3/27/2017. Vermont Bar Association 60 th Mid-Year Meeting Seminar Materials. Chapter 7 Trustee. Chapter 7 Trustee

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1 Vermont Bar Association 60 th Mid-Year Meeting Seminar Materials Bankruptcy Basics The Role of Chapter 7 and 13 Trustees Raymond J. Obuchowski, Esq. Chapter 7 Trustee Bethel, VT March 31, 2017 Equinox Resort & Spa Manchester Center, VT Chapter 7 Trustee 704. Duties of trustee (a) The trustee shall (1) collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest; (2) be accountable for all property received; (3) ensure that the debtor shall perform his intention as specified in section 521(a)(2)(B) of this title; (4) investigate the financial affairs of the debtor; (5) if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper; (6) if advisable, oppose the discharge of the debtor; Chapter 7 Trustee 704. Duties of trustee (a) The trustee shall (7) unless the court orders otherwise, furnish such information concerning the estate and the estate's administration as is requested by a party in interest; (8) (9) (10) if the business of the debtor is authorized to be operated, file with the court, with the United States trustee, and with any governmental unit charged with responsibility for collection or determination of any tax arising out of such operation, periodic reports and summaries of the operation of such business, including a statement of receipts and disbursements, and such other information as the United States trustee or the court requires; make a final report and file a final account of the administration of the estate with the court and with the United States trustee; if with respect to the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in subsection (c); 1

2 Chapter 7 Trustee 704. Duties of trustee (a) The trustee shall (11) if, at the time of the commencement of the case, the debtor (or any entity designated by the debtor) served as the administrator (as defined in section 3 of the Employee Retirement Income Security Act of 1974) of an employee benefit plan, continue to perform the obligations required of the administrator; and (12) use all reasonable and best efforts to transfer patients from a health care business that is in the process of being closed to an appropriate health care business that (A) is in the vicinity of the health care business that is closing; (B) provides the patient with services that are substantially similar to those provided by the health care business that is in the process of being closed; and (C) maintains a reasonable quality of care. Chapter 13 Trustee Trustee (a) If the United States trustee appoints an individual under section 586(b) of title 28 to serve as standing trustee in cases under this chapter and if such individual qualifies under section 322 of this title, then such individual shall serve as trustee in the case. Otherwise, the United States trustee shall appoint one disinterested person to serve as trustee in the case or the United States trustee may serve as a trustee in the case. (b) The trustee shall (1) perform the duties specified in sections 704(a)(2), 704(a)(3), 704(a)(4), 704(a)(5), 704(a)(6), 704(a)(7), and 704(a)(9) of this title; (2) appear and be heard at any hearing that concerns (A) the value of property subject to a lien; (B) confirmation of a plan; or (C) modification of the plan after confirmation; Chapter 13 Trustee Trustee (b) The trustee shall (3) dispose of, under regulations issued by the Director of the Administrative Office of the United States Courts, moneys received or to be received in a case under chapter XIII of the Bankruptcy Act; (4) advise, other than on legal matters, and assist the debtor in performance under the plan; (5) ensure that the debtor commences making timely payments under section 1326 of this title; and (6) if with respect to the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in subsection (d). (c) If the debtor is engaged in business, then in addition to the duties specified in subsection (b) of this section, the trustee shall perform the duties specified in sections 1106(a)(3) and 1106(a)(4) of this title. 2

3 The Filing of a Bankruptcy Case Electronic Case Filing ( ECF ) A. Petition and List of Creditors Barebones B. Schedules, Statements and Summaries C. Statement of Intent (Chapter 7) D. Wage withholding and Plan (Chapter 13) Appointment of Case Trustee Meeting of Creditors ( Section 341 meeting ) 341. Meetings of creditors and equity security holders (a) Within a reasonable time after the order for relief in a case under this title, the United States trustee shall convene and preside at a meeting of creditors. (c) The court may not preside at, and may not attend, any meeting under this section including any final meeting of creditors. Notwithstanding any local court rule, provision of a State constitution, any otherwise applicable nonbankruptcy law, or any other requirement that representation at the meeting of creditors under subsection (a) be by an attorney, a creditor holding a consumer debt or any representative of the creditor (which may include an entity or an employee of an entity and may be a representative for more than 1 creditor) shall be permitted to appear at and participate in the meeting of creditors in a case under chapter 7 or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at any meeting of creditors. (d) Prior to the conclusion of the meeting of creditors or equity security holders, the trustee shall orally examine the debtor to ensure that the debtor in a case under chapter 7 of this title is aware of (1) the potential consequences of seeking a discharge in bankruptcy, including the effects on credit history; (2) the debtor's ability to file a petition under a different chapter of this title; (3) the effect of receiving a discharge of debts under this title; and (4) the effect of reaffirming a debt, including the debtor's knowledge of the provisions of section 524(d) of this title. 3

4 343. Examination of the debtor The debtor shall appear and submit to examination under oath at the meeting of creditors under section 341(a) of this title. Creditors, any indenture trustee, any trustee or examiner in the case, or the United States trustee may examine the debtor. The United States trustee may administer the oath required under this section Self-incrimination; immunity Immunity for persons required to submit to examination, to testify, or to provide information in a case under this title may be granted under part V of title 18. VT. LBR MEETING OF CREDITORS AND EQUITY SECURITY HOLDERS (a) Waiver of Debtor s Appearance. On application by or on behalf of a debtor setting forth an adequate showing of exigent circumstances, and with the filed consent of the case trustee, the Court may excuse or otherwise waive a debtor s attendance at a duly noticed 341 meeting of creditors on such terms as approved by the case trustee. This application does not require notice or a hearing. (b) Documents Required at 341 Meeting of Creditors. The debtor or the debtor s attorney must bring the original, executed petition, schedules, and statements to the 341 meeting of creditors. Failure to do so may result in the debtor and the debtor s attorney being required to appear at subsequent 341 meetings of creditors. See also Vt. LBR (b); Vt. LBR (d); Vt. LBR VT. LBR DEBTOR S DUTIES GENERALLY (d) Document Production Prior to 341 Meeting of Creditors. See also Vt. LBR (b). (2) In all Chapter 7 cases, to the extent applicable, each debtor must provide the case trustee with the following documents at least seven days before the first scheduled 341 meeting of creditors: (A) for each residence, condominium, cooperative apartment, mobile home, lot, real property or time-share owned or set forth on the debtor s schedules: (i) a copy of the deed of title and all mortgage deeds showing recording information or stock certificates; (ii) recent evidence of value (e.g., tax bill, grand list value) and copies of all appraisals performed within the last three years; and (iii)current mortgage statements, including the pay-off amount on or near the date of filing; 4

5 VT. LBR DEBTOR S DUTIES GENERALLY (d) Document Production Prior to 341 Meeting of Creditors. See also Vt. LBR (b). (B) for each motor vehicle, snow machine, all-terrain vehicle, trailer, boat, airplane, piece of equipment or machinery, or other personal property that is titled or registered that the debtor owns or listed on the bankruptcy schedules: (i) a copy of the current title or, if none, a copy of the current registration; (ii) if the asset is collateral for a secured debt, the secured creditor s most recent statement of balance due; and (iii) a copy of the most recent appraisal or valuation; (C) for each bank account in which the debtor had an interest within three months prior to the filing, copies of the monthly bank statements for the three-month period prior to the date of the bankruptcy filing and through the date of filing; (D) for each personal injury lawsuit or other lawsuit or cause of action in which the debtor has an interest, including all those set forth on Official Form 106 A/B or Official 206 of the debtor s schedules: (i) the name and address of the attorney representing the debtor in the action; and (ii) a copy of the complaint and any correspondence with respect to the status of the action; VT. LBR DEBTOR S DUTIES GENERALLY (d) Document Production Prior to 341 Meeting of Creditors. See also Vt. LBR (b). (E) copies of completed federal and state income tax returns, including all schedules and attachments, for the two years prior to the year of the filing of the bankruptcy case, see also Vt. LBR ; (F) for all asset transfers within one year prior to the bankruptcy filing, any documents evidencing those transfers, including copies of the bills of sale, closing statements, deeds, or divorce decrees; (G) for all retirement plans, annuities, or life insurance policies in which the debtor has had an interest within one year prior to the bankruptcy filing: (i) a statement of current value, and (ii) statements showing all activities in each retirement plan, annuity, or insurance policy for the 12 months prior to the filing date; VT. LBR DEBTOR S DUTIES GENERALLY (d) Document Production Prior to 341 Meeting of Creditors. See also Vt. LBR (b). (H) a copy of any decree of divorce entered within one year of the bankruptcy filing and any State of Vermont Form 813 Affidavit of Income and Assets filed during the course of the divorce proceedings, or equivalent inventory documents; and (I) copies of all child support orders currently in effect or pending before a court. (3) In Chapter 13 cases, each debtor must provide the Chapter 13 trustee with copies of those documents referenced in subparagraph (2), above, as well as proof of insurance on all improved real estate, mobile homes, motor vehicles, boats, or business assets, and if any of these assets are not insured, the debtor must as also provide a written statement indicating which of the debtor s assets are not insured and explaining why. (4) The debtor must provide such additional documents (or copies thereof) as the case trustee reasonably requests and which the debtor has available. 5

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7 Mandatory Categories Tax returns Real Estate Documents Vehicle Titles Bank Statements Personal Injury/Litigation suit Asset Transfers Divorce Decrees Retirement/Life Insurance CHAPTER 13 CHAPTER 13 7

8 VT. LBR DEBTOR S DUTIES GENERALLY (d) Document Production Prior to 341 Meeting of Creditors. See also Vt. LBR (b). (5) The debtor must also bring (A) a form of government-issued photo identification, and (B) the debtor s social security card or, in the event the debtor does not have a social security card, a medical insurance card if it includes the debtor s social security number, a recent payment advice if it includes the debtor s social security number, a current W-2 form, a current IRS Form 1099, or an original Social Security Administration report. Domestic Support Orders Include in Schedule E even if current Need the DSO Holder s name and address 8

9 Preparation and Examination Are you personally familiar with the information contained in the petition, schedules and statements and related documents? Are they true and accurate as of the date of the filing? Are there any errors or omissions which you wish to bring to my or the court s attention at this time? Are all of your assets listed? Have you listed all of your creditors? Have you received the Bankruptcy Information Sheet? Do you understand difference between Chapter 7 and Chapter 13? Have owned any real estate in the last year? Have you made any transfers of property or given any property away in the last 4 years? 6 years? 10 years? Preparation and Examination Have you made any payments to an unsecured creditor greater than $600 in the last 90 days? Payment or transfers greater than $1000 in the last year to family members. Does anyone hold property belonging to you? As of the date of the petition, did you have any claims against anyone or business? Are you a Plaintiff in any lawsuit? Are you entitled to any life insurance proceeds or inheritance as a result of someone death? Do you anticipate receiving or having vest any inheritance within 6 months of the date of filing? Do you have any winning lottery tickets? Preparation and Examination Do you anticipate or realize any property or cash as a result of a divorce or separation proceeding.? Are you presently employed? What is the name of your employer? Same as filing or new? Address of your employer? Did you reside in any state other than Vermont in the past two years? If yes, where? Are you under any order or requirement to pay domestic support? Name and address of DSO holder? Have you performed under the Statement of Intent as to reaffirming or surrendering? Does anyone owe you any money? 9

10 Preparation and Examination Are all of your federal and state tax returns presently due filed? Are the returns provided accurate copies of the originals as filed with the respective taxing authority? CHAPTER 13 Is your property currently insured? Presently working, where? How long? Income? Trustee references -United States Department of Justice - Executive Office of US Trustee Handbooks for Chapter 7 Trustees & Standing Chapter 13 & 12 Trustees Standing Trustee Pledge of Excellence - Best Practices for Document Production Requests by Trustees in Consumer Bankruptcy Case. 10