Proposed Amendments to Bankruptcy Rules

Aid in Case Administration, Enhance Quality of Information
 

By Lawrence A. Friedman, Director

Executive Office for United States Trustees

Detroit Chapter 7 and Chapter 13 Consumer Bankruptcy Filings

 I, Walter Metzen, will provide, free of charge as part of your free initial Bankruptcy Analysis, a means test calculation to determine if you are eligible for Chapter 7 Bankruptcy.  Nearly 90% of the people who walk through my door are eligible to file a Chapter 7 Bankruptcy in Michigan and get a permanent discharge of their debt. With Chapter 13 Bankruptcy in Michigan, we can develop and affordable repayment plan to fit every budget.
 

 Contact me, Michigan bankruptcy attorney Walter Metzen to learn more about how I can help you get a Fresh Financial Start!.

Proposed Amendments to Bankruptcy Rules

Aid in Case Administration, Enhance Quality of Information



 

By Lawrence A. Friedman, Director

Executive Office for United States Trustees



 

Best Practices for Improved Bankruptcy Administration

In my years practicing bankruptcy law, I have noted a variety of "best practices" that could improve bankruptcy administration by fostering the provision of more accurate information and making bankruptcy proceedings more transparent. On behalf of the bankruptcy community, I have worked with U.S. Trustee Program personnel, private trustees, bankruptcy judges, and practitioners to identify those practices that are most effective in improving bankruptcy administration and curbing fraud and abuse.

Some of these practices can be instituted through amendments to the Federal Rules of Bankruptcy Procedure and the Official Forms. For example, bankruptcy trustees often-but not always-ask debtors to provide supporting documents regarding their reported assets, liabilities, income, and expenses. In a small number of districts, debtors are already required to produce these documents by local rule. Making this a nationwide requirement would foster good bankruptcy practice and improve case administration in all districts.

Similarly, Schedule I currently requires disclosure of the non-filing spouse's income only in Chapters 12 and 13, but not in Chapter 7. There is no justification for ignoring the impact of a non-filing spouse's income on a Chapter 7 debtor's financial situation, and the better practice would be to require that disclosure as well.

Last summer, the Program asked the Advisory Committee on Bankruptcy Rules of the United States Judicial Conference (the "Rules Committee") to consider proposed amendments to the Bankruptcy Rules and Official Forms that would improve bankruptcy administration and enhance the Program's efforts to curb fraud and abuse in the bankruptcy system. We offered four proposals: to require additional supporting documentation from debtors at the meeting of creditors under 11 U.S.C. 341(a); to require disclosure of the non-filing spouse's income in a Chapter 7 case; to require a statement, signed by the debtor and debtor's counsel, enumerating the services to be provided by counsel; and to permit certain actions under 11 U.S.C. 727 to be brought by motion.

These proposals were presented and discussed at the Rules Committee meeting in September 2003. At that time, our proposal to amend Schedule I to include the income of the non-filing spouse in Chapter 7 was tentatively approved. The proposals were referred for further study to the Consumer Subcommittee of the Rules Committee, which held an informal focus group meeting on January 30, 2004, to review the proposals and discuss them with Program representatives.

The subcommittee made a recommendation to the Rules Committee, which met on March 25-26, 2004, and agreed to publish for comment a modified version of our proposal to require debtors to provide documentation at the Section 341 meeting. At press time, the exact language of this modified version is being determined. The committee did not agree to publish the Program's other two proposals.

The committee's decision is subject to further approval by the Standing Committee, which next meets in June. We anticipate it will be approved and published for comment in August, followed by a six-month comment period and further Rules Committee deliberations. If everything proceeds on course, the rule change could be effective in December 2006.

Additional Documentation from Debtors

With this procedural background in mind, let me summarize the purpose and impact of the two proposals approved by the Rules Committee.

In our most significant proposal, we seek to facilitate the performance of duties by debtors and trustees by requiring production of certain documents at the Section 341 meeting. Under all chapters of the Bankruptcy Code, the trustee has a statutory duty to investigate the financial affairs of the debtor. Every debtor has a corresponding statutory duty, under 11 U.S.C. 521(4), to "surrender to the trustee all property of the estate and any recorded information, including books, documents, records, and papers, relating to property of the estate[.]"

Currently, there is no national rule to implement these obligations. While the absence of a rule does not foreclose the trustee from asking for information or lessen the debtor's duty to be forthcoming, it does affect the process insofar as it places the burden on the trustee to seek out the information. If the trustee requests no information, the debtor arguably has no obligation to be forthcoming, and the trustee's "investigation" consists only of a review of the debtor's petition, schedules, statements, and testimony at the Section 341 meeting.

The better practice, and the one used by most experienced trustees to find assets, confirm valuations, or unravel financial dealings, is to require debtors to produce certain documents to confirm what they have claimed in the petition, schedules, and statements. Correspondingly, the better practice for bankruptcy attorneys and their clients is to assemble documents before filing to ensure, among other things, that accurate information is provided to the bankruptcy court.

Our proposal would amend the Bankruptcy Rules to require every debtor to produce certain documents that have been reported as most useful to trustees and that are required under many local rules, standing orders, or local practice. The proposal requires only core documents that are necessary to determine if assets exist or if the debtor is entitled to a discharge. The proposal grants discretion to the U.S. Trustee or case trustee to waive the requirement. Finally, the proposal does not require the debtor to go to any third party to obtain documents. The debtor need only produce those documents in the debtor's possession.

Information on Spouse's Income

The other proposal accepted by the Rules Committee would require disclosure of the non-filing spouse's income on Schedule I in Chapter 7 cases. The income of a non-filing spouse is relevant to a Section 707(b) analysis and has been for some time. See Matter of Strong, 84 B.R. 541, 543 (Bankr. N.D. Ind. 1988). Nonetheless, Schedule I currently requires its disclosure only in Chapters 12 and 13. This places the burden upon the U.S. Trustee to elicit information on the non-filing spouse's income either before or at the Section 341 meeting.

The simple change made by the proposal will eliminate the need for the U.S. Trustee to make an inquiry at every Section 341 meeting involving a debtor with a non-filing spouse. It will also complement Schedule J, which requires the debtor to state the expenses of the household.

Conclusion

We are optimistic that these Bankruptcy Rule amendments will be approved and will enhance the provision of accurate information, facilitate processing, and help prevent abuse of the bankruptcy system. Too often, people accept the way things are as the way they have to be. Every one of us has the obligation to take an interest in advocating for changes that will improve the bankruptcy system nationwide. We can all contemplate further "best practices" that may improve bankruptcy administration, whether by future Bankruptcy Rule amendments or by other means.

Bankruptcy Basics - For Cases Filed on or after October 17, 2005 (pdf)
Bankruptcy Basics - For Cases Filed before October 17, 2005 (pdf)

UST Program.pdf


   
Contact me, Detroit bankruptcy lawyer Walter Metzen today to schedule your free initial consultation. I also offer clients flexible appointment times and same day appointments if necessary. Get in touch with me today to learn how filing bankruptcy may be beneficial for you and your family. Why should you hire a Board Certified Bankruptcy Specialist? Click Here. My office has handled over 10,000 bankruptcy cases in Michigan and will apply this experience to your case as well. My office prides itself on fast, detailed, personal service. There are many different aspects to a bankruptcy case. Some of the different aspects are listed on the links below for you to explore. If you have any questions while exploring this site or would like a free personal bankruptcy consultation, contact my office at (313) 962-4656 or toll free 888-777-FILE.

 Contact me, bankruptcy attorney Walter Metzen to learn more about how I can help you get a Fresh Financial Start!.

 Be sure to Obtain a copy of your Credit Report after your Michigan Bankruptcy Filing and check it for Mistakes.

Contact me, bankruptcy attorney Walter Metzen to learn more about how the new Chapter 7 bankruptcy law may affect your case. I offer a free initial consultation so we can discuss your case personally.

We are a Debt Relief Agency helping people file for bankruptcy relief under the Bankruptcy Code. Let us help you decide if bankruptcy is right for you.

Bankruptcy attorney Walter Metzen represents clients throughout Southeast Michigan, including the communities of Detroit, Southfield, Warren, Roseville, Farmington Hills, Ann Arbor, Belleville, Canton, Clinton Township, Dearborn, Dearborn Heights, Hamtramck, Highland Park, Holland, Howell, Lincoln Park, Livonia, Macomb, Northville, Plymouth, Port Huron, Redford, Rochester, Saginaw, Southfield, Sterling Heights, Taylor, Trenton, Troy, Westland, Wyandotte, Ypsilanti, Mount Clemens, Howell, Oakland County, Macomb County, Wayne County, Washtenaw County, Livingston County, and all of the surrounding areas.

 


 

Detroit Bankruptcy Lawyer Detroit Bankruptcy Lawyers Walter Metzen Detroit Bankruptcy Lawyer Detroit Bankruptcy Attorney Detroit Bankruptcy Attorneys Filing Bankruptcy in Michigan Lawyer Filing Bankruptcy in Michigan Declare Bankruptcy Detroit Fresh Start Bankruptcy Detroit Southfield Michigan Bankruptcy lawyers Declaring Bankruptcy in Michigan Michigan Credit Counseling Lawyer Board Certified Bankruptcy Lawyers Warren Bankruptcy Lawyer Walter Metzen Bankruptcy Lawyer Attorney for Bankruptcy in Wayne County Bankruptcy Lawyer Oakland County Detroit Chapter 7 Lawyer  Southfield Michigan Bankruptcy Lawyer Michigan Bankruptcy Specialist Macomb County Bankruptcy Lawyer Fresh Start Bankruptcy Lawyers of Michigan Birmingham Michigan Bankruptcy Lawyers Michigan Bankruptcy Helpline Oakland County Michigan Bankruptcy Specialists Michigan Chapter 7 Bankruptcy Lawyers Michigan Fresh Start Bankruptcy Law Office Wayne County Debt Relief Agency Michigan Credit and Debt Counseling Lawyers Detroit Chapter 7 Bankruptcy Board Certified Specialist Walter Metzen Detroit Bankruptcy Attorneys Helping People File Bankruptcy Detroit Credit Counseling and Bankruptcy Services Consumer Bankruptcy Attorney in Michigan Detroit Michigan Bankruptcy Attorney Detroit Michigan Bankruptcy Lawyer Filing a Personal Bankruptcy How to declare personal bankruptcy in michigan How to File Bankruptcy in Detroit Declaring Bankruptcy in Macomb County Michigan Detroit Bankruptcy Court Directory Best Bankruptcy Lawyer in Detroit Michigan Attorney Walter Metzen Online Help Filing Bankruptcy In Detroit Michigan Michigan Chapter 13 Bankruptcy Lawyers Board Certified Specialist Detroit Chapter 13 Bankruptcy Lawyers Stop Foreclosure Repayment Plan Chapter 7 Lawyers In Detroit Wayne County Michigan Detroit Credit Counseling Information Detroit Credit Counseling Debt Settlement and Bankruptcy Lawyers serving Metro Detroit Metroit Detroit Bankruptcy Lawyers Consumer Bankruptcy Specialist Walter Metzen Board Certified by the American Bankruptcy Institute Detroit Debt Relief Agency Helping People File Bankruptcy in Michigan The Law Office of Walter Metzen Michigan Bankruptcy Lawyers Fresh Start Bankruptcy Law Office Metro Detroit Michigan Bankruptcy Law Firm Serving all of Metropolitan Detroit Walter Metzen Consumer Bankruptcy Specialist Certified by the American Bankruptcy Institute Wayne County Bankruptcy Attorneys Southfield Bankruptcy Attorneys Consumer Bankruptcy Specialists Oakland County Chapter 7 and Chapter 13 Bankruptcy Lawyer Certified Specialist File Personal Bankruptcy in Michigan Filing Chapter 13 Bankruptcy in Michigan Declaring Chapter 7 Bankruptcy in Michigan Legal Help Filing Bankruptcy in Michigan Stopping Foreclosure in Michigan Help Filing Michigan Bankruptcy Walter Metzen Bankruptcy Lawyer Michigan Bankruptcy Michigan Bankruptcy Lawyers Michigan Bankruptcy Attorneys Helping Consumers get a FRESH START Macomb County Credit Card Lawyers Bankruptcy and Debt Settlement Michigan Bankruptcy Credit Counseling and Debt Negotiation Attorneys Royal Oak Bankruptcy Lawyers Wyandotte Michigan Bankruptcy Lawyers Fresh Start Bankruptcy Lawyers of Michigan. How to Declare Bankruptcy in Michigan Michigan Bankruptcy and Credit Counseling Lawyers Michigan Credit Card Relief Lawyers Fresh Start Bankruptcy Lawyers of Detroit Michigan Credit and Debt Counseling Bankruptcy Lawyers of Michigan Lawyers Detroit Bankruptcy Bankruptcy Lawyers of Michigan Walter Metzen Board Certified Consumer Bankruptcy Specialist 888-4WALTER Michigan Bankruptcy Centers Michigan Bankruptcy Counselors Michigan Bankruptcy Court Directory Fresh Start Michigan Bankruptcy Law Offices Michigan Bankruptcy Law Center Michigan Bankruptcy Laws Filing Bankruptcy in Michigan Michigan Bankruptcy Attorney Walter Metzen Specialist in Consumer Bankruptcy Laws Board Certified by the American Bankruptcy Institute Michigan Bankruptcy Online Michigan Bankruptcy Services. Michigan Chapter 13 Bankruptcy Attorneys Metro Detroit Chapter 7 Bankruptcy Lawyer Michigan Credit Counseling Credit Counselors of Michigan Michigan Debt Assistance Michigan Debt Relief Agency Fresh Start Bankruptcy Law Center Motor City Bankruptcy Laws Stop Wage Garnishment in Michigan Detroit Bankruptcy Lawyer Walter Metzen Consumer Bankruptcy Attorney Walter Metzen Michigan Fresh Start Lawyers Downriver Bankruptcy Lawyer Michigan Fresh Start Bankruptcy Offices of Detroit Bankruptcy Attorneys Detroit Filing Personal Bankruptcy in Michigan Filing Personal Bankruptcy in Michigan Fresh Start Bankruptcy Lawyers Fresh Start Bankruptcy Law Office of Detroit

 

 Content Footer