Office of the Chapter 13 Bankruptcy Trustee, Charlottesville, VA: Information for Debtor Attorneys

Debtor Attorney Information
(Version #21, Revised 03/11/08)

Note: The current web page is an older version.
This page will be updated with Version #24 as soon as possible.

Outline of Court Procedures,
Trustee's Policies and Procedures, and
Required Forms

For Debtors' Attorneys in Chapter 13 Cases
Administered by Trustee Herbert L. Beskin
in the Western District of Virginia

In an effort to assist debtors' attorneys and other interested parties, this section will set out the Court's procedures, the Trustee's policies and procedures, and the forms to be used in Chapter 13 cases administered by Trustee Herbert L. Beskin. The outline will follow the path of a Chapter 13 case chronologically from beginning to end: filing of the case; creditors' meeting; confirmation; post-confirmation; completion of plan payments, discharge, and closing of case; and miscellaneous matters.

Each section of the outline will consist of two parts. The first part will explain what the procedures and policies are and provide forms for each one. The second part, "Practice Pointers," will provide the Trustee's suggestions and recommendations as to how best to comply with the procedures and policies.

At the end of the outline is a list of all the Trustee's forms referred to in the outline, organized chronologically from the beginning of the case until the end. These forms can be accessed either by double-clicking on the form within the outline itself, or on the form in the chronological list.

In addition to this outline, there are three other parts of the Information for Debtors' Attorneys section of the website: (1) a Forms and Pleadings section which reproduces the forms referenced in this section; (2) the full CLE outline from the most recent annual seminar for Western District Chapter 13 attorneys put on by Trustees Beskin and Rebecca Connelly each fall; and (3) a Links to Other Resources section.

In order to help attorneys new to the Western District acclimate to the procedures required in Chapter 13 cases in this District, the Trustee is available to answer questions and encourages attorneys and their staff to set up a time to visit his office and meet the Trustee's staff.

SUMMARY TABLE OF CONTENTS

How to use this Summary Table of Contents:
To find the corresponding Section Number in the Detailed Table of Contents
click on the Section Number in the right-hand column.

SECTION NAMES	§
I. FILING OF THE CASE	I
II. CREDITOR'S (SECTION 341) MEETING	II
III. PERIOD BETWEEN CREDITORS MEETING AND CONFIRMATION	III
IV. CONFIRMATION	IV
V. POST-CONFIRMATION	V
VI. COMPLETION OF PLAN PAYMENTS, DISCHARGE, AND CLOSING OF CASE	VI
VII. MISCELLANEOUS	VII

DETAILED TABLE OF CONTENTS

How to use this Detailed Table of Contents:
To find the corresponding Page number in the Detailed Table of Contents
click on Page number in the right-hand column.

SECTIONS	Page
I. FILING OF THE CASE	5
A. Court website	5
B. Trustee's office structure and whom to contact	5
1. Pre-341 meeting	5
2. Between 341 meeting and confirmation of case	5
3. Post-confirmation	6
4. Orders	6
5. Attorney fee orders	6
C. Chapter 13 Plan format and initial notices	6
1. Standard Chapter 13 Plan format	6
2. Special Notice	7
3. Adequate Protection Payments	7
4. Automatic Stay—Extension of [Code § 362(c)]	8
5. Noticing Requirements	8
D. Payments, Pay Direct Orders, and Wage Deduction Orders	8
1. Plan payments	8
2. Mortgage payments	9
E. Case checklist	9
F. Trustee's introductory letter	9
1. Documents to be sent to the Trustee	9
2. Trustee's Questionnaire to Debtors	13
G. Written and DVD instructions to Debtors	13
H. Debtors' personal financial management course (Code §111(d))	13
I. Other matters	14
1. Attorney's Fees	14
2. Bankruptcy Link	14
3. Credit Counseling Certificate	14
4. Debtor audits by the United States Trustee	15
5. DSO Letters	15
6. Extension of time to file schedules or plan	15
7. Orders needing the Trustee's endorsement	15
J. Practice Pointers	15
1. Retainer agreement	15
2. Lien search	15
3. Credit report	16
4. Recent creditor addresses	16
5. National PACER search for debtors' prior cases	16
6. Materials explaining the Chapter 13 process	16
7. Homestead exemptions	16
8. Discussion of non-dischargeable debts	16
9. Discussion of fraudulent or preferential transfers	16
10. Plan payments	17
11. Preparation of schedules	17
12. Preparation of plan	23
13. Opting out of unsolicited offers of credit	28
II. CREDITOR'S (SECTION 341) MEETING	28
A. Debtors' ID	28
B. Wet signatures	29
C. Trustee's "Green Pamphlet"	29
D. Conduct of the creditors' meeting	29
E. Trustee's Report and Objections Following Meeting of Creditors (the "Trustee's Report")	29
III. PERIOD BETWEEN CREDITORS MEETING AND CONFIRMATION	30
A. Trustee's Goals	30
B. Debtors' Pre-Confirmation Affidavit	30
C. Attorney's responsibility to complete all items on Trustees 30 Report, contact Trustee's office once case is ready, or confirm status of case prior to the confirmation hearing	31
D. Continuation of the confirmation hearing	32
1. Lynchburg Division	32
2. Harrisonburg Division	32
E. Dismissal of case pre-confirmation	33
F. Preferential transfers by the debtors	33
G. Viewing debtors' payment history on Bankruptcy Link to make 32 sure debtors are current in plan payments	33
H. Lien avoidance	34
IV. CONFIRMATION	34
A. Attorney's presence at the confirmation hearing	34
B. Debtors' presence at the confirmation hearing	34
C. Confirmation Order	34
D. Continuation of the Trustee's motion to dismiss case	34
V. POST-CONFIRMATION	34
A. Review of claims within 30 day window after claims bar date	35
B. Trustee's notice of intention to pay claims	35
C. Trustee's objections to claims	35
D. Change in debtors' work or home address	35
E. Semi-annual Trustee's case reports	35
F. Resolution of debtors' default in payments prior to the Trustee filing a motion to dismiss case	36
G. Resolution of a Trustee's motions to dismiss case	36
1. Motion to dismiss documents	36
2. Continuation of the motion to dismiss	36
3. Filing of a modified plan	36
4. "Order resolving Trustee's motion to dismiss and directing debtors to increase plan payments to the Trustee"	36
5. "Drop dead" order"	37
6. "Consent Order amending plan to extend or alter plan payments or to clarify plan terms"	37
H. Motions to lift stay	37
I. Attorney's fees for post-confirmation work	37
J. Sale or refinancing of debtors' property, early payoff of case	38
1. Court permission required	38
2. Notice to closing attorney	38
3. Obtaining payoff information from the Trustee's office	38
4. Impact of 4th Circuit Murphy decision on debtor motions	39
K. Motion to incur debt	39
L. Debtor requests for refunds	39
1. Wrecked cars and insurance proceeds	40
2. Garnishments	40
M. Immediate reduction or suspension of plan payments due to an unexpected change in the debtors' financial situation	40
N. Notice required for modified plans that do not prejudice creditors	40
O. Practice pointers	40
VI. COMPLETION OF PLAN PAYMENTS, DISCHARGE, AND CLOSING OF CASE	41
A. Completion of plan payments, stopping of wage deduction order, and debtor refunds	41
B. Discharge procedure for cases filed prior to BAP & CPA (filed before 10/17/05)	42
C. Discharge procedure for cases filed under BAP & CPA (filed after 10/17/05)	42
D. Discharge procedure for cases under BAP & CPA (filed after 10/17/05) where debtors are not eligible for a discharge	42
E. Hardship discharge under Code §1328(b)	42
F. DSO Letters	43
G. Debtor refunds when no valid mailing address is available	43
H. Practice Pointers	43
1. Notify credit reporting agencies of discharge	43
2. "Bounce Back from Bankruptcy"	43
3. Closing letter to debtors	44
4. Retention of bankruptcy papers	44
VII. MISCELLANEOUS	44
A. Debtors' complaints about their attorney	44
B. Complaints about Trustee staff or communications	44
FORMS: TRUSTEE'S FORMS REFERRED TO IN THE OUTLINE OF COURT'S AND TRUSTEE'S POLICIES AND PROCEDURES	45

Return to Table of Contents

Top of page 5

OUTLINE

I. FILING OF THE CASE:

A. Court website: The Bankruptcy Court for the Western District of Virginia has a website which contains important information about procedures, Local Rules, personnel, forms, deadlines, etc. For further information see the home page of the U.S. Brankruptcy Court, Western District of Virginia. This entry point also contains a link to the Court's CM/ECF case look-up system, which requires a user name and password in order to access specific case information. A training area is available for attorneys who will be filing pleadings on CM/ECF. Attorneys who are new to the Western District should familiarize themselves with this site and the Court's requirements.

B. Trustee's office structure and whom to contact: Beginning 1/9/2008, the staff contact person for a case will depend upon the stage of the case and the nature of the issue. Kathryn will process all 341 documents. Cassandra and Danielle will prepare all cases for Court hearings. Ryan will handle closing of cases. Catherine will provide "customer service" and action item follow up for debtors, their attorneys, and creditors; she will also continue to conduct the debtor education program. All orders will be processed through the paralegal, R.C. Brett will handle claims-related issues. All court hearings and 341 meetings will be handled either by the Trustee or the staff attorney, Angela.

For clarification, "action items" are any issues that are not related to an upcoming court hearing or 341 meeting. This includes, but is not limited to, the following examples: payoff requests; notice of changes in a debtor's situation or contact information; processing insurance proceeds on a totaled car; monitoring compliance of orders suspending payments and resolving Trustee's motions to dismiss; coordinating review of no-provision issues; and all matters related to the debtor education program.

Contact information for each stage of a case is as follows:

1. Pre-341 meeting:

a. For matters relating to creditors' meeting documents ("341 docs"):
Kathryn ch13docs@ntelos.net ext. 12

b. For action items concerning a case:
Catherine catch13@ntelos.net ext. 14

2. Between 341 meeting and confirmation of case:

a. For issues or questions relating to matters which have been set for a Court hearing (including Trustee's Report issues or documents), or matters which may have to be set for hearing, contact:

Case#	Case Admin.	E-mail address	Telephone
-00 to -49	Danielle	daniellech13@ntelos.net	ext. 15
-50 to -99	Cassandra	ccareych13@ntelos.net	ext. 16

Top of page 6

b. For action items concerning a case:
Catherine catch13@ntelos.net ext. 14

3. Post-confirmation:

a. For issues or questions relating to matters which have been set for a Court hearing or may be set for hearing, contact Danielle or Cassandra as set forth in (2), above.

b. For action items concerning a case:
Catherine catch13@ntelos.net ext. 14

c. For issues or questions relating to the closing of a case, including wage release orders for completed plans:
Ryan ryanch13@ntelos.net ext. 13

4. Orders:
All orders which require the Trustee's signature should be sent via e-mail to the paralegal, R.C., at:
R.C. beskinordc13@ntelos.net ext. 20

Please identify the order in the subject line of the e-mail by case number, debtors' names, type of hearing, and date of hearing. For example: "07-60579 T & E Johnson MTLS 1/20/08," where 1/20/08 is the date of the hearing that was held on the Motion to Lift Stay; or "07-60579 T & E Johnson TMTD 1/20/08," where 1/20/08 is the date of the hearing that was held on the Trustee's Motion to Dismiss.

5. Attorney Fee Orders:

a. Initial attorney fees to be paid upon first confirmation of a case will now be processed by our Claims Specialist, Brett, as part of our normal confirmation order and claims entry process. Confirmation orders will be processed by Cassandra and Danielle to the extent that they will enter the correct plan payment schedule and the total of plan payments ("base gross") amount in our bankruptcy software, but they will not address the Attorney fee claim.

b. All post-confirmation, or non-confirmation related, attorney fee orders (for matters like Motions to Lift Stay, Incur Debt, or Modify Plan) will now be handled by Brett. We will monitor receipt of these orders through ECF noticing, but if you would like to e-mail copies of these endorsed orders to ensure prompt entry into our system, please e-mail them directly to Brett at: brettch13@ntelos.net.

C. Chapter 13 Plan format and initial notices:

1. Standard Chapter 13 Plan format: In the Western District, debtors are required to use a standard Chapter 13 Plan format which has been approved by the Judges. This form can be found on the Court's website (Local Forms, Form 3015-1B).

Top of page 7

2. Special Notice: The Court requires that if a secured creditor's lien is being avoided or modified (a "cram down," etc.) pursuant to paragraph 3.B. or 7. of the plan, a "Special Notice" must be filed with the plan and served upon the creditor. This form can be found on the Court's website (Local Forms, Form 3015C). Lien avoidance under Code §506 will also require an adversary proceeding. Service on the lienholder's registered agent is required pursuant to Rule 7004.

3. Adequate Protection Payments: Section 1326 of the Code now requires that a Plan provide that adequate protection ("AP") payments be made to any creditor that is being paid through the plan and is secured by a purchase money security interest in personal property. These payments must commence within 30 days from the date the case is filed, and a case cannot be confirmed until the Court is satisfied that the plan has properly provided for such payments. A plan may propose that such payments be made directly by the debtors to the creditor, or they can be made to the Trustee as part of the debtors' plan payment and disbursed by the Trustee.

If such payments are made to and disbursed by the Trustee, there will be no need for the debtors to provide proof of payment or proof of receipt by the creditor. If the payments are made directly by the debtors to the creditor, the Trustee will have to obtain proof of payment by the debtors and proof of receipt by the creditor prior to confirmation. Because of the difficulties inherent in proving that the debtors have made these payments, virtually all of the plans filed in this area have proposed that AP payments be made by the Trustee rather than directly by the debtors.

The BAP & CPA Code changes do not specify the required minimum amount of the AP payments. The Court's required Chapter 13 plan form provides that the equal monthly payments provided in paragraph 3 to a secured creditor entitled to AP payments are deemed to be the creditor's AP payments unless the plan provides otherwise elsewhere.

If the plan proposes not to pay a creditor anything for AP payments, the creditor still needs to be noticed of this in the same fashion. §1326. Over-secured creditors are still entitled to AP payments.

The Court's Standing Order #9 [see the Court's website] requires that a Notice of Adequate Protection Payments must be sent by the debtors' attorney to affected creditors within five days of the date on which the initial plan is filed. If the creditor fails to object to the proposed AP payments within fifteen days, the creditor is deemed to have accepted the proposed payments, and no separate Court order will be necessary. The required "Notice of Proposed Adequate Protection Payments and Opportunity for Hearing on Objection" is Form 4008-1A in the Local Forms section of the Court's website.

Top of page 8

4. Automatic Stay—Extension of [Code §362(c)]: A hearing to extend the automatic stay beyond the initial 30 days [§362(c)(3)] or to establish a stay [§362(c)(4)] must be held by the Court within 30 days of the date on which the case is filed, and the date and time of any hearing must be arranged beforehand with the Clerk's Office. Debtors' counsel must notice all creditors of any such hearing.

a. Judge Krumm requires live testimony for such hearings, and has announced that he especially wants to hear evidence regarding the issue of good faith in the filing of the instant case.

b. Judge Anderson has approved the use of a form notice and order which allows (i) the temporary continuance of the automatic stay until a second hearing can be held, and (ii) the use of "negative notice" to creditors so that the second hearing will not need to be held if no creditors object to the continuation of the stay. [Form#1: PDF / RTF]

5. Noticing Requirements: For noticing requirements for initial and amended plans, see the first page of the Form Plan and Local Rules 3015-1 and 3015-2. As stated above, for Special Notices see Bankruptcy Rule 7004.

D. Payments, Pay Direct Orders, and Wage Deduction Orders:

1. Plan payments are to be sent to a SunTrust Bank lockbox maintained by the Trustee in Memphis, Tennessee. Do not send payments to the Trustee's office in Charlottesville.

The address for payments is:

Herbert L. Beskin, Trustee
Chapter 13 Trustee's Office
P.O. Box 1961
Memphis TN 38101-1961

All payments must include the debtors' full names and their full case number (for example: "Thomas William Jones and Edna Joyce Jones, #07-60115."). Payments should be made payable to "Herbert L. Beskin, Trustee." Please advise your clients that the Trustee's office will not accept "walk-in" payments. If debtors bring payments to the Trustee's office they will be given an addressed envelope for mailing the payment to the lock box in Memphis.

In every case, an order must be entered by the Court either ordering the debtors themselves to make the payments proposed in the Plan (a "pay direct order"), or ordering the debtors' employer to make the plan payments (a "wage deduction order"). The debtors' attorney is required to file the appropriate order with the Court. Copies of all of the appropriate pay direct and wage deduction forms are attached. [Form#2: PDF / RTF] This order should be filed as soon as the case is filed so that the debtors will not fall behind right away. Studies show that automatic wage deduction cases are about five times more successful than direct payment cases.

Top of page 9

Both Judges now require wage deduction orders in every case unless (a) there is a compelling reason why one should not be required, and (b) the Trustee endorses an order allowing a pay direct order. The Trustee is requiring any employed debtor to appear before the Judge to request an exception to this rule. An example of an order permitting direct payments in special circumstances is attached; it states that if the debtors miss a single direct payment, they agree that their attorney will immediately submit to the Court a wage deduction order. [Form#3: PDF / RTF]

2. Mortgage payments: Sometimes extra precautions are advisable to keep debtors who have had trouble making their mortgage payments every month from defaulting on future payments. One possibility is for the plan to provide that the monthly mortgage payment will be made through the plan by the Trustee; in this scenario, the Trustee will take his usual commission on each such payment.

A second method is to have the Court enter a second, separate, wage deduction order with the employer that will have the employer send a separate check directly to the mortgagee each month to cover the mortgage payment. This method has the advantage of saving the debtors the Trustee's commission each month, and getting the payment to the mortgagee more quickly. An example of such a wage deduction is attached. [Form#4: PDF / RTF]

A third option is to set up an automatic monthly draft from the debtors' checking account directly to the mortgagee. This can be done by the debtors without any Court order or hearing.

E. Case checklist: The Trustee has put together a "master case checklist" for processing BAP & CPA cases. We have found it to be a useful guide in making sure that we do not omit any of the new steps and actions required by the Act. Under the for-whatever-it's-worth doctrine, a copy is attached for your review and use. [Form#5: PDF / RTF]

F. Trustee's Introductory Letter [Form#6: PDF / RTF]:

In every case the Trustee's office will, within a few days of filing, send to the debtors a letter outlining the debtors' initial responsibilities to make plan payments, provide documents, and attend the creditors' meeting. It is quite common for debtors to fail to follow through on the last two requirements, so they are set out in detail below.

1. Documents to be sent to the Trustee:

a. How to send documents to the Trustee: The Trustee asks that all requested information and documents be sent to his office as PDF, M.S. Word, or Rich Text formatted attachments to e-mails, rather than via fax or US mail. The Rich Text format is a fairly universal format that is easily generated in those offices that use WordPerfect rather than Word. Emailing these documents will ensure that you have a record that the documents have been sent, and it will allow Trustee staff to quickly attach the documents to the electronic case management software.

Top of page 10

(1) Information on subject line of e-mail: For each e-mail sent with or without attachments, please put the following information in the subject line: (i) case number; (ii) debtor's name; (iii) nature of attachment; and (iv) relevant hearing date. Providing this information will allow the document to be processed faster, and will ensure that matters are prioritized based on the date of the hearing. So, for example:

(a) 341 Documents: For documents that are required in every case and are to be filed prior to the creditors' meeting (the "341 meeting") the subject line would read: "07-60579 T & E Johnson 341 docs 1/20/08," where 1/20/08 is the date of the scheduled creditors' meeting.

(i) Please put all 341 documents in the same e-mail attachment; do not make separate attachments for each document. In joint cases, please attach all of each debtor's paystubs in order, then the other debtor's. And please make sure that you've included all the pages of a given document and put them in the proper order.

(ii) If you are sending a follow-up or subsequent batch of 341 docs, please denote that in the subject line by indicating "341 docs supp."

(b) Trustee's Report Documents: For documents that have been requested by the Trustee's Report (see section II. E., below) and are needed for confirmation, the subject line would read: "07-60579 T & E Johnson T's Rep docs 2/20/08," where 2/20/08 is the date of the confirmation hearing.

(2) Where to send 341 documents: All 341 documents should be sent to a special e-mail address which is used solely to receive such documents: ch13docs@ntelos.net

b. Documents required in every case: In every case the following documents should be provided to the Trustee at least ten days prior to the initially scheduled creditors' meeting. Please tell your clients not to send documents directly to our office; all documents should be sent to the attorney for review, and then by the attorney to our office. Remember to redact Social Security numbers and children's names from these documents.

(1) All pay stubs or operating statements (the "payment advices" referred to in §521) received by the debtors within the 60 calendar days immediately preceding the filing of

Top of page 11

the case. Do not send six months of paystubs unless you are documenting a change in income from the first four months. Also, if you are sending an employer print-out instead of actual paystubs, make sure that the print-out shows gross income and all deductions for each paycheck during the 60 day period. Bank statements showing paycheck deposits are not sufficient.

(a) If a Debtor is self-employed, and the attorney needs a monthly operating statement / profit and loss form to show the Debtor's income and expenses, the Trustee has a simple form that can be used. [Form#7: PDF / RTF]

(b) If the debtors are retired or disabled, send either a copy of: (i) the retirement, pension, or disability payments for the last two months, (ii) bank statements showing these funds being deposited, or (iii) the statement of benefits.

(2) Real estate and personal property tax bills for the current year showing city/county valuations

(a) If there has been a recent private appraisal, the Trustee will expect that to be provided to him as well.

(3) Current car insurance declaration page showing kind(s) of coverage, period of coverage, and total premium; and

(4) The federal personal income tax return for the most recent year (prior to filing) filed by the debtors. Do not send prior years unless specifically requested by the Trustee's Report.

(a) If the debtors are not required to file tax returns, they should submit an affidavit stating this fact, the reason why, and the years for which no returns were required. A sample of such a form is attached. [Form#8: PDF / RTF]

(5) Note: Pursuant to §521(i), failure to provide within 45 days of the filing of the case the payment advices or other items required by the Court in §521(a)(1) can result in automatic dismissal of the case. The debtors can request an extension of this deadline, but the request must be made before the expiration of the 45 day period. (Note: As of 1/08, the dismissal may be automatic in the Lynchburg Division, but a hearing will be held first in the Harrisonburg Division.)

Top of page 12

c. Other documents:

(1) Deed(s) and proof of joint vs. individual liability: If the debtor(s) own real estate as tenants by the entireties and there is unprotected equity in the property, the Trustee will want to see a copy of the deed and appropriate third-party documents (copies of bills; credit reports; etc.) to establish how the property is titled and whether there are any joint debts.

(a) Note: Virginia Code §8.01-220.2 makes bills for emergency medical care, and the follow-up to such care, joint debts that must be paid from equity in T by Es property.

(2) Unusually high living expenses: The Trustee may ask for documentation of such expenses, so providing them right away will speed up the process. Examples include medical bills, transportation, child care, utility bills, etc. If you are submitting a large stack of bills or receipts, the Trustee will not review them unless they are accompanied by a summary sheet explaining what the attached documents will show.

(3) Financial assistance to the debtors from family or friends: If the debtors will be relying upon significant financial assistance from family or friends to make their plan feasible, the Trustee will usually require those persons to execute an affidavit that makes clear the amount and duration of their assistance. [Form#9: PDF / RTF] The Trustee recommends that this affidavit be executed before the plan is filed so that the attorney will know right away if the debtors can truly rely upon this financial assistance.

(4) Prior Homestead Deeds: If the Chapter 7 test is an issue, and the debtors have previously filed Virginia Homestead Deeds, the Trustee will need to see them to ensure that the debtors are not claiming more Virginia Code §34-4 protection than they are entitled to.

(5) Valuation issues: If the debtors are claiming that their real estate is worth less than the most recent tax assessment, their car is worth less than the current NADA retail value, etc., the Trustee will expect to see appropriate other third-party evidence of the lower value.

(6) Other income sources: Provide the Trustee with appropriate third-party evidence of any other income or benefits received by the debtors: Food Stamps, Unemployment Insurance, child or spousal support, Veterans' Benefits, etc.

Top of page 13

(7) Charitable contributions: If the amount of contributions being claimed by the debtors is unusually high (more than $75/mo.), the Trustee will probably request documents showing the history of contributions in the year or two prior to filing.

2. Trustee's Questionnaire to Debtors: This three page questionnaire [Form#10: PDF / RTF] will be sent to the debtors with the Trustee's letter. It must be filled out by the debtors and returned to the Trustee before the 341 meeting. It will provide the Trustee with information required by BAP & CPA, and will save time at the 341 meeting. Since the debtors will need the attorney's assistance in filling out this questionnaire, it should not be sent to the Trustee by the debtors. The Trustee requires that the attorney or a staff person assist the debtors in filling out this form. It should then be sent to the Trustee with the required documents listed above.

The attorney needs to explain to the debtors the importance of this document being filled out correctly and completely, and the debtors' obligation to advise the Trustee if any of the information subsequently changes or is determined by the debtors to be incorrect. If after confirmation it turns out that the debtors' affidavit was incorrect, the Trustee may object to any subsequent plan modification that cures an undisclosed pre-petition delinquency by reducing the "pot" to unsecured creditors, or he may take other appropriate action to bring this incorrect disclosure to the Court's attention.

G. Written and DVD instructions to Debtors: Pursuant to the Court's Standing Order #10, the Court has ordered that in every case debtors' counsel shall certify to the Court that (i) the debtors have viewed a DVD of instructions to debtors produced by Judge Krumm, and (ii) the debtors have been provided with the Court's written instructions to debtors, reviewed them, and had a chance to ask the attorney questions about them. If the debtors are pro se, the Trustee shall provide them with the written instructions and information about how to obtain the DVD. The certifications to be made by the debtors and the attorney are a part of the pre-confirmation affidavit which they must sign and submit to the Court prior to confirmation (see paragraph III. B., below).

The Court's web site contains information about how to obtain a copy of the DVD, and the DVD can be viewed on this website and on the website of Trustee Rebecca Connelly.

H. Debtors' personal financial management course (Code §111(d)): BAP & CPA requires that in order for debtors to obtain a Chapter 13 discharge, they must take the Personal Financial Management course no later than the date on which they make their last plan payment as required by their plan (Rule 1007(c). However, Local Rule 4008-1 and Local Form 4008-1A give the debtors 60 days from the date on which the Trustee advises the Court that they have completed their plan payments to certify to the Court that they have completed the course.

The Trustee's office provides its debtors with this course at no charge; the course is currently taught in person about once a month, in Lynchburg and in Charlottesville. Shortly after filing the case, debtors will be advised by letter from the Trustee's office of the upcoming sessions being offered.

Top of page 14

Dates, locations, and directions for all sessions, as well as other information about this program, are available under Debtor Education Program portion of the Debtor Information section of this website. Anyone with questions about the Trustee's personal financial management course can call Catherine in the Trustee's office, at (434) 817-9913, extension 14.

There are also more than a dozen private providers of this course that have also been approved by the U.S. Trustee to provide a Personal Financial Management course in this District; information about these providers can be found on the U.S. Trustee Program's website. These providers will charge the debtors a fee to take the course, and will sometimes provide the course by phone or online.

The Trustee strongly recommends that the debtors take this course as soon as possible, as it will greatly assist the debtors in the management of their personal finances and the successful completion of their case.

I. Other matters:

1. Attorney's Fees: At this time (1/08) there is no Local Rule or Standing Order authorizing a standard fee for debtors' counsel in Chapter 13 cases. Currently the Trustee is not objecting to attorney's fees of up to $2,500 for all ordinary services required through confirmation. If any attorney is requesting fees in excess of that amount, both the Court and the Trustee will expect to see contemporaneous time records and an explanation as to why such fees are being requested.

The Court has ruled that while attorneys fees may be paid ahead of unsecured claims, executory contracts, secured debt arrears, and priority claims other than support arrears, they come behind fixed monthly payments to secured creditors and at best can only be paid pro rata with support arrears being paid by the Trustee.

For attorney's fees for work performed after confirmation of the case, see the "Post-Confirmation" section of this Outline.

2. Bankruptcy Link: The Trustee's case management software provider, EPIQ Systems, maintains a website that allows debtors' attorneys and creditors to have 24/7 access to basic information about all the Trustee's pending cases: payments received, claims filed, disbursements to creditors, etc. Access to this website is free, and can be obtained by e-mailing to the Trustee a request for access to the system. The Attorney may be required to sign an access agreement. Please note that there is always a delay of 5 – 10 days between the date a payment is sent by the debtor to the Memphis SunTrust lockbox and the date it appears on Bankruptcy Link.

3. Credit Counseling Certificate: A certificate from a certified credit counseling agency must be filed with the Court. The Court's website lists those agencies which have been approved for debtors in the Western District of Virginia. The debtors must have taken the credit counseling session within 180 days of the date on which their case is filed. (Note: There is some controversy about whether the session can be on the same day as the filing of the case, but both Judges have held that same-day counseling is acceptable, and the Trustee will not object.)

Top of page 15

4. Debtor audits by the United States Trustee: Generally, in this District the confirmation process will proceed independently of any case audits being conducted by the Office of the United States Trustee.

5. DSO Letters: At the beginning of the case, the Trustee is required by BAP & CPA to send notice to any DSO (Domestic Support Order) payee and the state agency in charge of collecting child support to alert them to the case and certain information about the debtor. [Form#11: PDF / RTF] In order to ensure proper noticing of such claims, the Trustee will not recommend confirmation unless all DSO payees are listed on Schedule E, and he recommends that the state child support agency be listed there as well.

6. Extension of time to file schedules or plan: When an attorney is asking for the Trustee's endorsement on an order requesting an extension of time in which to file schedules or a plan in a new case, please provide the Trustee with a brief statement of the reason(s) the extension is needed. This explanation need not be any longer than one sentence and should be included within the e-mail that contains the order attached for his endorsement.

7. Orders needing the Trustee's endorsement: Almost all orders in a Chapter 13 case in this district require the endorsement of the Chapter 13 Trustee. At any time in the case if an order requires the Trustee's endorsement, please send it via e-mail to: beskinordc13@ntelos.net. Using this email address will ensure that the order is sent directly to the Trustee's paralegal, R.C., and that it will be reviewed promptly. As stated previously, the Trustee asks that orders be sent by e-mail instead of by fax or the postal service, and that they include the full case number, the name of the debtor(s), the kind of order, and hearing date in the subject line of the email. (E.g. "07-62161 B Jones MTLS 1/21/08").

J. Practice Pointers:

1. Retainer Agreement: Be sure to spell out in your agreement your right to fees if the case is converted or dismissed; the amount of any such fees will have to be approved by the Court, but at least one Judge will not allow any fees in such circumstances unless the agreement allows for them. In this District the initial fee agreement is presumed to cover all services through initial confirmation.

2. Lien search: If the debtors own any interest in real estate, a lien search should be conducted. It is the only way to ensure that all existing liens are known and dealt with. Do not take the debtors' word regarding what liens exist against real estate.

Top of page 16

3. Credit report: Always obtain a copy of a current credit report for each debtor and review it with them. It is the best way to ensure that no debts have been omitted from the schedules, and to determine if the debtors are the victims of identity theft. A new federal law allows each person one free credit report each year. www.AnnualCreditReport.com

4. Recent creditor addresses: Under the new requirements of Code §342(c)(2)(A), in order to ensure that creditors are noticed at the correct address(es) the attorney will need to obtain from the debtors copies of all correspondence from creditors in the 90 days immediately preceding the filing of the case.

5. National PACER search for debtors' prior cases: Before a case is filed, it is essential to know about the debtors' prior bankruptcy cases. The debtors' ability to obtain or retain the automatic stay, and their eligibility for discharge, hinge on this information. The web site is: Pacer Service Center: U.S. Party Case / Index.

a. Eligibility for discharge: Judge Anderson has ruled that §1328(f) means that the 2 and 4 year disqualification periods are to be measured from the date the former case was filed to the date the current case was filed. In re Kimberly Campbell, Case #06-60678, 7/13/06 ruling.

6. Materials explaining the Chapter 13 process: The need for such materials has been significantly decreased by the Judge's DVD instructions to debtors, the Trustee's introductory letter to debtors, and the Trustee's "Green Pamphlet" [see Part II. of the outline], but materials or checklists clarifying the debtors' initial duties, payment schedules, court hearing dates and locations, etc., may still be required to prevent problems in the first stages of the case.

7. Homestead exemptions: In order to determine which state's exemptions the debtors are eligible for, the attorney needs to know the debtors' domicile for the past 2 years. Code §522(a)(3).

8. Discussion of non-dischargeable debts: Do the debtors understand their obligations for any non-dischargeable debts that will not be paid in full during the case? Remember that any such debts will have to be disclosed in the end-of-case DSO letters that the Trustee is required to send to the DSO recipient and the state child-support collection agency. Code §1302.

9. Discussion of fraudulent or preferential transfers: The Trustee will always ask about any such transfers in the five years prior to filing. Such transfers may affect how much the debtors will have to pay in their plan, and may directly affect the transferees. Have these issues been discussed with the debtors prior to filing?

Top of page 17

10. Plan payments:

a. By wage deduction: Make sure that debtors understand their responsibility to begin making plan payments themselves immediately until they see the deduction showing up on their paystubs, and the need to keep all paystubs during the plan to prove payments in case there are problems.

b. Direct by debtors: Make sure that debtors understand the importance of keeping a receipt or copy of all payments made by them in case of problems.

c. If the plan payment increases during course of plan: Stress to the debtors that it is their responsibility to ensure that any required "step up" in payments occurs on time, whether payment be by wage deduction or direct payment. Give the debtors written materials that clarify the change(s) and when they are to occur.

11. Preparation of schedules:

a. Basic rule: "Disclose, disclose, disclose": when in doubt, put something in the schedules. E.g.: equitable/contractual interests in real property or vehicles; all bank accounts or sources of income, no matter how small; personal injury claims.

b. Valuing assets: On Schedules A and B, please disclose the source of your valuation of real estate, vehicles, and other assets of significant value (e.g.: tax assessment, NADA retail value, private appraisal). Do not deduct liquidation costs, and if property is jointly owned, please specify if you are providing the total value or the value of the debtor's proportional interest in the property.

c. Schedule A:

(1) Disclose all forms of ownership: condos, burial plots, mineral rights, life estates, property owned in other states, property jointly owned, etc.

(2) Always disclose the results of any recent appraisal and send the Trustee a copy.

d. Schedule B:

(1) Use retail fair market values.

(2) Commonly omitted items: bank accounts; jewelry; debts owed to the debtors; property in which the debtor owns a partial or equitable interest.

Top of page 18

(3) Disclose all potential claims: personal injury, bonuses, child/spousal support, commissions, etc.

e. Schedule C:

(1) Remember to review Code §522(b)(3)(A) and determine eligibility for Virginia exemptions.

(2) Remember that if an asset is owned by one spouse, the other spouse's Va. Code §34-4 exemptions cannot be used to protect it.

f. Schedule D:

(1) State the date each claim was incurred (for "910 claim" issues, etc.).

(2) Clearly identify the collateral for each claim.

g. Schedule E:

(1) State the year(s) for each tax owed.

(2) The Trustee strongly prefers that any non-priority taxes be listed separately and solely on Schedule F, but if you do list both on Schedule E, be sure to specify which amounts are priority and which are non-priority.

(3) The Trustee will not object if the plan proposes to pay in full a child support delinquency by an ongoing wage deduction from the debtor's wages to the DSO recipient or the state agency; they do not need to be paid through the Trustee. If the delinquency will not be paid in full during the term of the plan, the DSO recipient or state agency will have to agree to such treatment unless Code §1322(a)(4) applies.

(4) List any DSO recipient and the appropriate state support collection agency, even if the debtor says there is no delinquency on the support obligation.

h. Schedule F:

(1) List account number and date claim incurred for each debt.

(2) Redacting of all but last four digits of account numbers [Bank. Rule 9037(a)] will cause problems for creditors trying to match Trustee plan payments with debtors' accounts. Debtors may choose to submit full account numbers and waive this requirement [9037(g)], and the Trustee encourages debtors to do so to ensure payments are properly applied by creditors to their accounts.

Top of page 19

i. Schedule G: If a lease/executory contract is being cured in the plan, be sure the creditor is listed on the matrix so it can file a proof of claim and be paid.

j. Schedule I:

(1) If in a joint case one spouse is not working, disclose at the top of the form whether retired, disabled, homemaker, or looking for employment.

(2) In section 17 at the bottom of the form, disclose any expected changes or seasonality of income, unusual situation regarding family structure or dependents, health problems affecting income, etc.

(3) At the top of the form, disclose nature of job, physical address of employer, and length of time at this job.

(4) If the debtor is living with someone in a common-law-marriage type situation, please disclose income and expenses of both parties as if they were married.

k. Schedule J:

(1) Use actual current expenses.

(2) If you are showing a large or bundled expense in sections 2.d., 11.d., 13.d., or 17, please itemize on attached form.

(3) Please disclose any anticipated changes in expenses in section 17 at the bottom of the form.

l. Statement of Financial Affairs ("SOFA"):

(1) Questions #1 & 2: Complete for all gross income during two previous years and current year, separately for debtor and spouse even if not a joint case.

(2) Question #7: Be sure any religious contribution figures are the same as that on Schedule J, line 10, and Form B22C, line 45.

(3) Question #9: Be sure the figure for attorney's fees is the same here as on the attorney disclosure form and in the plan.

Top of page 20

(4) Questions #18-20 must be filled out for every business operated by the debtor in the past six years, even if it is no longer in existence.

m. Disclosure of Attorney Compensation Form: Disclose all amounts received, and specify which are costs and which are fees. Make sure amounts match paragraph 2 of the plan and question # 9 on the SOFA.

n. Form B22C (CMI form): The case law on interpreting this form is of course new and still evolving. Unless otherwise specified, the interpretations set forth below represent the position the Trustee will take as to how the amount on each line should be calculated. Unless otherwise noted, the Trustee's position is the same as that of the US Trustee if he has announced a position on that issue. [For more detailed information on completing this form, see the materials for the 12/1/07 seminar on Chapter 13 Practice in the Western District of Virginia elsewhere in this section of the website.]

(1) Lines 2-3:

(a) Include the income of the non-filing spouse. Some of this may be deducted later on Line 19, but at this stage all spousal income must be included.

(b) If self-employed, put gross income on Line 3a. and deduct operating expenses on Line 3b. Such expenses can only be deducted once, so if they are used here, they cannot be deducted elsewhere in the form.

(2) Lines 4-8:

(a) Include income from all sources: rent, retirement, interest, dividends, etc.

(b) Include child or spousal support here; such amounts may be deductible later on Line 54.

(c) Include regular contributions from others who are helping with living expenses, including payments made to third parties for the benefit of the debtors.

(d) Include unemployment compensation and V.A. benefits, but not Social Security benefits.

(3) Line 16: Household size: Trustee will review multiple factors, including whether alleged dependents are claimed on tax returns; how long the group has been functioning as a family unit; whether the debtors are providing more than half of the person's support; and the Census Bureau's definition of family unit.

Top of page 21

(4) Line 17: In re Earl and Robin Hylton, 8/22/07 opinion by Judge Krumm, Case # 07-70320: the applicable commitment period is a temporal requirement, so above median debtors must propose a 60-month plan.

(5) Line 22: For loans against retirement plans which end before the plan ends, the balance owed as of filing (including interest) should be divided by 60.

(6) Lines 26, 34, 36, 42, 43 or 44: You will need to supply appropriate supporting documents when asserting expenses on these lines.

(7) Line 29:

(a) If one debtor claims two IRS car ownership deductions when she has only one car payment, the Trustee will object.

(b) In re Earl and Robin Hylton, supra. Case holds that the debtor can claim an ownership deduction for a vehicle even though it will be owned free and clear during the course of the plan; the debtor need not actually have a car payment for the entire plan to claim this allowance.

(8) Line 30: If debtor received a large tax refund last year, the amount on this line should be increased by 1/12th of the refund unless the debtor's situation, wage withholding, etc., has changed significantly.

(9) Line 32: The debtors should only claim the amount attributable to term life insurance, not the whole life portion of the premium.

(10) Line 33: Do not include the arrearage portion of any support payment, as it will be deducted on Line 49. Only deduct court-ordered payments; any informal payments should be deducted on Line 57.

(11) Line 36: Health care expenses:

(a) Do not include health insurance or HAS premiums.

(b) Effective 1/1/08, there will be a standard deduction of $54 per person ($144/person if over 65).

Top of page 22

(12) Line 37: Do not include telephone land line or basic cell phone service; they are already included in Line 25.

(13) Line 43:

(a) Do not include preschool or college expenses.

(b) Effective 1/1/08, maximum deduction is $137.50/child.

(14) Line 44: There is a statutory cap of 5% on this additional expense.

(15) Line 45:

(a) There is a statutory cap of 15% of gross income on this deduction.

(b) The Trustee may ask for documents to support the amount and prior history of any charitable contributions. If the amount of the contribution has increased significantly on the eve of bankruptcy the Trustee will probably object.

(16) Lines 47 and 48:

(a) If debt is being paid in full in less than 60 months, or is a balloon payment, pro rate the payments over 60 months, including interest.

(b) Do not deduct leased vehicle payments, as they are covered by Lines 25 and 28.

(c) Arrearages: Deduct 1/60th of the total being cured in the plan, including interest. Per the statute, do not deduct arrearages owed on luxury items.

(d) In re McPherson, 350 B.R. 38 (2006), opinion by Judge Anderson: debtors cannot deduct amount of pre-petition contractual payments in cram down situations; they can only deduct the amount being paid by the Trustee in the plan on the secured portion of the debt.

(e) In re Kermit and Terri Ball, Case #06-70154, 5/17/06 opinion by Judge Krumm: debtors cannot deduct the amount of pre-petition contractual payments if in their plan they are surrendering the collateral.

Top of page 23

(f) Good faith requirement: In re Earl and Robin Hylton, supra, Judge Krumm stated that the confirmation requirement of good faith [§1325(a)(3) and (7)] still applies, and the Court will still examine such secured debt payments to determine "if the unsecured creditors are better off than they would be if the asset is excluded and the monthly payments on the secured debt are added into a monthly plan payment."

(17) Line 49: Deduct 1/60th of the priority payments being made in the plan. Do not duplicate arrearage amounts being paid through a separate state-court-ordered wage deduction.

(18) Line 50: This amount should reflect the Trustee's commission on the actual monthly plan payment. The commission percentage can be found on the UST's website.

(19) Line 54: You can deduct here income on Line 7 from child support.

(20) Line 55: Include actual retirement contributions, plus 1/60th of any loan being repaid in the plan, including interest.

(21) Line 57:

(a) Do not deduct student loan payments.

(b) Per the statute, all expenses must be reasonably necessary for the support of the debtors and their dependents.

(22) Line 58: Monthly Disposable income:

(a) This is the net amount (after Trustee's commission) which must be paid to unsecured non-priority claims and attorney's fees in the plan. It does not include plan payments for priority claims, Trustee's commission, or secured debts.

(b) When this figure is significantly different from the disposable income figure on the bottom of Schedule J, the Trustee may look closely at the feasibility and good faith of the proposed plan payments. See Hylton, supra.

12. Preparation of Plan:

a. Before filing the plan, review it one last time and compare it with the schedules.

Top of page 24

Most plan mistakes will be avoided if the attorney reviews the plan a final time and compares it with the final version of the schedules. Since most plans are not done at one sitting, many are revised several times before submitted, and schedules are often changed significantly as the debtors provide information, it is very common for the final draft of the plan not to match up fully with the final draft of the schedules. This is especially important if the plan has been drafted by a paralegal. Make sure that every secured and priority claim has been provided for.

b. Determining the Applicable Commitment Period ("ACP"):

(1) Above median: In re Earl and Robin Hylton, 8/22/07 opinion by Judge Krumm, Case # 07-70320: 60 months of payments are required, unless the plan pays 100% in a shorter period of time, and the ACP is a temporal requirement.

(2) Below median: 36 months of payments are required, unless 100% is being paid in a shorter period of time.

c. Disposable income:

(1) Above median: Disposable income is to be determined using B22C, but good faith analysis still applicable (e.g., payment of luxury secured debts; see previous section of outline). In re Earl and Robin Hylton, 8/22/07 opinion by Judge Krumm, Case # 07-70320. The Trustee may also seek an increase in the plan payment if the difference between the disposable income figures in Form B22C and Schedule J is very large.

(2) Below median: The Trustee uses the disposable income figure as determined at the bottom of Schedule J, unless he believes that the numbers on Schedule I or J are incorrect or claimed expenses are greater than reasonably necessary.

d. Computing percentage payout to unsecured creditors: When computing plan payments, please assume a Trustee's commission of 10%, as that is the maximum rate that can be charged and is the figure the Trustee's staff will use in evaluating any proposed plan. So, for example, if the net total of payments to all creditors is to be $10,000, and you are trying to determine what the total of plan payments would have be to yield that amount after deduction of the Trustee's commission, you would divide $10,000 by 0.9: $10,000 ÷ 0.9 = $11,111.11.

e. Chapter 7 test calculations: The Trustee follows the ruling of Judge Stone in re Christopher and Angel Todd, Case #7-02-04451, 3/17/03 opinion in calculating the amount necessary to meet the "Chapter 7 test" of Code §1325(a)(4).

Top of page 25

That decision held that in evaluating whether a plan meets this test, both reasonable costs of sale and the Chapter 7 Trustee's statutory commission must be deducted from the fair market value of the property in question. The Trustee uses a 6% commission for improved real estate and a 10% commission for unimproved real estate and personal property; the Chapter 7 Trustee's sliding commission rate can be found at Code §326(a).

f. Paragraph 1 of the form plan:

(1) If plan payments change during the course of the plan, specify the date on which any such changes take place.

(a) Make sure the debtors understand that it will be their responsibility alone to ensure that the payments change on the specified dates, even if payment is by wage deduction.

(2) If payments other than regular monthly payments are to be part of the plan, specify the date they will be made and the source of the payment. E.g.: "$20,000 from sale of real estate no later than 1/30/10"; "pre-confirmation funds of $2,500 as of 11/30/07."

(3) Review the fixed monthly payments required in the other parts of the plan to ensure that in every month the plan payment is sufficient to pay in full all the fixed payments plus the Trustee's commission.

(a) If the debtor is paid weekly, ensure that four weekly payments (as opposed to the 4.33 weeks per month that those payments will "average" over the course of the year) will cover the required Trustee payments every month.

g. Paragraph 2 of the form plan:

(1) Ensure the attorney's fee amounts (balance owed and amount paid thus far) match the Disclosure Statement and question 9 on the SOFA.

(2) Ensure that only the priority portions of tax debts are being included as priority claims.

(3) If support arrearages are being paid outside the plan by a wage deduction against the debtor, state that clearly.

h. Paragraph 3 of the form plan: Note that if nothing is provided in paragraph 11 regarding Adequate Protection payments for these creditors, the monthly payments in this paragraph will be the Adequate Protection payments required by Code §1326.

Top of page 26

(1) Paragraph 3A:

(a) Ensure that the claim satisfies all of the requirements for a "910 claim": it is purchase money, it is secured by personal property, it was purchased within 910 (or 365) days, and it was purchased for the debtor's personal use. If the balance owed includes any "negative equity" from a trade-in that was part of the purchase, that portion of the balance may be subject to bifurcation because it is not part of the "purchase price." E.g., In re John and Amy Pajot, 7/17/07 Opinion by Judge Tice, Case # 06-31446-DOT (Bank. E.D. Va.).

(b) Interest rate: Rate should be in accordance with the Supreme Court's Till decision.

(c) Specify the monthly amount and the number of months; do not put "pro rata"; the total amount to be paid should include applicable interest.

(2) Paragraph 3B:

(a) Attorney must file a Special Notice (supra, section I. C.) for every creditor whose claim is being "crammed down" pursuant to this provision.

(b) Specify the monthly amount and the number of months; do not put "pro rata"; the amount should include applicable interest.

(c) Interest rate: Rate should be in accordance with the Supreme Court's Till decision.

(3) Paragraph 3C:

(a) Remember to specify if the collateral is being surrendered in full satisfaction of the debt.

(i) Both Judges have ruled that "910" collateral can be surrendered in full satisfaction of the debt, such that the creditor has no right to an unsecured deficiency claim. These decisions are on appeal to the Fourth Circuit as of 1/2008.

i. Paragraph 4 of the form plan:

Top of page 27

(1) Paragraph 4B.: State clearly what "separately classified" means: debt to be paid 100%? debt to be paid ahead of all other unsecured claims? etc. Specify which debts and in what amounts are to be treated in this fashion; do not just say, for instance, "joint debts."

j. Paragraph 5 of the form plan:

(1) Payment of arrearages:

(a) In last column, use "pro rata" instead of specific monthly payments; far simpler and usually faster way to pay the creditor. If you use pro rata, no need to fill in estimated cure period column.

(b) If you are paying interest on arrears, Trustee will usually object unless the plan is 100% or has been extended beyond required ACP for that purpose.

k. Paragraph 6 of the form plan:

(1) Make sure that any creditors listed in this paragraph are listed on the matrix and are receiving notice of the plan.

(2) Note that new Code section 1322(b)(7) says that if plan fails to provide for the assumption of a lease of personal property, the automatic stay & co-debtor stay are terminated as of plan confirmation.

l. Paragraph 7 of the form plan:

(1) Remember that each creditor listed here must receive a Special Notice (supra, section I.C.).

(2) See also paragraph III. H. for the language that must be inserted into any order avoiding lien in Judge Anderson's Court.

m. Paragraph 10 of the form plan: The Court requires that any sale or refinancing of real estate be noticed to all parties and approved by the Court (see section V. J., below).

n. Paragraph 11 of the form plan:

(1) Intent of paragraph: Generally, anything not in the standard format of paragraphs 1-10 should go here. Paragraphs 1-10 are not supposed to be altered.

Top of page 28

(2) Adequate Protection payments: If the Adequate Protection payments are to be different from the payments set forth in paragraph 3, they need to be set forth in this paragraph. Be sure to state when they start and end; how much per month the payment is; and whether the payments are in addition to, or a credit against, the payments set forth in paragraph 3.

(3) Providing substantive or future-problem-resolving provisions: Both Judge Anderson and Judge Krumm have restricted the use of this paragraph to affect substantive rights of creditors. The Judges struck down 18 proposed sub-paragraphs of paragraph 11 inserted by debtor's counsel. Many of these proposed provisions would have affected substantive creditor rights (e.g.: negating contractual arbitration provisions; how payments were to be applied; releasing of title). Read this decision before trying to use this paragraph in any new or creative ways. In re Susan Maupin, Case #07-61051, 11/1/07 opinion by Judge Anderson; In re Louis and Nikki Jones, Case #07-50446, 12/14/07 opinion by Judge Krumm reaching the same conclusion regarding the same provisions.

(4) Surrender of property where there appears to be equity: In situations where property is being surrendered and there is a chance that there will be net proceeds to the debtors from the property's equity, this paragraph should be used to clarify to whom these proceeds will be paid. E.g.: "any net proceeds from the sale of the property will be promptly paid to the Trustee and applied toward plan payments."

13. Opting out of unsolicited offers of credit: One problem for debtors in Chapter 13 is that they continue to receive unsolicited offers of credit even after their case has been filed. These offers can present dangerous opportunities to fall back into the credit cycle. There is now an "official Consumer Credit Reporting Industry" website that will allow debtors to opt out of such solicitations, either permanently or for five years. The website address is OptOutPrescreen.com.

Return to Table of Contents

II. CREDITOR'S (SECTION 341) MEETING

A. Debtors' ID: Please make sure that the debtors bring with them an official picture ID and (if the ID does not have the full Social Security number) Social Security cards or other original, official, third-party documents containing their full Social Security numbers. If they do not bring these documents, the creditors' meeting may have to be continued to a later date. Copies of documents will not be acceptable.

Top of page 29

B. Wet signatures: The Trustee will ask debtors' counsel to produce the debtors' "wet" (original) signatures on the petition and schedules, so the attorney needs to bring those documents to the hearing.

C. Trustee's "Green Pamphlet": At the creditors' meeting, the debtors will be given a pamphlet prepared by the Trustee's office that contains important information for the debtors about their obligations in Chapter 13. (Note: the same information can be found in the FAQ part of the debtors' section of this website.) Please encourage them to read this pamphlet right away, as it will help them to understand the Chapter 13 process and provide them with other resources to assist them, such as:

1. National Data Center: This 24/7 web site is available to all debtors at no charge. It will allow them to check the status of their case — payments, claims filed, claims paid, etc.— at any time in their case. The home page can be found at National Data Center Chapter 13 Case and Claims Data.

2. Credit report information: How to obtain a free credit report each year.

D. Conduct of the creditors' meeting: The debtors' testimony is under oath and is digitally recorded. The Trustee or his staff attorney will have questions for the debtors, and creditors attending the hearings will be allowed to ask questions. Debtors are encouraged to ask questions of the Trustee. There will also be a fifteen minute talk by the Trustee or staff attorney about the debtors' obligations in Chapter 13.

At the end of the creditors' meeting, the Trustee and the debtors' attorney will determine, as best they can, if the case can be ready at the originally scheduled confirmation hearing. If it appears that there are appropriate reasons why it cannot be ready, the Trustee and the attorney may agree that the case should be set for a later confirmation date, and the Trustee's Report will so state. This approach will save both the attorney and the Trustee's staff from reviewing a case for the initial confirmation hearing if it is unlikely that the case will be ready.

E. Trustee's Report and Objections Following Meeting of Creditors (the "Trustee's Report"): The day after the creditors' meeting, the Trustee will file with the Court, the debtors, and the debtors' attorney his Trustee's Report. [Form#12: PDF / RTF] This is a detailed three page report which sets forth the Trustee's objections to confirmation, if any; any documents or information that still need to be submitted; any motions that need to be filed by debtors' counsel; and any other items that need to be resolved in order for the case to be confirmed.

Please note that: (a) this means that there is pending in every case a motion to dismiss until such time as the case is confirmed, and (b) the Trustee retains the right to ask at any subsequent confirmation hearing for dismissal of a case if either the debtors are not current in their proposed plan payments or the attorney fails to present appropriate reasons why matters in the Trustee's Report remain unresolved.

Return to Table of Contents

Top of page 30

III. PERIOD BETWEEN CREDITORS MEETING AND CONFIRMATION

A. Trustee's Goals: The Trustee's goals during this crucial period between the creditors' meeting and case confirmation are as follows:

1. Confirm cases at the original confirmation hearing if at all possible, or as soon as possible thereafter. In any event, a case should be confirmed within six months of filing unless there are extraordinary circumstances.

2. Reduce to an absolute minimum the time spent by Trustee's staff on preparing a case for a given Court date if the case will not be ready on that date.

3. Reverse the current practice whereby Trustee's staff takes the initiative in determining readiness of a case prior to the confirmation hearing and reports to the attorneys what he/she needs to do to have the case ready. Instead, the attorney needs to take the initiative and report to Trustee's staff when a case is ready, at which time staff will review the case and confirm the attorney's assertion or advise the attorney of any remaining problems.

4. Modify the court preparation process so that attorneys forward Trustee Report items to Trustee's staff as soon as possible after the creditors' meeting, so that the process is ongoing from the filing date forward and not compressed into the days just prior to a scheduled Court date.

B. Debtors' Pre-Confirmation Affidavit: This affidavit is to be submitted to the Court, with a copy to the Trustee, prior to confirmation. This form is available on the Court's website under "Trustee Forms." It provides the Trustee and the Court with information and certifications which under BAP & CPA must be obtained before a case can be confirmed. Specifically, the debtors must affirm to the Court that they are current on all post-petition tax payments, support payments, and secured debt payments; that they have filed all tax returns required in the past four years; and that all objections to confirmation have been resolved.

While this affidavit is not mandatory, the Trustee believes that it will save debtors and attorneys significant time and effort in the confirmation process. If the affidavit is not used, the debtors will either have to appear at the confirmation hearing and testify to the necessary facts, or provide other appropriate documents to achieve the same result. The attorney must sign off on the affidavit to show that he/she has reviewed it with the debtors.

The affidavit states that the information being certified by the debtors is true as of that date, and will also be true as of the date of the confirmation hearing, so the debtors have an affirmative obligation to notify the Trustee if, for example, they fall behind in support payments or secured debt payments after the affidavit is executed but prior to the confirmation hearing. The debtors' attorney needs to make sure the debtors understand this aspect of the affidavit. If a motion to lift stay is filed shortly after confirmation and it becomes clear that the debtors' affidavit was not correct as of the date of confirmation, the Trustee reserves the right to bring this problem to the Court's attention and ask for sanctions. For example, the Trustee may object to any modified plan that seeks to cure a post-petition mortgage default by reducing the payout to unsecured creditors.

Top of page 31

C. Attorney's responsibility to complete all items on Trustee's Report, contact Trustee's office once case is ready, or confirm status of case prior to the confirmation hearing: The debtors' attorney will be electronically served with a copy of the Trustee's Report (see paragraph II. E., above) within a day or so after the creditors' meeting, and the Trustee will also mail a copy to the debtors. As stated previously, this Report sets out all items which need to be completed or resolved before the Trustee will recommend to the Court that the case be confirmed. It is the attorney's responsibility to attend promptly to all these items, and to contact the Trustee's office once the attorney believes all items have been completed or resolved.

As explained previously in section I.B., the attorney will contact one of two Case Administrators in the Trustee's office. All active cases are divided among these two staff members according to the last two digits in the Court-assigned case number. Contact information is as follows:

Case#	Case Admin.	E-mail address	Telephone
-00 to -49	Danielle	daniellech13@ntelos.net	ext. 15
-50 to -99	Cassandra	ccareych13@ntelos.net	ext. 16

Once the Trustee's office is notified that the attorney thinks the case is ready, if the Trustee's staff agrees with this assessment the case will be noted as ready for confirmation, pending only a last minute check to make sure the debtors are current in their plan payments as of the confirmation hearing date. In order for the debtors to be considered "current," the payments received by the Trustee (as recorded by Bankruptcy Link; see section III. G., above) must be up-to-date pursuant to the proposed plan, or the debtors must present recent paystubs showing that funds have been withheld by the employer sufficient to make them current once these funds are sent to the Trustee. If an automatic wage deduction is in place and working, as long as any "default" is less than one month's payment, the Trustee will consider the debtors to be "current." Debtors paying directly must be fully up-to-date in their payments.

"Seven day" rule: Given the other demands placed upon the Trustee's office, all documents and information required for confirmation of a case must be received by the Trustee's office at least seven days before the scheduled confirmation hearing. Any documents tendered to the Trustee's office less than seven days prior to the hearing will not be reviewed by the Trustee's staff, and the case will be reported to the Court as not ready for confirmation.

"Six months/three strikes and you're out" rule: If the case will not be ready to be confirmed at the initial confirmation hearing, it is the attorney's responsibility to so advise the Trustee's office as soon as that becomes evident. As long as the debtors are making their plan payments as proposed and the attorney is working to resolve the remaining issues, the Trustee will not object to a continuance beyond the initial confirmation hearing.

If a case is still not ready for confirmation at the second scheduled confirmation hearing, the Trustee will recommend to the Court a second continuance if (a) the debtors are current in their proposed plan payments, (b) the attorney is making progress towards resolving the remaining issues, and (c) there is a justifiable reason why the case is not yet ready.

Top of page 32

If the case is still not ready at the third scheduled confirmation hearing, unless there are extraordinary circumstances presented to the Trustee justifying the continuation of the case, the Trustee will report the case to the Court as not ready and ask for dismissal of the case, and the debtors and their attorney should present to the Court their reasons why the case should not be dismissed. It is the Trustee's expectation that, absent extraordinary circumstances, all cases should be confirmed within six months of filing, so the third scheduled confirmation should take place within that six-month time frame.

D. Continuation of the confirmation hearing: In the Western District, the Court has issued a standard Continuance Order form; see the Local Forms portion of the Court's website, and look under Form B263. However, at present the continuance process differs somewhat between the Lynchburg and Harrisonburg Divisions of the Western District.

1. Lynchburg Division: In Judge Anderson's Court, a confirmation hearing can be continued in one of two ways. If the case is continued "with conditions," the attorney must submit to the Court the official Continuance Order and the attached Exhibit A (a total of three pages) for entry by the Court; such orders must be endorsed by the Trustee. The Exhibit A will contain a list of items that need to be completed or resolved for the case to be confirmed, and the Trustee will usually fill out this Exhibit A [Form#13: PDF / RTF] and hand it to the attorney in Court. If the attorney attaches the Trustee's version of Exhibit A to the Order, the attorney may endorse the Order on the Trustee's behalf and submit it to the Court.

A continuance "with conditions" means that, absent extraordinary circumstances, the case will be dismissed if it is not ready for confirmation at the next hearing, and the attorney will not be allowed to offer explanations as to why the case is not ready. If prior conditions have not been met but there are legitimate reasons why, debtors' counsel can submit to the Court prior to the scheduled hearing an Order, endorsed by the Trustee, extending these conditions until a future Court date. [Form#14: PDF / RTF] This will keep the case from being dismissed.

If a case is continued in Judge Anderson's Court "with expectations," the Trustee will informally hand the attorney the same Exhibit A, but the attorney will not be required to submit an Order of Continuance. The case can still be dismissed at the next hearing, since the Trustee's Motion to Dismiss is still pending, but if the case is not ready as anticipated the attorney will be allowed to offer explanations at the next hearing as to why the case is not ready and why it should not be dismissed.

2. Harrisonburg Division: In Judge Krumm's Court, only the first two pages of the Order of Continuance are used by the Court, and the Judge will announce from the bench which clauses in the Order are to be filled in by the attorney before it is submitted for entry. Each such Order must be forwarded to the Trustee for his endorsement before being submitted to the Court. (As with all other orders needing the Trustee's endorsement, it should be e-mailed to: beskinordc13@ntelos.net)

Top of page 33

E. Dismissal of case pre-confirmation: If a case is dismissed prior to confirmation, all funds on hand with the Trustee except accrued Adequate Protection payments will, as required by the Code, be returned to the debtors upon dismissal unless the attorney has filed a motion for fees within ten days after the hearing at which the case was dismissed. The Trustee will usually not object to fees up to 75% of the attorney's agreed-to fee if the attorney has done everything required in the case up to that point and the dismissal of the case is not the attorney's fault. If asked to recommend a fee above this level, the Trustee will review such requests on a case-by-case basis. Any final decision on such fees is of course up to the Court. Note: Judge Krumm will generally not award attorney's fees to debtors' counsel in this situation unless the attorney's retainer agreement clearly states that the client agrees to such an award.

F. Preferential transfers by the debtors: In situations where a debtor within five years of filing transferred property of significant value without receiving full consideration, the Trustee will usually ask that a consent order be entered in which both the debtor and the transferee waive the statute of limitations on the recovery of such property by the Trustee in return for the Trustee agreeing not to recover the property for the estate at this time. [Form#15: PDF / RTF] If the transferee refuses to cooperate, the Trustee may ask that a consent order be entered tolling the statute of limitations until such time as the plan has distributed funds sufficient to make this issue moot. [Form#16: PDF / RTF]

G. Viewing debtors' payment history on Bankruptcy Link to make sure debtors are current in plan payments: The Trustee strongly recommends that a few weeks prior to the confirmation hearing the attorney check the Trustee's Bankruptcy Link website (see para. I. G., above) to make sure the debtors are current in plan payments at the time of the confirmation hearing. A case will not be confirmed if the debtors are not current, and can be dismissed if the delinquency is substantial. Evidence that plan payments are being regularly withheld from an employer (copies of recent paystubs, etc.) pursuant to a wage deduction order will suffice to show that the debtors are current in their payments.

1. For cases that have not been confirmed, be aware that Bankruptcy Link will determine if a case is "current" based solely on the initially filed plan. If the debtors have filed an amended plan pre-confirmation, the system may not be correct in determining if the debtors are in fact current pursuant to the most recently filed plan, and the attorney will need to make that computation himself or check with the Trustee's case administrator.

2. Payments from debtors are first sent to the Suntrust lockbox in Memphis, Tennessee. They are then downloaded into the Trustee's "Case Power" system. A day later they are posted to the Bankruptcy Link system. This means that payments received by the Trustee's office may take up to ten days to show up on Bankruptcy Link.

Top of page 34

H. Lien avoidance: When avoiding a lien, Judge Anderson requires language in the order avoiding lien that makes it clear that the avoidance of the lien will occur only at such time as the plan has been successfully completed. While the Court will enter the order as soon as the matter has been resolved, the order makes clear that the debtors' attorney may file the order with the state Circuit Court Clerk's Office only if and when the plan has been successfully completed. In the interim the claim shall be treated for all plan purposes (including payment) as if it is unsecured. [Form#17: PDF / RTF]

Return to Table of Contents

IV. CONFIRMATION

A. Attorney's presence at the confirmation hearing: The Trustee does not have the authority to excuse the attorney's presence at the confirmation hearing, even if a case appears to be fully ready to be confirmed. The Trustee strongly suggests that if an attorney will not be present at this hearing, she should either: (1) make arrangements for substitute counsel to appear on the attorney's behalf in case unanticipated matters arise, or (2) call the Judge's courtroom clerk to determine if the attorney's presence will be required.

B. Debtors' presence at the confirmation hearing: If a case is ready for Confirmation and there are no other unresolved matters pertaining to the case pending on that day's docket, the debtors will not need to be present in Court at the confirmation hearing.

C. Confirmation Order: There is a standard form for the Confirmation order in the Western District. [Form#18: PDF / RTF] It is only one page long, and incorporates by reference the terms of the confirmed plan.

The last section, entitled "Other Provisions," is a versatile section which can be used at the confirmation hearing for a variety of purposes, including: correcting math mistakes or typos in the plan; clarifying that the plan must pay 100%; requiring the attorney to make sure a wage deduction order is working; or increasing plan payments to an amount greater than that set forth in the plan. Such uses of the "Other Provisions" allow confirmation of the plan without additional notice or hearing where the additional provisions do not prejudice creditors. Attached is a list of some of the standard "Other Provisions" used by the Trustee to expedite the confirmation of cases. [Form#19: PDF / RTF]

D. Continuation of the Trustee's motion to dismiss case: In certain situations the Trustee may agree to recommend confirmation only if he is allowed to continue an objection (usually a Chapter 7 test or disposable income test objection under Code §1325) to a future date. In this event, the continuation of his motion to dismiss, the retention of his objection, and the next hearing date will be noted in the "Other Provisions" section of the Confirmation Order.

V. POST-CONFIRMATION (Note: The Court requires the Trustee's endorsement of any and all of the orders described below. Send any such proposed order to: beskinord13@ntelos.net)

Top of page 35

A. Review of claims within 30-day window after claims bar date: The Trustee expects that debtors' counsel will in every case examine the Court's claims register within 30 days after the claims bar date to ensure that all claims which are necessary for the successful completion of the debtors' plan have been timely filed. Under Bankruptcy Rule 3004 the attorney may, within 30 days after the bar date, file a claim on behalf of any creditor who has failed to file its claim. This is especially crucial for any priority or secured claims which the debtor needs to pay. Failure to review the claims register at this juncture and file necessary late claims can result in the Trustee filing a motion to dismiss the case, or in the debtors not obtaining the relief they have been assured by their attorney they would receive.

B. Trustee's notice of intention to pay claims: Once the claims bar date has passed, the Trustee's office will review all filed claims and issue to the debtors and their attorney a notice of intent to pay claims, together with a letter explaining the notice. [Form#20: PDF / RTF] The debtors and the attorney need to review this document and advise the Trustee if they object to any claims or see any mistakes in the proposed distribution. Unlike some Districts, this document is not binding on any party, and is only sent as a courtesy by the Trustee to give the debtors a chance to point out any problems. In order for any filed claim to be modified or disallowed, an appropriate objection must be filed, a hearing held, and an order entered by the Court.

C. Trustee's objections to claims: The Trustee will generally object to any filed proofs of claim that: (1) are filed late; (2) purport to be secured or priority, but do not have appropriate supporting documentation; or (3) are unsecured, have no appropriate documentation, and are not listed on the debtors' schedules. The Trustee will not generally object to unsecured claims where (i) the claim has been listed on Schedule F, (ii) a proof of claim has been filed in approximately the same amount as that set forth in Schedule F, and (iii) the proof of claim does not have the usually-required documentation.

If a secured claim is filed late but the payment of the claim is important to the debtors' rehabilitation and plan success, the Trustee will generally not object to the secured portion of the late claim, but will object to any payments being made on the unsecured portion of the claim. A copy of the standard order on such an objection by the Trustee is attached. [Form#21: PDF / RTF]

D. Change in debtors' work or home address: Please promptly advise the Trustee and the Court in writing if the debtors have moved their residence; if the debtors move and cannot be found, the Trustee will usually file a motion to dismiss the case. The address lodged with the Court is the only official address for the debtors, and all service of process from our office will be sent to that address.

Similarly, if the debtors are making their plan payments by wage deduction and they change jobs, please promptly notify the Trustee in writing and file an amended Wage Deduction Order for the new employer.

E. Semi-annual Trustee's case reports: Twice a year (usually March and September) the Trustee will send to all debtors and their attorneys an interim statement of all payments received from the debtors and all disbursements made in their case.

Top of page 36

F. Resolution of debtors' default in payments prior to the Trustee filing a motion to dismiss case: If debtor's counsel is attempting to "nip the problem in the bud" and resolve a delinquency before the Trustee has filed his motion to dismiss case, the Trustee has devised a motion and consent order which will allow the debtors to increase their plan payments over the balance of the existing plan term and thereby resolve the problem without having to file an amended plan. [Form#22: PDF / RTF] In such instances the attorney will usually also have to file an amended wage deduction order to provide for the new payment amount.

G. Resolution of a Trustee's motions to dismiss case: The Trustee will generally file a motion to dismiss the case when: (i) the debtors have fallen more than two months behind in their monthly plan payments; (ii) the debtors have failed to make a scheduled plan payment from tax refunds, sale of property, etc; or (iii) a filed claim reveals that the confirmed plan has failed to provide for a claim that must be provided for, and the debtors need either to modify their plan or object to the filed claim. In these situations the Trustee will set the hearing far enough in the future to allow the attorney to take steps to correct the problem, and will work with the attorney to resolve the issue. The Trustee has developed a variety of ways to resolve these problems:

1. Motion to Dismiss Documents: For documents that are needed to respond to a Trustee's Motion to Dismiss, the subject line would read: "07-60579 T & E Johnson TMTD 2/20/08," where 2/20/08 is the date of the hearing on the motion.

2. Continuation of the motion to dismiss: The Trustee will generally not object to a continuance beyond the first scheduled hearing if the attorney is making progress toward solving the problem. As with the continuation of the Trustee's Motion to Dismiss in the pre-confirmation context, continuation will require use of the Court's Order of Continuance (see "continuation of the confirmation" in section III. D., above), which can be found in the Local Forms section of the Court's website.

3. Filing of a modified plan: In many cases the debtors must file a modified plan under Code §1329 to address the problem(s) raised in the Trustee's motion. Whether or not such an amended plan will have to be noticed to all creditors will depend upon the nature and extent of the changes being proposed. Fourth Circuit case law dictates that the debtors must show an unanticipated and substantial change in circumstances in order to decrease plan payments, so the Trustee will expect amended Schedules I and J, recent pay stubs, and third-party proof of any significant increases in living expenses in those situations.

4. "Order resolving Trustee's motion to dismiss and directing debtors to increase plan payments to the Trustee": [Form#23: PDF / RTF] In the situation where the debtors have fallen behind in their plan payments but can afford to increase their payments for the duration of the existing plan to make up the default, this simple two page consent order allows them to do just that. The total of payments and the length of the plan remain the same, and only the amount of the monthly payment is changed. Again, the debtors' attorney may have to file an amended wage deduction order to match the new payment.

Top of page 37

5. "Drop dead" order: There may be instances where the Trustee will agree to not seek dismissal of a case, but may insist on a "drop dead" order. [Form#24: PDF / RTF] This order will stipulate that if the debtors fall more than 30 days behind in their plan payments at any time in the future, the case will automatically be dismissed, without further notice or hearing, if the Trustee certifies such a default to the Court. This order is usually used where the debtors have had numerous problems with their plan payments or have incurred a significant delinquency.

6. "Consent Order amending plan to extend or alter plan payments or to clarify plan terms": [Form#25: PDF / RTF] The Trustee has developed a new motion and consent order which allows the debtors to increase their plan payments by adjusting the amount of the monthly payment, extending the length of the plan, increasing the total of payments, or some combination of these three changes. The order does not require notice to all creditors, since it is only benefiting the unsecured creditors and not changing the treatment of any secured or priority creditors, and so can be used to solve certain problems in a very short time frame. It can be also be used to resolve certain issues that involve the failure of a confirmed plan to provide for later-filed claims. This form is different from [Form#22: PDF / RTF] or [Form#23: PDF / RTF] because it makes changes other than just increasing the plan payment over the existing term of the confirmed plan. If you have any questions about how this from might be used, call the Trustee's paralegal, R.C.

H. Motions to lift stay: In order to expedite the processing of creditors' motions to lift stay, the Trustee has developed certain language which must be included in any order resolving such a motion. The required language [Form#26: PDF / RTF] clarifies when the Trustee is to cease making payments on the creditor's secured claim for pre-petition arrearages; sets a time limit by which any unsecured claim for deficiency must be filed; and, if the stay is to be lifted at some future date without any further Court order, sets out a process for notifying the Court and Trustee if the creditor is enforcing its rights to liquidate the collateral. The Trustee will not endorse any order lifting stay unless it contains this language.

I. Attorney's fees for post-confirmation work: For post-confirmation work Judge Anderson will approve, with the Trustee's recommendation, requests for $250 for the following actions by debtors' counsel without the attorney having to file contemporaneous time records: defending a motion to dismiss; defending a motion to lift stay; prosecuting a motion to incur debt or sell real estate; or filing a modified Plan. In situations where a Trustee's motion to dismiss and/or a debtors' default in payments is resolved using the orders which have been made available by the Trustee (Forms #22, #23, or #25), the Trustee will not object to a fee of $150. If any attorney is requesting fees in excess of these amounts, both the Court and the Trustee will expect to see contemporaneous time records and an explanation as to why such fees are being requested.

Top of page 38

In cases involving the defense of a motion to lift stay, Judge Anderson requires that debtors' counsel execute a certification [Form#27: PDF / RTF] that the attorney has consulted with the debtors, negotiated with the creditor's counsel, etc., before any such fees will be awarded. This certification should be submitted to the Trustee at the hearing during which the motion has been resolved so that the matter will not have to be carried over to the next Court docket date.

Judge Krumm has no such guidelines as to amount of fees, and will expect to see contemporaneous time records and a copy of the retainer agreement for any such request. In addition to such time records, the Trustee may ask for an explanation of time expended in cases where the fees requested exceed $250.

All such fees must be sought by application filed with the Court by debtors' counsel, and an order approving the fees, endorsed by the Trustee, must be entered by the Court before the Trustee can pay any such fees to the attorney.

In most instances the Trustee will ask that additional funds be added to the plan to cover these new attorneys fees. This change can be accomplished by using the "Consent Order amending plan to extend or alter payments" referred to above [Form#25: PDF / RTF], or by incorporating the additional funds into a modified plan. If the standard attorney's fee of $250 is being added to the plan, a total of $280 must be added to cover the Trustee's commission on the fee.

J. Sale or refinancing of debtors' property; early payoff of case:

1. Court permission required: Debtors are required to seek Court permission, after notice to all parties, before selling or refinancing real estate. In these situations Local Rule 6004-3 requires that the notice must state: (i) the amount of sale / refinancing; (ii) the amount to be paid to the Trustee; (iii) whether the transaction will pay off the balance owed on the plan; and (iv) if the plan is not being paid off, the amount to be received by the debtors.

The Trustee requires that certain additional language be inserted into the order authorizing the sale or refinancing before he will endorse any such order. [Form#28: PDF / RTF]

The Court also requires prior authorization in the form of a Court order before selling, transferring, or refinancing other property. If the value of the property being transferred is small, the process may not require notice to all parties. Counsel should check with the Clerk's Office in such situations.

2. Notice to closing attorney: It will be responsibility of debtors' counsel to ensure that the closing attorney has received a copy of the order authorizing sale or refinancing prior to closing, and that the Trustee receives a copy of the HUD-1 and the correct amount of funds from closing.

3. Obtaining payoff information from the Trustee's office: In any situation where the debtors are attempting to pay off their case early, it is the policy of the Trustee's office to provide the payoff in terms of the total amount of payments remaining according to the confirmed plan. This is known as the "base gross payoff." It is possible that the actual payoff could be different if fewer creditors filed claims, or if creditors filed claims in amounts less than anticipated by the confirmed plan; this is known as the "payoff by claims."

Top of page 39

The accuracy of the payoff by claims cannot be guaranteed unless Trustee staff proceeds to take all steps necessary to close a case. Since this is a labor-intensive process generally reserved for completed cases, the staff will not provide the payoff by claims unless there is a large difference between the base gross payoff and the payoff by claims, and if the amount of the payoff affects the viability of a refinancing loan to payoff a Chapter 13. Those requests will be considered on a case-by-case basis. For most purposes, the safest figure to use is the base gross payoff. But even this base gross figure is an estimated figure which is subject to change pending a full case review.

When funds sufficient to pay the base gross figure or the payoff by claims figure are received by this office, any excess funds will be refunded to the debtors following the case-closing review. A copy of the standard explanatory letter and disclaimer issued by the Trustee's office whenever a payoff figure is requested is attached. [Form#29: PDF / RTF]

4. Impact of 4th Circuit Murphy decision on debtor motions to sell real estate: Trustee's motion to modify plan pursuant to Code §1329: In re Murphy, 474 F.3d 143 (4th Cir. 2007), the 4th Circuit held that a Chapter 13 Trustee may, using Code §1329, seek an increase in plan payments when the debtor experiences a substantial and unanticipated increase in his property and is selling it. The Trustee interprets this decision to mean that in situations where the debtors are seeking Court permission to sell real estate, the Trustee is obligated to determine (i) the amount the asset has appreciated since the case was filed, and (ii) whether or not the debtors' plan should be modified to increase the total of plan payments and the payout to unsecured creditors.

a. Please provide the Trustee with documentation of the current value of the real estate when the motion to sell is filed.

K. Motion to incur debt: If the debtors need to incur debt in excess of the $5,000 limit allowed by the form plan (see paragraph 10), they must obtain approval from the Court. Judge Anderson has ruled that the $5,000 figure refers to the principal amount being borrowed. It is the Trustee's understanding that the $5,000 figure is a cumulative one and not a "per transaction" one.

The Trustee will want to know the reason for the motion, the terms of the loan being sought, and how the new obligation affects the feasibility of the plan; the last requirement may require amended Schedules I and J and recent paystubs. If the debtors are trying to purchase a replacement vehicle, the Trustee and the Court will want to know what efforts the debtors have made to ensure the lowest possible interest rate and monthly payment.

L. Debtor requests for refunds: Once a plan has been confirmed, the Trustee is not authorized to refund any plan payments to debtors unless counsel has obtained an order from the Court authorizing such a refund. The only exception is when the debtors are paid ahead of the plan schedule due to a mistaken payment and are requesting a refund of no more than the excess of funds on hand.

Top of page 40

1. Wrecked cars: One recurring problem involves debtors' cars. If the Trustee is paying for the debtors' car in the plan, the car is totaled, and the insurance company sends the Trustee proceeds which exceed the balance owed on the secured portion of the debt, the debtors will have to obtain a Court order before the Trustee can send them the excess funds to purchase another car. A simple consent order is sufficient, and no notice to creditors is required. A copy of the standard letter which the Trustee sends to insurance companies and other parties to explain this process is attached. [Form#30: PDF / RTF]

2. Garnishments: If a debtor is being garnished at the time of filing, the garnishment is quashed by the attorney, the funds garnished are exempted on Schedule C, and the funds are for whatever reason sent to the Trustee, it is the Trustee's policy to refund such funds to the debtor without the necessity of a Court order.

M. Immediate reduction or suspension of plan payments due to unexpected change in the debtors' financial situation: In situations where the debtors have experienced a sudden and unexpected reduction in their income or an increase in their living expenses, the Trustee will work with debtors' counsel to deal with such emergencies. The Trustee has developed a consent order which allows the debtors to immediately reduce or suspend their plan payment and existing wage deduction with the understanding that an amended plan will be filed within a specified period of time to cure any default or amend the plan accordingly. [Form#31: PDF / RTF] The Trustee will usually not recommend a period of suspension greater than 90 days. Based upon the attorney's proffer of good cause, the Trustee will not require supporting documentation of the alleged change in circumstances until the amended plan is filed. If the attorney fails to file the promised modified plan within the agreed period, the Trustee will file a motion to dismiss the case.

N. Notice required for modified plans that do not prejudice creditors: As of 9/07, the Clerk's Office is employing a new procedure involving modified plans that do not prejudice any creditors. The new procedure is for debtors' counsel to file the amended plan without any certification that the plan does not adversely affect any creditors. The Clerk's Office will issue the order setting the modified plan for hearing. When debtors' counsel prepares the certificate of service (or non-service) on the order setting the hearing, the attorney can state on the certificate of service (or non-service) that the plan does not adversely affect any parties and therefore the order has not been served. The proposed modified plan will remain on the Court's docket until the Trustee submits the order confirming the plan; once the order has be entered, the previously-set hearing date will be removed from the Court's docket.

O. Practice pointers:

1. Notice required for various motions: Look at Rule 7004 and check with the Court clerks to make sure proper notice has been given in each instance.

Top of page 41

2. Wording of motions:

a. To incur debt: To save having to redo such motions if a promised loan falls through, the Trustee suggests adding the following language to any motion and order involving approval of the debtor's request to incur debt: "... from lender X at the following terms: ... or from any other lender/seller at terms equal to or more favorable to the debtor."

b. To sell real estate: When selling real estate, the Trustees suggests using "sale free and clear of liens" language in both the motion and the order, so that if a previously-unknown lien is discovered in the title work-up it won't delay the sale: "Sale to be free and clear of liens, with all valid deeds of trust, judgments, tax liens and other encumbrances being removed from the title to the real property and impressed upon the sale proceeds without change in priority."

3. Sale or refinancing of real estate: problem regarding who pays arrears: If the plan provides for the Trustee to pay the arrears, and they are paid at closing, debtors must still pay the full balance of the base gross (total of payments) of the confirmed plan to obtain their discharge; the Trustee has no authority to reduce the base gross unless the plan is amended. The Trustee will probably oppose reducing the base gross by the amount of the arrears being paid at closing. Check with the Trustee prior to filing the motion to discuss this issue if it will cause problems for the debtors.

Return to Table of Contents

VI. COMPLETION OF PLAN PAYMENTS, DISCHARGE, AND CLOSING OF CASE

A. Completion of plan payments, stopping of wage deduction order, and debtor refunds: Once the debtors have completed all the payments required by their confirmed plan, any automatic wage deduction in place should be immediately stopped. While the Trustee has his own system for keeping track of when plan payments are completed, it is not a perfect system, and the Trustee may sometimes be a month or so late in becoming aware that all plan payments have been made. Debtors should therefore be advised to keep track of when they have completed their plan payments and should be urged to advise the Trustee immediately when payments have finished; debtors can log onto Bankruptcy Link (see section I. G., above) at any time to find out the status of their plan payments.

Once the Trustee has been made aware that all plan payments have been made, he will so advise the Court and it will issue a Wage Release Order stopping any ongoing wage deduction. The order will be sent to the debtors, their attorney, and any employer that is doing a wage deduction. The debtors should call the employer's payroll office immediately to ensure that the proper person has received the order and the deduction is being stopped. If problems arise, the debtors should promptly contact their attorney.

If excess funds have been sent to the Trustee's office because the wage deduction continued beyond its proper ending point, the debtors should notify the Trustee's office. If in fact excess funds have been sent to the Trustee's office, a refund to the debtors can be made at the next regularly scheduled monthly distribution after the employer's checks have cleared the bank. (Note: The Trustee is not permitted to write checks on any funds until they have been on deposit in the Trustee's account for 14 days.)

Top of page 42

The Trustee's staff conducts a thorough closing procedure for every case once plan payments have finished. It usually takes 4-6 weeks to conduct this process. Sometimes this process will reveal that the debtors are entitled to a refund (for example, where not all creditors filed claims and every creditor was unexpectedly paid in full), but no such refunds to debtors can be issued until this closing process has been completed.

B. Discharge procedure for cases filed prior to BAP & CPA (cases filed before 10/17/05): In cases filed prior to 10/17/05, once the Trustee has filed with the Court a report of completion of plan payments, the Court will usually enter a Discharge Order within a few business days.

C. Discharge procedure for cases filed under BAP & CPA (cases filed after 10/17/05): Pursuant to Local Rule 4008-1, once the Trustee has certified to the Court in a BAP & CPA case that the debtors have completed their plan payments, the Court will issue to the debtors a "Notice to File Certification of Compliance." The debtors will then have 60 days to execute and file with the Court and the Trustee the "Debtors' Certification of Compliance with USC §1328" form that accompanies this Local Rule and which can be found on the Local Forms section of the Court's website, Form 4008-1A. If the debtors fail to file this form within the 60-day period, the case may be closed by the Court Clerk's Office without the issuance of a discharge.

(Note: In this Form the debtors are certifying, among other things, that they have taken the personal financial management course required by Code §1328(g). If the debtors have not taken this course by the time they have completed their plan payments, the Court's discharge procedure appears to give the debtors 60 additional days from the date on which the Notice is sent to them to complete the course.)

Once the debtors have filed the Certification form with the Court, the Clerk's Office will set the case for a discharge hearing no less than ten days after the form is filed. Notice of the hearing is only sent to the debtors, their attorney, and the Trustee. The case will be called on the Court's docket for that day, and as long as there are no objections by any party there will be no actual hearing and no need for the debtors to appear. The Clerk's Office will proceed to issue the Discharge Order within ten days after the hearing. Of course, if objections to the discharge have been filed prior to the hearing, debtors' counsel will need to be prepared to present appropriate evidence at that time.

D. Discharge procedure for cases under BAP & CPA (cases filed after 10/17/05) where debtors are not eligible for a discharge: Upon receiving the Trustee's report of completion of plan payments in a case where the debtors are not eligible for discharge, the Court will not issue the "Notice to File Certification of Compliance"; instead, it will wait for the Trustee's Final Report and close the case after the 30-day time frame has passed.

E. Hardship discharge under Code §1328(b): The Bankruptcy Code allows debtors to apply for a discharge before they have completed their plan payments only in certain restricted circumstances. This is the so-called "hardship discharge." Before the Trustee will be able to make a recommendation to the Court in these situations, he will need to be provided with evidence that shows the debtors have met the three pronged test of this section [the failure to complete plan payments was due to circumstances beyond the debtors' control; the amount of funds already distributed to unsecured creditors meets the "Chapter 7 test"; and no modified plan is practicable].

Top of page 43

Note: At present there is a split between the Judges as to whether someone who dies after confirmation is eligible for a hardship discharge. See in re Sandra Stockton, Case # 04-00792, 5/8/07 opinion by Judge Krumm (discharge denied); Judge Anderson allowed it in one case where there were no objections filed by creditors.

F. DSO Letters: At the time of discharge, the Trustee is required by BAP & CPA to send notice to any DSO (Domestic Support Order) payee and the state agency in charge of collecting child support to alert them to the issuance of the discharge and certain information about the debtor and any of his/her non-dischargeable debts. [Form#32: PDF / RTF]

G. Debtor refunds where debtors' whereabouts unknown: Occasionally there is money to be refunded to the debtors upon completion of their plan, but the refund check to the debtors is returned because the debtors have moved. In those situations if the Trustee's staff cannot reach the debtors by phone, an e-mail or fax is sent to the attorney asking if the attorney has a better address. If no better address is forthcoming from the attorney, the Trustee is required to send the check to the Bankruptcy Court registry. Given the importance of this money to the debtors, the Trustee asks that attorneys respond promptly to such an inquiry, and that they exert reasonable efforts to use information in the file to locate the debtors.

H. Practice pointers: The Trustee strongly recommends that the debtors' attorney take the following steps at the conclusion of the debtors' case:

1. Notify credit reporting agencies of discharge: Assist the debtors in notifying the three major credit reporting agencies of the successful completion and discharge of their case. Sending a copy of the schedules and the discharge will increase greatly the odds that the case is properly recorded in their records.

Advise the debtors to check their credit report again in six months or so to make sure that their case and their discharge have been properly recorded on their credit reports.

2. Bounce Back from Bankruptcy: Numerous scams and a sometimes bewildering array of hurdles await debtors coming out of Chapter 13. Providing debtors with information to help them navigate these confusing waters is essential to their successful return to "the real world." Provide the debtors with a copy of this book, or something like it, to ensure they have some guidance in how to get back on their feet, correct their credit reports, avoid creditor scams, etc. (Bounce Back From Bankruptcy, A Step-by-Step Guide to Getting Back on Your Financial Feet, 4th Edition by Paula Langguth Ryan is published by Pellingham Casper Communications, Odenton, MD. Telephone: (800) 507-9244) Website: New Credit after Bankruptcy.

Top of page 44

3. Closing letter to debtors: Send a closing letter to the debtors outlining the effect of the discharge, how to follow up on the correct reporting of their case to the credit reporting agencies, what to do in case of a violation of the discharge injunction, the importance of retaining all the documents from the case, etc.

4. Retention of the bankruptcy papers: Impress upon the debtors the importance of retaining in a safe place their bankruptcy papers. As we know all too well, they will need them over the next few years for a variety of reasons.

Return to Table of Contents

VII. MISCELLANEOUS

A. Debtors' complaints about their attorney: The Trustee receives complaints from debtors about their attorneys on a regular basis. It is the Trustee's policy to take all such calls himself, and, pursuant to Code §1302(a)(4), advise debtors of their options. The Trustee explains to each debtor that the first step in any such situation is to arrange a meeting with the attorney to express the debtor's concerns face to face; that most of these problems are the result of a misunderstanding or lack of communication and can be resolved; that if requested, the Trustee will send the debtor a letter outlining the debtor's options [Form#33: PDF / RTF]; and that if requested the Trustee will provide the debtor with the names of other experienced bankruptcy attorneys in the relevant geographical area.

B. Complaints about Trustee staff or communications: The Trustee's office is committed to providing prompt, courteous, and accurate service and information to debtors, attorneys, and creditors involved in Chapter 13 cases. Any complaints concerning Trustee staff will be handled directly by the Trustee, Herbert L. Beskin, and can be transmitted to him using the phone, fax, or e-mail contact information found on the home page of this web site.

Top of page 45

(Version #18, Updated 01/29/08)

TRUSTEE'S FORMS REFERRED TO IN THE OUTLINE OF COURT'S AND TRUSTEE'S POLICIES AND PROCEDURES

FILING OF THE CASE

Form

Page

1.	Motion & Order to allow temporary continuance of automatic stay, and use of negative notice to schedule a second hearing (Judge Anderson)	PDF / RTF	8
2.	Forms for Wage Deduction Orders and Pay Direct Orders	PDF / RTF	8
3.	Order permitting direct payment by debtors because of special circumstances	PDF / RTF	9
4.	Wage Deduction Order for employer to pay directly to mortgagee the debtors' regular monthly mortgage payment	PDF / RTF	9
5.	Trustee's "Master Case Checklist"	PDF / RTF	9
6.	Trustee's "Introductory Letter to Debtors"	PDF / RTF	9
7.	Trustee's monthly "Profit and Loss" form for self-employed debtors	PDF / RTF	11
8.	Debtors' affidavit where no federal tax returns were required to be filed	PDF / RTF	11
9.	Trustee's "Affidavit of Financial Assistance" from debtors' friends/family	PDF / RTF	12
10.	Trustee's "Debtor Questionnaire"	PDF / RTF	12
11.	Trustee's letters at beginning of case to DSO payee and state child support agency	PDF / RTF	15

II.

CREDITORS' (SECTION 341) MEETING

12.

"Trustee's Report & Objections Following Meeting of Creditors"

PDF / RTF

III.

PERIOD BETWEEN CREDITORS' MEETING AND CONFIRMATION

13.	Trustee's Exhibit A to Court's Continuation Order	PDF / RTF	32
14.	Order extending conditions	PDF / RTF	32
15.	Consent order tolling statute of limitations on recovery of assets preferentially transferred by debtor: both debtor and transferee endorsing order	PDF / RTF	33
16.	Consent order tolling statute of limitations on recovery of assets preferentially-transferred by a debtor: transferee refusing to endorse order	PDF / RTF	33
17.	Language which must be inserted into any order avoiding lien	PDF / RTF	34

IV.

CONFIRMATION

	18.	Confirmation Order	PDF / RTF	34
	19.	Some standard "Other Provisions" used in Confirmation Order	PDF / RTF	35

POST-CONFIRMATION

	20.	Notice of intent to pay claims and explanatory letter	PDF / RTF	35
	21.	Order allowing secured portion of late-filed secured claim but not unsecured portion	PDF / RTF	35

22.	Motion and Order resolving default to Trustee and directing debtors to increase plan payments to the Trustee where no motion to dismiss has been filed by Chapter 13 Trustee	PDF / RTF	36
23.	Order resolving Trustee's motion to dismiss and directing debtors to increase plan payments to the Trustee	PDF / RTF	36
24.	"Drop dead" Order (automatic dismissal)	PDF / RTF	37
25.	Motion and Consent Order amending plan to extend or alter plan payments or to clarify plan terms	PDF / RTF	37
26.	Required language for Orders lifting the automatic stay	PDF / RTF	37
27.	Certifications required by debtors' counsel for attorney's fees incurred in defending a motion to lift stay	PDF / RTF	38
28.	Required language in Orders authorizing sale or refinancing of real estate	PDF / RTF	38
29.	Trustee's letter to parties explaining plan payoff figure	PDF / RTF	39
30.	Trustee's letter explaining how insurance proceeds for wrecked cars are applied and distributed	PDF / RTF	40
31.	Consent Order immediately reducing or suspending debtors' plan payments and requiring the filing of a modified plan within a fixed period	PDF / RTF	40

VI.

COMPLETION OF PLAN PAYMENTS, DISCHARGE, AND CLOSING OF CASE

32.

Trustee’s letters at end of case to DSO payee and state child support agency

PDF / RTF

VII.

MISCELLANEOUS

33.

Standard letter from Trustee to debtors explaining the debtors' options when they are complaining about their attorney

PDF / RTF

Return to top

Debtor Attorney Information (Version #21, Revised 03/11/08)Note: The current web page is an older version.This page will be updated with Version #24 as soon as possible.

Outline of Court Procedures, Trustee's Policies and Procedures, and Required Forms

For Debtors' Attorneys in Chapter 13 Cases Administered by Trustee Herbert L. Beskinin the Western District of Virginia

SUMMARY TABLE OF CONTENTS

DETAILED TABLE OF CONTENTS

OUTLINE

Debtor Attorney Information
(Version #21, Revised 03/11/08)

Note: The current web page is an older version.
This page will be updated with Version #24 as soon as possible.

Outline of Court Procedures,
Trustee's Policies and Procedures, and
Required Forms

For Debtors' Attorneys in Chapter 13 Cases
Administered by Trustee Herbert L. Beskin
in the Western District of Virginia