S. Trustee’s Office’s requirements, thereby placing the burden on them to review the documents and decide if there is any serious issue. If it appears that the debtor is fully cooperating in good faith, then the U.S. Trustee’s office may even be less inclined to spend a significant amount of time reviewing the papers.

Providing all of the requested documents can be somewhat burdensome, and in some cases, these papers can fill a box. Imagine the difficulty of the U.S. Trustee’s Office sorting through such a large amount of materials. If the debtor is not able to immediately assemble all of the requested materials, you should nevertheless quickly send in whatever documents are available, together with an explanatory cover letter.

If the U.S. Trustee’s office fails to take any action (i.e., filing a motion or seeking to extend its time by stipulation) by the bar date, then they are forever precluded from doing so. If the U.S. Trustee requests an extension of time to review the materials, it is customary to give it.

Tip#9: Consider Alternatives to Chapter 7 If Necessary. Unfortunately, not every debtor who has no non-exempt assets can simply jump into the Chapter 7 arena. For cases where it is obvious that filing would trigger an inquiry from the U.S. Trustee, consider Chapter 13 instead. Also consider negotiating with creditors as an alternative to bankruptcy. If, after filing a Chapter 7 case, the U.S. Trustee does bring a 707(b) motion, then the usual worst case scenario is that the case will be dismissed. The other alternatives include defending it or converting the case to one under Chapter 13.

Bonus Tip: Don’t Let Yourself Become a Subject of Investigation. One of the objectives of the initiative is to raise the standard of practice among professionals. A common complaint by everyone who regularly practices in Bankruptcy Court, including Judges, U.S. Trustees and panel trustees, is that the quality of debtor representation has declined tremendously over the past decade. This is directly attributable to an increase in the number of practitioners who do not regularly practice in Bankruptcy Court and who are not sufficiently familiar with bankruptcy rules, protocol or procedure. If the debtor’s attorney’s services are clearly inadequate, the U.S. Trustee may bring a proceeding to reduce or disgorge the attorney’s legal fees. Accordingly, avoid filing schedules that are sloppy, incomplete, or inaccurate. In addition, do a thorough intake, always advise the client about the entire bankruptcy process, and prepare the client for any court hearings, especially the meeting of creditors. Finally, do not assist in the fabrication of any information, especially that contained in the budget.

In a future article I will highlight some recent case decisions in which the U.S. Trustee sought to dismiss a Chapter 7 case as an abusive filing under Code section 707(b).

About the Author. Long Island Bankruptcy Attorney Craig D. Robins, Esq., is a frequent columnist for the Nassau Lawyer, the official publication of the Nassau County Bar Association in New York. This article appeared in the March 2004 issue of the Nassau 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.

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