A Chicago Bankruptcy Attorney’s Christmas Wish List To Chapter 13 Trustees

At the close of every calendar year, I try and reflect about the year past from a bankruptcy standpoint. What was most rewarding about being a chapter 13 bankruptcy attorney? What would’ve made the practice of law even more rewarding? What types of rulings or policies would I have liked to have seen go in a different direction? Just a few simple thoughts as we enter the Christmas season.

More Uniformity

1)   Wouldn’t it be great if there was more uniformity among the chapter 13 trustees? There are three chapter 13 trustees which handle the reorganization cases for the bulk of my clients. There is a fourth trustee that has just a handful of my clients per year. A greater sense of uniformity would really be helpful. It would enhance the process in that the debtor’s attorneys would know what to expect and thus, the debtor’s themselves would know what to expect. Some trustees will hear the 341 meeting without full documentation. Other trustees adhere to a stricter reading of the code with regard to providing documents. The three trustees also differ on the amount that a debtor can protect in a tax refund going forward. I understand that the judges are now considering a ruling with regard to same. However, for years, debtors have been shocked to hear that one trustee wants the entire refund turned over where another trustee wants little or nothing turned over. There simply doesn’t seem to be a sense of fairness.

More Amenability

2)  Wouldn’t it be great if the chapter 13 trustees were a little more amenable to the debtor’s efforts to reorganize?  In most chapter 13 cases, success or failure from the outset is quite obvious. Is the debtor complying with the code? Equally importantly, is the debtor making the required plan payments? You often can have one without the other. The debtor can be making the required payments yet not fully complying in the strictest sense of the bankruptcy code with regard to documentation, production, satisfactory explanation of items in the schedules, etc. However, it should be the money that talks. If a case gets dismissed prior to confirmation, absent adequate protection payments and attorney’s fees, the debtor winds up getting a return of remaining funds. This seems like a windfall to me when there were funds available to go to creditors. I would love to see more cases confirmed if the money is right and then allow the debtor to sink or swim post-confirmation. Otherwise, we are simply engaging in an exercise with no benefit to creditors. I rarely see the creditors fighting hard to dismiss a debtor. Rather, it is the chapter 13 trustee who often cannot be satisfied.

Video Meetings

3)  Wouldn’t it be great if the 341 meeting of creditors could be done through a video meeting? If that were the case, the debtor would not have to take off a day of work and lose a day’s pay. The attorney would not have to travel great distances to attend the meetings. Much like a video deposition, the debtor could be sworn in and subject to the questioning of the trustee. I believe that the technology is readily available through Skype, face time and other methods which could provide for such a meeting. If a creditor wishes to appear and question the debtor, the creditor can simply attend the meeting at the trustee’s office. A recorded video of the meeting could also be made available for creditors. As video technology continues to improve, it is my hope that one day videoconferencing for chapter 13 creditor’s meetings can become a reality.

Well there you have it; nothing too outrageous, nothing remotely crazy. I just wanted to share a few simple wishes of the chapter 13 trustees during this Christmas season. Chapter 13 is an incredible form of protection provided by the federal government and by the Constitution. A slight enhancement here and there, can go a long way to improving this wonderful system. A little more uniformity, a little more latitude given towards the debtors who are paying on time and the possible introduction to video 341 meetings are three wishes for chapter 13 trustees.

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