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

Debtor Attorney Information
(Version #41, Last revised 10/24/11)

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 where applicable, provide the forms that are to be used. 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 and the list of the Trustee's forms, there will be two other parts of the Debtor Attorney Information section of the website: (1) a Recent Developments section, and (2) 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.

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SUMMARY TABLE OF CONTENTS

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DETAILED TABLE OF CONTENTS

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OUTLINE

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. Bankruptcy 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 session 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 March 1, 2010, the staff contact person for a case will depend upon the stage of the case and the nature of the issue. Liz will process all creditors' meeting ("341 meeting") documents. Jennifer and Danielle will prepare all cases for confirmation hearings, while Cassandra will handle all post confirmation Trustee motions to dismiss. Ryan will handle closing of cases. Cassandra will also provide "customer service" and action-item follow up for debtors, their attorneys, and creditors. All orders will be processed through the paralegal, R.C., and Brett and Joe 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.

a. For matters relating to creditors' meeting documents ("341 docs"):
Judy judithch13@ntelos.net ext. 11

a. For issues or questions relating to matters in Staunton or Harrisonburg cases 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 the staff attorney, Angela Scolforo, at ext. 10. For similar issues or questions relating to matters in Lynchburg or Charlottesville cases contact:

a. For issues or questions relating to matters which have been set for a Court hearing or may be set for hearing, contact Jennifer or Danielle as set forth in 2.a., above, or Cassandra for post confirmation Trustee motions to dismiss.

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. 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, please state "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.

a. Initial attorney fees to be paid upon first confirmation of a case will now be processed by our Claims Specialists, Brett and Joe, as part of our normal confirmation order and claims entry process. Confirmation orders will also be processed by Brett and Joe.

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 and Joe.

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). Please note that the form was changed effective December 1, 2009.

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.A. 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 lien holder'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 Trustee strongly recommends this course of action.

The BAP & CPA Code changes do not specify the required minimum amount of the AP payments. As a matter of practice, almost all of the plans filed in this District provide a monthly AP payment equal to 1% of the value of the collateral

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, and the Trustee may object to this lack of payment pursuant to §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.

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.

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 (a "bridge order"), and (ii) the use of "negative notice" to creditors so that no second hearing will be required if no creditors object to the continuation or establishment 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.

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 CHARLOTTESVILE ADDRESS IS FOR CORRESPONDENCE ONLY.

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 SunTrust Bank 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 a debtor's 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. The Trustee does not need to endorse this order. [Form#2: PDF / RTF RTF This "Form #2" is actually a collection of the various types of plan payment orders.] ] Either a wage deduction order or a pay direct 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.

In cases where the debtor is working for an employer (as opposed to being self-employed), both Judge Anderson and Judge Krumm 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. If the Trustee does not believe that the debtor has presented a sufficiently compelling reason, he will ask that the debtor 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. Be sure to submit to the Court a motion and order (for example, See [Form#4: PDF / RTF]) as soon as the case is filed which will authorize the Trustee to begin making mortgage payments prior to confirmation; without such an order, the Trustee will not be able to begin making the regular mortgage payments until the case is confirmed, and the debtors may be charged late payments or [BE] subjected to a motion to lift stay in the interim. Also, you need to discuss with the mortgagee any issues regarding late payments and late fees for the first month of the plan.

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 order is attached. [Form#5: 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. Many banks will provide this service (sometimes called "automatic bill pay") to the debtors at no additional charge

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#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.

a. How to send documents to the Trustee: The Trustee asks that all requested information and documents be sent by the attorney to the Trustee's 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 our electronic case management software.

(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 and other 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 Code §521) received by the debtors within the 60 calendar days immediately preceding the filing of

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#8: 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 [within two years of filing], the Trustee will expect that to be provided to him as well.

(3) Current car insurance declaration page showing each vehicle covered, 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 an affidavit is attached. [Form#9: PDF / RTF]

(5) Note: Pursuant to Code §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.)

(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 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. For medical prescription expenses, the summary statement from the debtors’ pharmacy is the best document to use.

(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#10: 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. If each debtor is claiming $10,000 worth or exemptions under 34-4 because he/she is over the age of 65, please note the debtor's age on Schedule C or I. Also note that beginning in 2010 a Homestead Deed must recite all 34-4 exemptions claimed in prior filed Homestead Deeds.

(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 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.

(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#11: PDF / RTF] has been sent to all debtors' attorneys. 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, or review it before it is sent to the Trustee. It should then be sent to the Trustee with the required documents listed above.

By signing this questionnaire, the debtors are certifying that the information is correct as of the date the questionnaire is signed by them, and that it will also be true as of the date their plan is confirmed, which can be several months in the future. 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.

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 view the DVD. (The DVD is downloadable or viewable on the Debtor Information section of this website.) 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).

This website maintains a copy of the DVD instructions to Debtors at the following web address: www.cvillech13.net/video/krumm_dvd_320w_240h.mp4. This link takes a while to load the video file, but it will play on whatever default video player is available. [If you are having trouble accessing this MP4-formatted video, we recommend that you install QuickTime.]

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.

There are more than a seventy private providers of this course that have 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.

1. Attorney's Fees: As of August 1, 2011, At this time (February, 2010) there is no Local Rule or Standing Order authorizing a standard ("no look") fee for debtors' counsel in Chapter 13 cases. However, both Judge Anderson and Judge Krumm are now allowing, and the Trustee is not objecting to attorney's fees of up to $2,750 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 AP and 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" part of this Outline, section V. I.

a. Cases: (1) A recent Supreme Court case held that an unsecured creditor can recover post-petition attorney fees authorized in a valid pre-petition contract: Ogle v. Fidelity & Deposit Co. of Maryland, U.S., 4/30/10 denial of cert.; (2) Attorney’s requested fees significantly reduced by the Court; Court sets out in detail the standard for evaluating such fees: In re Palmer and Debra Goodbar, #09-52018, and In re Jeffrey Goodbar, #10-51542, Bankr. Dt., W.D. Va, 6/29/11 Krumm opinions; (3) Photocopying expenses must be necessary to a particular case and property documented to be reimbursed: In re Jeffrey Goodbar, #10-51542, 8/10/11 opinion; (4) Attorney ordered to disgorge $5,000 in fees: In re Edward Dunn, #11-60847, Bankr. Ct., W.D. Va., 8/18/11 opinion by Anderson; (5) Appropriateness of "no-look" fees in Chapter 13 cases is reaffirmed by the Court; in this case the attorney’s request for hourly fees is denied, but even if hourly fees were allowed, the lodestar analysis would confirm that the no-look fee was appropriate: In re Bruce and Jane Slater, #10-62521, Bankr. Ct., W.D. Va., 9/6/11 Anderson opinion.

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. Any applicant will 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. This delay can be especially crucial in plan confirmation and motion to dismiss situations.

3. Credit Counseling Certificate: A certificate from a certified credit counseling agency must be filed with the Court; a plan cannot be confirmed without it. 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. The credit counseling session can be taken the same day as the case is filed, but it must be taken before the case is actually filed. In re Marvin and Wanda Crewey, #11-71179, Bankr. Ct., W.D. Va., 6/28/11 Stone opinion.

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#12: 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 for which the Trustee’s endorsement is being sought.

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").

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 ordinarily required attorney services through initial plan confirmation.

a. For a recent Supreme Court case discussing the application of sections 101(12A), 526, and 526 to attorneys generally, see Milavetz, Gallop et al. v. U.S., _____ U.S. _______, #08-1119, 3/8/10 Opinion.

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. The safest way to conduct such a search is to do it within a few days after the case has been filed; this ensures that the attorney does not miss any last-minute liens filed against the debtors’ property.

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 received 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.

b. 109(g) issues: Debtor may be ineligible to file again if there was a causal connection in a prior case within the last 180 days between a motion to lift stay and the debtor’s motion to dismiss the case. In re Marilyn Myers, #10-60880, Bankr. Ct., W.D. Va., 6/21/10 Anderson opinion.

6. Materials explaining the Chapter 13 process: The need for such materials from the attorney has been 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 information or checklists clarifying the debtors' initial duties, payment schedules, court hearing dates and locations, etc., are still essential 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?

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 received during the plan to prove payments in case problems arise.

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 is required to increase during the 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.

(1) "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; "uncollectible" debts.

(2) Review the schedules and plan one last time before filing: It is depressing how often the figures on the plan do not match those on the schedules, and how many debts are stated on Schedule D or E but not provided for in the plan (or vice versa). Take the time to cross-check the plan and the schedules before filing them with the Court. You will save yourself significant time and trouble by not having to correct these documents later, and the Trustee will greatly appreciate the decrease in mistakes that need to be fixed. The failure to conduct this final review is the single most common source of plan mistakes.

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.

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

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

(2) Commonly omitted items: bank accounts; jewelry; debts owed to the debtors; earned-but-not-received commissions or bonuses; "junk" vehicles; property in which the debtor owns a partial or equitable interest.

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

(4) A debt or promissory note owed to the debtors by a third party should be listed as an asset on Schedule B. If regular payments are being received by the debtors on this debt, those payments should also be listed as income on Schedule I.

(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.

(4) All debtors' attorneys should review the 6/17/10 decision of the U.S. Supreme Court in the case of Schwab v. Reilly, 560 U.S., #08-538. In a Chapter 7 case, the Court held that an exemption claim does not cover the excess value of the asset over the value disclosed on Schedule B. In re Stoney, 21 CBN 562, Bankr. Ct., E.D.Va. 2011 [Court sustained the Trustee's objection to the debtor's claiming "100% of FMV" on Schedule C because it supersedes state exemption statutes]

(5) Other cases: In re James Perkins, #10-63148, Bankr. Ct., W.D. Va., 3/31/11 Anderson opinion [Va. Code sec 34-29 applies only to earnings subject to garnishment and does not cover paycheck earnings once deposited into the debtor's checking account]

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

(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. Show this treatment of the claim in paragraph 2 of the Court's required form plan. 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. Also list a custodial parent even when no support order has been entered, since Code §101 14A)(C) includes orders entered even after a Chapter 13 case has been filed. Note that beginning in 2010, the Virginia Division of Child Support Enforcement has designated a Senior Assistant Attorney General, Jack Maxwell in Lynchburg [telephone: 434-386-2044; jack.maxwell@dss.virginia.gov], as the point person for all delinquent child support debts in Chapter 13 cases. He has begun to take an active role in objecting to plans that do not properly provide for such claims, objecting to confirmation where the debtor is not current post-petition on such an obligation, and bringing post-confirmation defaults to the attention of the Trustee. Attorneys are urged to call Mr. Maxwell early on if there are any questions about delinquent child support in a case.

(5) For Virginia personal property taxes, state law gives the locality a lien on the vehicle for all taxes owed. Virginia Code §58.1-3942. So if the debtor still owns the vehicle, the claim is really a secured claim and should be listed on Schedule D, not Schedule E. If listed on Schedule D, the Trustee will not object to the payment of interest on such a claim at the rate set forth in the Virginia Code. However, the Trustee will also not object if the debt is listed on Schedule E as long as it is no more than one year old.

(1) List account number, reason for the debt, and date claim incurred for each debt. Be as precise in your description of the debt as your software will allow; "credit card" is better than "open account."

(2) Redacting all but the 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 [Rule 9037(g)], and the Trustee encourages debtors to do so to ensure payments are properly applied by creditors to their accounts.

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.

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

(2) In section 17 at the bottom of the form, disclose any expected changes, temporary nature, or seasonality of income, children with special needs, any unusual situation regarding family structure or dependents, any health problems affecting income, etc. If you are concerned with the debtor’s privacy, send an e-mail to my office with this information when the case is filed; it's important that we know about special circumstances before the 341 meeting.

(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.

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

(3) Please disclose any anticipated changes in expenses in section 19 at the bottom of the form.

(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.

(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.

All debtors' attorneys should read the 6/17/10 decision of the U.S. Supreme Court in the case of Hamilton v. Lanning, 560 U.S., #08-998. The Court held that in determining disposable income in an above-median case, the court should adopt a forward looking approach and interpret "projected disposable income" in Code section 1325 to include known or virtually certain changes in the debtor’s income and expenses since filing. In other words, the court may look beyond the amounts set forth on form B22C in determining the debtor's projected disposable income as of the confirmation hearing.

(a) Include the income of the non-filing spouse. Some of this (e.g., expenses on which the non-filing spouse is solely obligated; retirement contributions) may be deducted later on Line 19, but at this stage all spousal income must be included. The Trustee will oppose any deduction on Line 13.

(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.

(a) Include income from all sources: rent, retirement, interest, dividends, mileage reimbursement from the debtor’s employer [In re Tinsley, #09-51194, 4/8/10 opinion by Judge Krumm], 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. Judge Krumm has denied a deduction for an 18-year old child living with the debtors. In re Kessee, #10-70465, 2010 ruling [no formal opinion]. He has also held that a debtor cannot claim young children for whom he has visitation rights but not physical custody. In re Smallwood, #09-70529, 5/21/09 decision.

(4) Line 17: In 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. See In re Minahan, #08-70118, an 8/20/08 decision by Judge Judge Stone; also, In re Kessinger, #09-82328, 5/12/10 decision by Judge Krumm. The Court held that these expenses can only exceed the IRS allowances in unusual circumstances, and even then only by five percent, and that the actual amounts spent on these items by the debtors are not relevant in determining the appropriate Chapter 13 plan payment.

(a) The U.S. Supreme Court on 1/11/11 announced its decision in the case of Ransom v. FIA Card Services, #09-907. The Court ruled that an over-median debtor could not claim a car ownership expense unless he had a loan or lease payment on a vehicle as of filing. The Court left open questions such as whether a creditor could move for an increase in plan payments if the loan ended early in the plan. This decision would appear to overrule Judge Krumm's 2007 decision in In re Earl and Robin Hylton, supra., 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.

(b) In In re Styles, 397 B.R. 771 (Bankr. W.D. Va. 2008), Judge Krumm held that one debtor may take deductions for two vehicles on Lines 28 and 29, but he went on to say that any such claim is subject to the good faith test set forth in his Hylton decision, 374 B.R. at 586. In Hylton, the debtor was required to add back into the unsecured "pot" any money being used by him during the plan to pay for a luxury vehicle he was keeping and for which he was deducting payments on Line 47. Also, the Styles decision will now have to be interpreted in light of the Supreme Court’s 1/11/11 ruling in the Ransom case.

(c) If the debtor cannot claim a car ownership expense on a vehicle because there is no loan payment on it as of filing, the Trustee will not object to the debtor taking an "old vehicle allowance" of $200/mo. if as of filing the vehicle is either six years old or has 72,000 miles on it. This allowance is limited to one vehicle per debtor, and is only applicable if the debtor is not already claiming a car ownership expense on another vehicle.

(8) Line 30: If debtor received a large tax refund in the year prior to filing, 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. The debtor must offset taxes withheld with tax refunds to determine actual tax liability. In re Kessinger, #09-73238, Bankr. Ct., W.D. VA., 5/12/10 ruling by Judge Krumm [no formal opinion].

(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.

(a) Do not include health insurance or HAS premiums here; they should be put on Line 39. Any expenses listed here are only those in excess of the $60/person or $144/person allowance for medical expenses already listed on Line 24.

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

(14) Line 44: There is a statutory cap of 5% on this additional expense, and you will need to document both the expenses claimed and the justification for them.

(b) The Trustee may ask for documents to support the amount and prior history (usually the most recent 24 months) of any charitable contributions. If the amount of the contribution has increased significantly on the eve of bankruptcy the Trustee will probably object.

(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 In re McPherson, 350 B.R. 38 (Bankr. W.D. Va 2006), [Judge Anderson], the Court held that: debtors cannot deduct the amount of pre-petition contractual payments owed; they can only deduct the amount being paid by the Trustee in the plan on the secured portion of the debt.

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

(f) Good faith requirement: In In re Earl and Robin Hylton, 374 B.R. 579 (Bankr. W.D. Va. 2007), 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." To put it another way: the Trustee will object if the unsecured creditors are being asked to pay for the debtor’s boat.

(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.

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

(b) Per the statute [Code §1325(b)(2)], all expenses must be reasonably necessary for the support of the debtors and their dependents.

(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. Both Judge Anderson (In re Lynch, 08-63151, 1/13/10 opinion) and Judge Stone (In re Minihan, 08-70118, 8/20/08 opinion) have stated that this figure is only the starting point, not the ending point, for determining the debtors' "projected disposable income," and the Court may look at changes in the debtors' income since filing when considering confirmation of a proposed plan. See also the Supreme Court's decision in Hamilton v. Lanning, supra.

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

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.

(1) Above median: 60 months of payments are required, unless the plan pays 100% in a shorter period of time, and the ACP is a temporal requirement. In re Earl and Robin Hylton, 374 B.R. 579 (W.D. Va. 2007; Judge Krumm).

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

(1) Above median: Disposable income is to be determined using Form B22C, but an analysis of the debtors' good faith is still applicable (e.g., payment of luxury secured debts; see previous section of outline). In re Earl and Robin Hylton, 374 B.R. 579 (Bankr. W.D. Va., 8/22/07 opinion by Judge Krumm). 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. Both Judge Anderson (In re Lynch, 08-63151, 1/13/10 opinion) and Judge Stone (In re Minihan, 08-70118, 8/20/08 opinion) have stated that the monthly disposable income figure obtained from Line 59 is only the starting point, not the ending point, for determining the debtors' "projected disposable income," and the Court may look at changes in the debtors’ income since filing when considering confirmation of a proposed plan. On 6/7/10, the U.S. Supreme Court handed down its decision in Hamilton v. Lanning, #08-998, U.S.. The Court ruled that in above-median cases, the Bankruptcy Court may consider "known or virtually certain" changes in the debtors' income and expenses since filing in determining projected disposable income under Code §1325.

Computing disposable income in above-median, non-business cases. Since there is some confusion about what Form B22C requires above-median debtors to pay into a Chapter 13 plan, the Trustee offers the following as a worksheet:

(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.

(a) Some cases discussing disposable income in below-median cases: In re Tinsley, #09-51194, Bankr. Ct. W.D. Va.,4/8/10 Krumm opinion [mileage reimbursement is income; employer per diem amount is relevant evidence of actual expenses]; In re Donald and Regina Wallace, #10-72504, Bankr. Ct., W.D. Va., 7/8/11 Krumm opinion [Court rules on specific monthly living expenses; cigarette expenses not allowed because unnecessary]

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 to 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. Also, remember that when the plan provides for the surrender of the debtor's collateral on a secured debt and the debt exceeds the value of the collateral, you need to add the expected unsecured deficiency claim to the total of unsecured debts when calculating the percentage to be paid to unsecured creditors.

e. Chapter 7 test calculations: The Trustee follows the ruling of Judge Stone in 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). 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. For costs of sale 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). Judge Stone has ruled that the "effective date of the plan"—the final hearing on plan confirmation—is the appropriate time to value property for purposes of the Chapter 7 test. In In re Allen, 240 B.R. 231, 237-238 (Bankr. W.D. Va. 1999).

(Note: All references to the plan, below, are to the form plan approved by the Judges effective 12/1/09; this form can be found on the Court's website.)

f. First page of the plan: The Trustee will object if any of the following information is omitted from the first page of the plan:

(2) for a modified plan: the date of the plan it's replacing; the plan provisions being modified; the creditors being affected by the modification; and the date, time, and place of the hearing on the modified plan [for the last information, it is acceptable to refer the creditor to the attached notice of hearing].

(1) If plan payments change during the course of the plan, specify the date on which any such changes take place. (Instead of such "step up" plans, some attorneys amortize over the entire length of the plan payments that will end early; it's simpler for the debtors, and the Trustee will not object to such plans. Make sure the debtors understand the impact of such a plan on their monthly finances early in the plan.)

(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." The Trustee may object to any plan that calls for yearly lump sum plan payments of tax refunds; the debtors invariably neglect to make such payments, and thereby become delinquent in their plan payments. The Trustee recommends instead that the debtors adjust their payroll tax withholding at the beginning of the plan and thereby increase their monthly plan payment from the beginning. Note also that if a debtor wishes to receive his/her EITC (Earned Income Tax Credit) refund on a monthly basis instead of having to wait until April, the debtor can file a form W-6.

(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.

(1) "Payment and Term": The Trustee recommends that the Plan state "pro rata" in most instances. This will usually ensure faster payment than fixed monthly amounts, and will prevent underfunding of the plan.

(2) Priority Taxes: Make sure that only priority taxes are provided for in full in paragraph 2 of the plan; older taxes are not priority (income: 3 years; property: 1 year; withholding: no time limit) unless no return was filed or the tax was recently reassessed.

(a) If a case is filed between January 1st and May 1st, a problem with the taxing authorities usually arises. Both the state and the federal government will probably file claims for that year's personal income taxes because even though the returns aren't due until April 15th or May 1st, the tax is statutorily "due" as of January 1st. They will often base the amount of their claim on last year's return, which may result in a claim that is much larger than is in fact owed for the current year. Since a filed claim is "allowed" unless objected to, it's a confirmation issue that will need to be resolved before the case can be confirmed. Our experience is that the fastest way is take care of this problem is to call the Richmond office of the IRS (Linda Kormylo, 804 916 8063, or Robin Rinkewich, 804 916 8069) or, for the VDOT, Mark Ames at TACS (804 649 2445); send them a copy of the current year’s tax return showing no taxes owed; and ask them to withdraw or amend their claim asap. Once a debtor files a bankruptcy case, all Federal income tax returns are filed by mailing them directly to: Internal Revenue Service, Insolvency Units, 400 N. 8th Street, Box 76, Richmond, VA 23219-4838 [4/5/11 IRS notice].

(b) 4/22/11 update from IRS office in Richmond (Linda Kormylo, 804 916 8063). The Richmond office of Special Procedures used to handle all Chapter 13 cases in the WD of VA, from beginning to end, but its responsibilities have changed. The Richmond office still reviews, and is responsible for, all Chapter 13 cases from the WD of VA "from filing through confirmation." It files the proof of claim in each case. After confirmation, the case is sent to the Philadelphia office. Any issues regarding post-confirmation plan payments by the debtors will be dealt with by the Philadelphia office. If any issues arise regarding post-confirmation taxes, the case will be sent back to Richmond and the Richmond office will handle the matter. Debtors or attorneys can always call the toll free number in Philadelphia (800 913 9358) if they have questions about a case; that office can answer most questions, and will refer the case to Richmond if need be.

(3) Child or Spousal Support Arrears: If the support is being paid through wage deduction prepetition, the Trustee will not oppose a plan provision that allows the arrears to be cured through such existing wage order IF (i) it will cure the arrears within the term of the plan, (ii) the portion that will not be cured by the existing wage order is cured in the plan and the treatment is clearly disclosed in paragraph 2 of the plan, or (iii) the Virginia Division of Child Support Enforcement does not object to the proposed treatment.

(4) Attorney Fees: May be paid pro rata with support arrears and adequate protection payments, but not ahead of such payments.

(a) "No look fee": The Court has not officially approved a "no look fee" in the Western District at this time. All fees must be disclosed in the plan and in the Form 2016(b) attorney fee disclosure statement.

(b) Post confirmation fees: All post-confirmation fees require a fee application and an order entered by the Court.

i. Paragraph 3 of the plan: Secured debts: Motions to value collateral ("cramdown"), collateral being surrendered, adequate protection payments, and payment of certain secured claims:

(a) This paragraph is new as of 12/1/09. It requires the Debtors to list those secured debts which they are proposing to "cram down" [split the debt into two parts: a secured part, for which the creditor will be paid the replacement value of its collateral plus interest in fixed monthly amounts; and the balance, which will be made an unsecured claim and paid pro rata with the other allowed unsecured claims.] This part is only to list those debts which are being crammed down; the actual terms of the cram down payments will be set forth in paragraph 3.D., below.

Note: The Fourth Circuit has held that the "negative equity" portion of a purchase-money loan on a vehicle is part of the creditor's purchase-money-security-interest and cannot be crammed down in Chapter 13. In re Price, 562 F.3d 343 (4th Cir. 2009).[But note: The U.S Supreme Court denied cert. in a 2010 Ninth Circuit case that held that "negative equity" in a car loan is not purchase money for purposes of the hanging paragraph at the end of section 1325(a)(5). AmeriCredit Fin. Servs, Inc. v. Penrod, #10-1443, 10/3/11, 79 USLW 3686.] It has also held that a mobile home that is the debtor's principal residence and is still personal property can be crammed down. In re Donnie Ennis, 558 F.3d 343 (4th Cir. 2009). If the mobile home has become real property, it cannot be crammed down. In re Witt, 113 F.3d 508 (4th Cir. 1997).

(a) Where the debtor is surrendering the collateral (house, car, furniture, etc.), the claim must be listed in this paragraph. Any unsecured deficiency remaining after the collateral is liquidated by the creditor will be paid by the Trustee pro rata with the other allowed unsecured claims. [Note: don't forget to include in your paragraph 4.A. calculation of the estimated distribution to unsecured creditors the difference on Schedule D between the value of the collateral being surrendered and the amount of the creditor's claim.] Clearly identify the collateral (address of real property; year and make of car; etc.). Value and claim information must match what's on Schedule D. Remember that surrender of collateral in full satisfaction of the debt has been prohibited by the 4th Circuit in Tidewater Finance Co. v. Kenney, 531 F. 3d 312 (4th Cir. 2008).

(b) Beginning 2/1/10, Judge Anderson wants the plan to contain language advising the creditor that any unsecured deficiency claim must include documentation showing that the debtor's collateral has been liquidated, and the proceeds of sale have been applied to the balance owed, in accordance with applicable state law. This language should be put in paragraph 11 with language in paragraph 3.B. advising the creditor that it must also look at paragraph 11. It should also be included in any order lifting the automatic stay.

(c) Both Judge Anderson and Judge Krumm now allow the debtors to state in paragraph 11 — after alerting the creditor in paragraph 3 that it must also look at paragraph 11—that if the creditor fails within 180 days from plan confirmation to file an amended proof of claim for its unsecured deficiency, the creditor's claim will be barred.

(d) If real property is being surrendered and there are delinquent real estate taxes owed on the property, don't forget to list in this paragraph the locality to whom the taxes are owed and provide that these taxes will be paid outside the plan by the foreclosing trustee.

(a) There is no Code provision clarifying the amount or duration of adequate protection ("AP") payments. They are supposed to be payments made to a secured creditor prior to confirmation to compensate the creditor for the depreciation of the collateral between case filing and the beginning of the fixed monthly payments. This amount is usually 1% of the collateral value per month. Even over-secured creditors are entitled to adequate protection payments.

(b) Prior to 12/1/09, the attorney used paragraph 11 to set forth the terms of any AP payments. Now those terms are to be put into this sub-paragraph. The Trustee will not object if additional terms clarifying AP payments are also put in paragraph 11, as long as there is a note in paragraph 3.C. advising the creditor to look also at paragraph 11. If AP payments are provided for in an unusual way, in the absence of clear instructions to the contrary, the Trustee will, pursuant to Code 1326(a)(1)(C), assume that AP payments are to be deducted from the principal amount being paid in fixed monthly amounts post-confirmation in paragraph 3.D.

(c) The plan must provide for adequate protection payments to begin 30 days after filing for all creditors holding purchase money liens on personal property (not required for debts secured by real estate).

(d) Notice: The Court's Standing Order #9 [12/05/06] requires that within 5 days of filing the original or amended plan, you must file and serve notice of the proposed AP treatment, using the Court’s required form (found on its website under Local Forms). If an objection is filed by the creditor within 15 days of notice, the Court will set a hearing date. If no timely objection is filed by the creditor within 15 days, adequate protection payments may be disbursed without further notice, hearing, or separate order.

(i) Under the column "Adeq. Protection Monthly Payment;" be sure to put both the amount of the payment and the number of months it is to be paid. Note: Paragraphs 3.C. and 3.D. state that, unless otherwise provided, AP payments will cease as of confirmation and the fixed monthly payments set forth in paragraph 3.D. will commence. If that is what you intend, the Trustee recommends putting in this column "$__/mo. thru conf." If instead you want the AP payments to run for a fixed number of months, the Trustee recommends that you put in this column "$__/mo. x __ mos."

(ii) Under the column "To Be Paid By," the Trustee strongly recommends putting "Trustee." Every AP payment in every plan administered by the Trustee since 2005 has been paid by the Trustee; obtaining proof of payment if they are made by the Debtors would be a nightmare, and would delay confirmation of the Plan.

(4) Paragraph 3.D.: Payment of Secured Claims on Property Being Retained (not including paragraph 5)

(a) This paragraph sets forth the payments to be made by the Trustee to secured creditors (other than the mortgage loans or long term debts covered in paragraph 5). It covers cramdowns, judgment liens, tax liens, and secured debts to be paid in full by the Trustee (including "910 claims"). None of these payments can be made until the Plan has been confirmed.

(b) In the 3rd column ("Approx. Bal...."), you will put (i) the "crammed down" value [replacement value of the collateral] if the debt is being crammed down, or (ii) the balance owed on the debt if it is a "910 claim" or the balance owed is less than the replacement value of the collateral. (If the claim amount for a "910 claim" or a claim being paid in full is different on the creditor’s proof of claim, the Trustee will adjust the monthly payment to pay the proof of claim amount, plus interest at the rate specified, over the number of months specified.

(c) In the 4th column ("Interest Rate"), you must state the rate of interest to be paid on the claim. The interest rate must be in accordance with the Supreme Court's decision in Till v. SCS Credit Corp, 541 U.S. 465 (2004). Based on Till, the Trustee will usually not object to any rate of interest that is (i) at least the Wall Street prime rate on the first day of the month in which the case was filed, and (ii) no more than the Wall Street prime rate on that date plus two points. [Here's a web site where you can always check the current Wall Street Journal prime interest rate .

(a) In cases where the Trustee is to pay the regular monthly mortgage payment, it is crucial that the debtors' attorney file a "first day order" authorizing the Trustee to begin making the regular monthly payments prior to confirmation. Otherwise, the debtors will be late on their first few payments and incur late fees, etc.

(b) There are a variety of issues that arise when the Trustee is paying the ongoing monthly mortgage payment. They include: How will the first month's payment be made in a timely fashion, and by whom? Does the debtor's attorney need to quickly file a proof of claim if the mortgagee has failed to do so? What happens when the escrow payment is increased during the life of the plan, and what notice must the mortgagee give of such an increase? As of 01/01/11, the Trustee is working with debtor and creditor attorneys to devise some standard language for paragraph 11 or a first day order which will provide guidelines for these issues; any such language will have to be approved by the Court. But the debtors' attorney needs to be aware of these issues before proposing a plan that has the Trustee making the regular mortgage payments.

(3) Paragraph 5.C.: Restructured mortgage loans being paid in full during the Plan: This provision is new as of 12/1/09. If the last contractual payment on the Debtors’ mortgage is due during the Plan, the Debtors can choose to modify the monthly payments, alter the interest rate using the Till case, and have the Trustee pay through the Plan the remaining balance due on the mortgage. You must specify the monthly payment amount and the number of months it is to be paid. If the claim amount is different on the creditor’s proof of claim, the Trustee will adjust the monthly payment to pay the proof of claim amount, plus interest at the rate specified, over the number of months specified.

l. Paragraph 6 of the plan: Unexpired leases and executory contracts: Make sure all contracts and leases are listed on Schedule G, and that all these creditors are listed on the matrix.

(1) Paragraph 6.A.: Contracts and leases being rejected: Be sure to add to your percentage payout computation for general unsecured debts any balance that will be owed on a rejected lease or contract.

(2) Paragraph 6.B.: Contracts and leases being assumed: The Trustee again recommends that any arrearage be paid pro rata (column 4). 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.

(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.

(3) Paragraph 7.A.: Judicial and non-possessory,non-purchase money liens under Code sec. 522:

(b) Both Judge Anderson and Judge Krumm now require that a separate motion and order be used to avoid liens under this section. See [Form#18: PDF / RTF] for the special language that Judge Anderson requires in any order avoiding lien; Judge Krumm requires that any such order state that it is subject to Code §349(a). On 12/22/10, Judge Krumm ruled that a debtor could not use Code §522 to avoid a judgment lien against one debtor on property owned by that debtor and his spouse as tenants by the entireties with right of survivorship, because the lien never attached to the property. In re James and Virginia Smith, #10-50687.

(c) On 6/13/11 the Fourth Circuit held that a Chapter 13 debtor need not file a Homestead Deed prior to avoiding a judgment lien on real estate using Code §522. In re Annie L. Botkin, #10-1681. F. 3d. This case would appear to overrule Judge Anderson's decision in In re Gary and Barbara Tarpley, 123 B.R. 741 (W.D. Va. 1991), that (i) a Homestead Deed need not be filed in order for debtors to obtain the benefit of Va. Code section 34-4 exemptions claimed by them on Schedule C for the purpose of passing the "Chapter 7 test" of Code section 1325(a)(4), but (ii) in order to avoid a lien under Code sec. 522(f), "a Virginia Chapter 13 debtor must perfect claimed exemptions in accordance with the applicable provisions of the Virginia Code."

(4) Paragraph 7.B.: Avoidance on grounds other than Code sec. 522 (like sec. 506):

(a) The moving party will have to file a separate Adversary Proceeding to avoid a lien under Code sec. 506. The basis of such an action is that there is no equity for the junior lien to attach to: the property is worth less than the senior lien. The Fourth Circuit has reaffirmed that debtors can avoid junior liens on their primary residence if the lien is wholly unsecured. In re Derrick & Tracie Millard, #09-2266 (4th Cir. 12/15/10, unpublished opinion.)

(b) If there is even $1 of equity for a junior lien to attach to, it cannot be avoided using sec. 506.

(2) Claim scheduled as unsecured, but POC filed as secured: If creditor doesn' timely object to confirmation, creditor will be treated in the plan as unsecured. But creditor can still enforce its lien after discharge.

(3) Claim scheduled as secured, but POC filed as unsecured: creditor will be treated in the plan as unsecured.

(4) Trustee can adjust monthly disbursement amount as needed to pay secured claim in full.

(1) Even though property "revests" in the debtor upon confirmation, debtor needs Court permission to sell, refinance, put a lien on, or do a loan modification on the mortgage of real property.

(2) Judge Krumm requires that notice be given to Trustee, any creditor who has requested notice, and anyone else required by the Court's Local Rules. Judge Anderson may only require notice to the Trustee and affected lien holders; check with the Court.

(1) No Court permission needed to incur a total of $5,000 (principal amount) in new debt during the Plan; this amount is cumulative, and applies to unsecured or secured debt.

(2) Notice required to Trustee, any creditor who has requested notice, and anyone else required by the Court’s Local Rules.

(1) Attorneys are not supposed to change or add to any of the text of the first ten paragraphs. The Judges' intent is that anything unusual be put into paragraph 11 and be clearly identified as to substance and parties affected.

(2) If any section affects creditors who have already been dealt with in a prior paragraph, the prior paragraph should clearly advise the creditor that it must also look at paragraph 11.

(3) Both Judge Anderson and Judge Krumm have put limits on the kinds of substantive provisions that can be inserted into paragraph 11. See, In re Maupin, 07-61051, and In re Jones, 07-50446, in which both Judges denied a debtor attorney’s attempts to provide for a variety of substantive and procedural issues in paragraph 11. 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 these decisions before trying to use this paragraph in any new or creative ways.

(4) Effective 7/11/11, both Judge Anderson and Judge Krumm are now allowing standard language to be added to the form plan that limits the time within which a creditor may file an unsecured proof of claim for a deficiency on property being surrendered pursuant to paragraph 3.B. of the plan. This language will provide certainty and closure in situations where debtors must pay 100% of claims or want to pay off their plan early.

The following language (or something comparable) can be inserted into paragraph 11 of the plan: If you add this language, you need to state clearly in paragraph 3.B. that the creditor also needs to look at paragraph 11.

"Any unsecured proof of claim for a deficiency which results from the surrender and liquidation of the collateral noted in paragraph 3.B of this plan must be filed by the earlier of the following dates or such claim will be forever barred: (1) within 180 days of the date of the first confirmation order confirming a plan which provides for the surrender of said collateral, or (2) within the time period set for the filing of an unsecured deficiency claim as established by any order granting relief from the automatic say with respect to said collateral.

Said unsecured proof of claim for a deficiency must include appropriate documentation establishing that the collateral surrendered has been liquidated, and the proceeds applied, in accordance with applicable state law."

(5) 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.

14. Service of process on corporations and financial institutions: helpful hints (04/28/11):

(a) TO serve an insured institution, Bank:
First go to the FDIC web site to find out if the bank is insured (you only need to fill in the name, it will give you choices). This will tell you if the bank is insured, if there is a successor institution, and give the "official address." Second: google the bank name and "investor relations" or "corporate governance." The list of the Board of Directors including the CEO should appear on a letter or in the yearly report. (I serve the CEO at the official address by certified mail, then any other address - from a proof of claim etc.).

(b) TO serve an insured institution, Savings and Loan:
First go to the OTS web site to find out if S&L is insured (you only need to fill in the name, it will give you choices). This will tell you if the S&L is insured, if there is a successor institution, and give the "official address." Second: google the S&L name and "investor relations" or "corporate governance." The list of the Board of Directors including the CEO should appear on a letter or in the yearly report.

(c) TO serve a corporation:
Every state has a secretary of state which maintains a web site. In Florida it is http://www.sunbiz.org/search.html. You can search by Name of the Corporation. (I also use this site to find out if the debtors have additional corporations.) This will provide you with the name of the registered agent. If the Corporation is not registered in your state and have filed a proof of claim check the Secretary of State from the proof of claim address. The other favorite is https://delecorp.delaware.gov/tin/GINameSearch.jsp (Delaware - the haven for most large corporations).

A. English-deficient or deaf debtors: If the debtors are not able to understand or converse in English, the Office of the US Trustee provides for access during 341 meetings to a phone-based translation service. If you have such a client, please advise the Trustee at least ten days ahead of the scheduled 341 meeting of your debtor's need for this service and his/her/their primary language so that the Trustee can make arrangements for a translator to be available by phone at the hearing.

If the debtor is deaf, arrangements have to be made by the Trustee to retain an interpreter for the deaf. Such arrangements are more complicated, so please give the Trustee at least thirty days advance notice of the need for such a service. Failure to give adequate advance notice may result in continuation of the 341 hearing.

B. Debtors' ID: Please make sure that the debtors bring with them (i) an original of an official picture ID [driver’s license, military picture I.D., etc.] and (ii), (if the ID does not have the full Social Security number), an original or copy of Social Security cards or other 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. It's probably a good idea for the attorney to bring to the meeting the debtors' most recent tax return; it can be used to provide the debtors' Social Security numbers if they've forgotten their original documents.

C. Wet signatures: As of 12/01/10, the Trustee will no longer ask to see the "wet" (original) signatures on the petition; instead, he will only ask the debtors under oath if they signed the original petition and schedules.

D. Trustee's "Informational 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 Debtor Information 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.

E. Conduct of the creditors' meeting: The debtors' testimony will be 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 also encouraged to ask questions of the Trustee. In addition, there will usually be a short 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 there is no chance that the case will be ready at that time. For example, in cases where claims issues pose problems (e.g., equity in the debtors' tenancy by the entireties property requires that joint unsecured creditors be paid 100%), the Trustee will probably request that confirmation be continued beyond the claims bar date. In this way the Court can be sure that these claims have been properly provided for in the plan, and both the Trustee and the debtors' attorney will only have to review claims one time.

F. 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#13: 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.

The Trustee's Report is the "road map" for getting a case confirmed. It contains everything that the Trustee needs in order to recommend to the Court that a case be confirmed, and until all items on it have been completed the Trustee will not be able to advise the Court that a case is "ready." The Trustee strongly recommends that the attorney meet with the debtors right after the creditors meeting to review what needs to be done, and to make sure the debtors understand the importance and time-sensitive nature of following through on the documents and information needed. Beginning work on these items promptly after the creditors' meeting is the key to getting a case confirmed on schedule.

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 it is clear that the case will not be ready on that date.

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

4. Front-end-load 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 to be filed in the past four years; that they have viewed Judge Krumm's DVD and his written instructions about Chapter 13; 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. Virtually every case filed makes use of this affidavit. 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. The Trustee will object to any modified plan that seeks to cure a post-petition-pre-confirmation mortgage default by reducing the payout to unsecured creditors.

C. Preparing cases for Court: Communication between the debtors’ attorney and the Trustee's office:

1. 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.

2. As explained previously in section I.B., the attorney will contact one of three 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:

3. It's crucial to begin working on the Trustee's Report items immediately after the 341 meeting, and to give the debtors a clear written list of what is needed from them and by when. As with pre-341 documents, send all documents as a single attachment to an e-mail, and specify on the subject line the debtor's name, case number, "conf docs," and the date of the confirmation hearing. If you send a large amount of documents for a particular issue (e.g., medical bills to establish monthly medical expenses), you must attach a summary that explains what the documents will show.

a. In each case involving confirmation of an initial or modified plan, a motion to dismiss, or a status hearing, a Case Administrator ("C.A.") will send to your office prior to Court an e-mail detailing (i) our recommendation to the Court, (ii) if applicable, what statements will be read into the record in Court (e.g., confirmation order other provisions), (iii) if applicable, the items that we believe must still be completed for a case to be ready or our motion to be resolved, and (iv) if applicable, a proposed continued Court date.

b. If your office does not respond to that e-mail, we will assume that you are in agreement with what we've said. If there is any question about the e-mail address we're supposed to be using, please advise the C.A. right away.

e. I will continue to call debtor attorneys a day or two before Court to discuss only those cases in which (i) I am asking dismissal and you have not previously indicated that the debtors are not opposing my motion; (ii) there are still issues that need resolving (disposable income; Chapter 7 test; etc.); or (iii) there is a question about what the continuation date should be.

f. As has been the custom, you are free during this call to bring to my attention any cases you need to discuss.

g. There is no change in this part of the process from what we've been doing over the past year.

h. In Court the Trustee will still hand out the Exhibit A for cases that are being continued with conditions.

i. The Trustee will no longer hand out the Exhibit A in cases that are being continued with expectations. The last e-mail sent to your office by the C.A. will contain the next Court date and all those items that still need to be completed, and we have realized that the Exhibit A in these cases is nothing but a less-detailed duplication of the e-mail.

j. We are now preparing for each Court day an annotated version of the Official Court Docket that Courtroom Clerk Barbara Okes prepares each time. Beneath each case there will be a space that will contain (i) the Trustee's recommendation to the Court; (ii) any statements that must be read into the record (e.g., other provisions in confirmation orders); (iii) if the case is being continued, the continuation date; and (iv) if the case has problems, a brief description of the problems that still need to be resolved.

k. The Trustee's office will send to each debtor’s attorney with cases on the docket a final version of this annotated docket no later than the day before Court. We will send you the annotated docket in Word format, which means that it will be totally searchable. For example, if you wanted to find a case by either name or case number, you would hit "Control F" [if you're using Word; it may be something else if you use a different word-processing program] and then type in the case name/number. If you need the document to be sent to you in RTF or other format, let us know.

l. The Trustee will usually have with him in Court a complete history of each case, including payment history and filed claims, but it will be on the laptop computer instead of on paper.

5. Process for Staunton and Harrisonburg cases: For Valley cases, the Staff Attorney (Angela Scolforo) will work up the cases prior to Court herself and contact each attorney via e-mail to resolve any remaining problems. After the 341 hearing, all documents which are being sent to comply with the Trustee's Report should be sent to her directly.

NOTE: If you file an amended plan within seven days of a scheduled confirmation hearing, notify the C.A. immediately by e-mail, since we do not check the Court website once a hearing is less than seven days away.

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 I.2. 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 calendar 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 making progress toward resolving 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.

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 (but see below). The Exhibit A will contain a list of items that need to be completed or resolved for the case to be confirmed. The Trustee will usually fill out this Exhibit A [Form#14: PDF / RTF] and hand it to the attorney in Court. If the attorney attaches the Trustee's version of Exhibit A to the Order without making any changes, the attorney may endorse the Order on the Trustee's behalf and submit it to the Court; it does not need to be sent to the Trustee's office for review.

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 Extending Conditions", endorsed by the Trustee, extending these conditions until a future Court date. [Form#15: PDF / RTF] This will keep the case from being dismissed.

If a case is continued in Judge Anderson's Court "with expectations," the attorney will not be required to submit an Order of Continuance. Prior to 3/1/11, the Trustee informally handed to the attorney in Court an Exhibit A, which set forth the items that needed to be completed or resolved for the case to be confirmed at the next hearing. Beginning 3/1/11, the Trustee will no longer hand out an Exhibit A for these cases. Instead, the attorney will be able to rely upon the e-mail sent out by the Case Administrator prior to the c0nfirmation hearing in every case which set forth the items needed for confirmation but not yet completed or resolved. 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)

1. Lynchburg Division. If prior to confirmation an amended plan is filed, it must be filed with the Court and noticed to creditors at least 35 days prior to the scheduled confirmation hearing, or a new hearing date will have to be set. [For a modified plan being filed after a plan has already been confirmed, an order will be issued by the Court setting a hearing date, and the attorney must serve that notice on creditors with the new plan.] If the attorney believes that the plan does not require noticing, the attorney must attach a "certificate of non-service" to the noticing order and return it to the Court; that will be sufficient unless the Trustee advises the Court that he believes the plan did require noticing, in which event the matter will be decided by the Judge.

2. Harrisonburg Division. If prior to confirmation an amended plan is filed, it must be filed with the Court and noticed to creditors at least 35 days prior to the scheduled confirmation hearing, or a new hearing date will have to be set. [For a modified plan being filed after a plan has already been confirmed, an order will be issued by the Court setting a hearing date, and the attorney must serve that notice on creditors with the new plan.] If the attorney believes that an amended or modified plan does not require noticing, the attorney should advise the Courtroom Clerk accordingly, and the Judge will rule on that issue when the case is called.

F. Dismissal or conversion of case pre-confirmation: attorney's fees: If a case is dismissed or converted 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 written motion for fees within ten days after the hearing at which the case was dismissed. The Trustee will usually not object to a fee of $2,650 if the attorney has done everything required in the case up to that point and the dismissal or conversion 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, and will ask the attorney to explain any additional work that was required. 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. Judge Anderson now requires either that the debtor endorse any such fee order, or the matter be set for a hearing if the debtor refuses to endorse the proposed order; the attorney may obtain the debtor’s endorsement via telephonic authorization.

G. 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#16: PDF / RTF] If the transferee refuses to cooperate, in cases where the value of the property is not great, the Trustee may ask that a consent order endorsed only by the debtor be entered tolling the statute of limitations until such time as the plan has distributed funds sufficient to make this issue moot. [Form#17: PDF / RTF] ]; in cases involving property of greater value, the Trustee may refuse to recommend confirmation or file an adversary proceeding to obtain an appropriate order.

H. 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 may be sufficient 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.

1. 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. In re Ricky Wharton, Bankr. Ct. W.D. Va., #09-61741, 3/26/10 opinion. 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#18: PDF / RTF] Judge Krumm requires that any such order state that it is subject to Code §349(a).

2. Note: On 6/13/11, the Fourth Circuit upheld the decision of the for the Western District of Virginia (Judge Kaiser) and held that a Chapter 13 debtor need not file a Homestead Deed prior to avoiding a judgment lien on real estate using Code section 522. In re Annie L. Botkin. [This case would appear to overrule Judge Anderson's decision in In re Tarpley, 123 B.R. 741 (1991), that while a Homestead Deed need not be filed in Chapter 13 to obtain the benefit of Va. Code 34-4 for the purpose of claiming the exemption on Schedule C and passing the "Chapter 7 test" it must be timely filed (within 5 days of the originally scheduled 341 meeting) to avoid a lien under Code sec. 522(f).] At a hearing on such a lien avoidance motion, the attorney needs to be prepared to present evidence as to the property value, the balance owed on the debts against the property, and the claiming of the exemption.

3. Make sure service of process on a lien avoidance motion/complaint complies with Rule 7004, and file the motion immediately after the plan is filed so as not to delay confirmation any longer than need be. NACBA (the National Association of Consumer Bankruptcy Attorneys) is compiling a list of FDIC institutions and their officers to make service of process a bit easier to accomplish.

4. The Fourth Circuit on 12/15/10 reaffirmed the right of debtors to avoid junior liens on their primary residence if the lien is wholly unsecured. In re Derrick & Tracie Millard, #09-2266 [unpublished opinion].

5. Debtors cannot use section 522(f) to avoid a potential judgment lien against one debtor on tenants by the entireties property, because the lien does not attach if both debtors are alive and still married: In re James & Virginia Smith, #10-50687, Bankr. Ct., W.D. Va., 12/22/10 Krumm opinion. In light of this decision, the Trustee does not oppose listing such debts as unsecured claims on Schedule F instead of listing them as secured claims on Schedule D.

6. Other cases: Debtor can still avoid a mortgage lien after he’s surrendered the property in a confirmed plan; here the deed of trust was lost and never recorded: In re Charles and Christine Rector, #09-62669, Bankr. Ct., W.D. VA., 3/11/11 Anderson opinion; Liens can be avoided in a Chap. 13 cased filed close on the heels of a Chap. 7 case even though the debtors are not eligible for discharge, but in this case confirmation is denied because the case was filed in bad faith to avoid Dewsnup: In re Karen Helton, #11-60126, Bankr. Ct., W.D. Va., 8/12/11 Anderson opinion in A.P. #11-06028.

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. If the attorney cannot be present and obtains substitute counsel, the attorney needs to ensure that the substitute is familiar with the facts of the case and can answer the Judge's questions if anything arises. Judge Krumm will in some instances allow a telephonic appearance by counsel; permission for such arrangements must be obtained prior to the hearing.

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#19: PDF / RTF] It is only one page long, and incorporates by reference the terms of the confirmed plan. This order will be prepared and submitted to the Court by the Trustee after the confirmation hearing has been concluded; it does not require the attorney's endorsement.

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; stating that a debtor is not eligible for discharge; stating that there is no automatic stay in the case; or increasing plan payments to an amount greater than that set forth in the plan. Such uses of the "Other Provisions" section allows 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#20: 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. The attorney will need to provide to the Trustee, prior to the subsequent hearing, documents responding to the Trustee's pending objection.

1. Debtor's affidavit regarding disposable income issues. The Trustee has developed a form affidavit [Form#20A: PDF / RTF] for use by debtors' attorneys when there are post-confirmation hearings involving changes (or lack of changes) in a debtor’s employment situation or disposable income. The use of this affidavit can sometimes resolve the Trustee's concerns and negate the need for further hearings.

E. Espinosa Decision. On 3/23/10, the Supreme Court announced its decision in United Student Aid Funds v. Espinosa, U.S.. The Court held that a confirmation order is not void under FRCP 60(b)(4) because a court lacked the statutory authority to confirm the plan in question; there was legal error, but the confirmation order is still enforceable and binding because the creditor had actual notice and failed to object. The Court went on to say that Code section 1325(a) requires bankruptcy courts to address and correct defects in a debtor's proposed plan "even if no creditor raises the issue."

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 as an attachment to e-mail to: beskinord13@ntelos.net)

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. When filing such a late claim, be sure to attach documentation sufficient to establish a secured or priority claim.

1. Objections to claims. Judge Anderson has issued an important decision concerning objections to proofs of claim. In re David and Amanda Falwell, #08-60495, 11/5/09 Opinion. The opinion covers burdens of production and proof; acceptable bases for objection; and other related issues. Attorneys are cautioned not to object solely on the basis of no documents being attached to the creditor’s proof of claim. [Regarding attorneys' fees recoverable for such objections, see paragraph V.I., Attorney's fees for post-confirmation work.]

a. Other cases: In re Randall and Tina Woods, #10,62058, W.D. Va. Bankr. Ct., 1/27/11 Anderson opinion [in an objection to claim based on the statute of limitations the debtor must provide evidence, since he has both the burden of production and of persuasion]; In re Reginald Ponton, #10-61515, W.D. Va. Bankr. Ct., 1/27/11 Anderson opinion [a second claim filed by a secured creditor as a supplemental claim for repossession is a separate claim]; In re George Tomaras, #10-60785, W.D. Va. Bankr. Ct., 2/9/11 Anderson opinion [an objection that the debtor has made other arrangements outside of bankruptcy to pay the claim is not a valid grounds]; In re Frank and Sandra Zacchino, #10-62312, Bankr. Ct., W.D. Va., 4/8/11 Anderson opinion [fact that a claim is contingent or unliquidated is not a basis for disallowing the claim]; In re Chrystalene McCutcheon, #09-64035, Bankr. Ct., W.D. Va., 10/6/10 order [Court lacks jurisdiction to hear objection to claim asserting that it is not a joint claim]

The Clerk's Office has advised attorneys that each objection should be on a separate pleading, and a hearing on an objection should be scheduled with no less than 45 days notice.

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#21: 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. Where there is inadequate or no documentation of such a claim, the Trustee will send to the creditor, the debtors, and the attorney a letter giving the parties 30 days to provide the requested documents before he will file an objection to the claim. 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#22: PDF / RTF]

The Trustee is required by the US Trustee to review all mortgage proofs of claim. If discrepancies, excessive charges, inadequate documentation, or other problems are found, the problem will usually be referred to the debtors' attorney so that the attorney can take whatever actions are deemed to be in the best interests of the debtors. Egregious problems, or ongoing problems with a particular creditor, may result in the filing of an objection by the Trustee or referral to the US Trustee.

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.

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, in Judge Anderson’s Court the Trustee has devised a motion and consent order which will allow the debtors to adjust or increase their plan payments over the balance of the existing plan term and thereby resolve the problem without having to file an amended plan (the "Motion to Amend Plan to Extend Plan Payments/Amend Plan to Alter Plan Payments/Clarify Plan Terms/Resolve Trustee's Motion to Dismiss" and "Order" of the same title). [Form#23: PDF / RTF] The motion and order are "check box" forms that allow the attorney to check off those paragraphs that apply to the case at hand. They allow 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. In such instances the attorney will usually also have to file an amended wage deduction order to provide for the new payment amount. We call this form the "order resolving." The debtors will be required to endorse any such order; the attorney may endorse the order on behalf of the debtors based upon telephonic authorization.

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 are cumulatively 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 prior to the hearing, and will work with the attorney to resolve the issue. The Trustee has developed a variety of ways to resolve these problems:

1. Filing Documents Needed to Respond to the Trustee's Motion to Dismiss: 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 hearing" 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 [In re Murphy and In re Goralski, 474 F.3d. 143 (4th Cir. 2007)] 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.

When constructing a modified plan, the attorney needs to review all of the following documents to ensure that the modified plan is accurate: (i) the most recently confirmed plan; (ii) the most recent confirmation order, including the "other provisions" section; (iii) any prior "order resolving" [see next paragraph]; (iv) any post-initial-confirmation orders lifting stay; and (v) any post-initial-confirmation orders allowing additional compensation to debtors’ counsel. Our office sees a large number of mistakes in modified plans that arise because counsel has not reviewed, and incorporated into the modified plan, the relevant provisions and dollar amounts from all these sources. Remember, for example, that if the debtor is choosing to surrender collateral on a secured claim that (i) the Trustee was paying through the plan (e.g., a car), or (ii) the Trustee was paying arrears while the debtor was making the regular monthly payment (e.g., house mortgage),that the Trustee has previously been paying for, the modified plan must state the amount that the Trustee has already paid on this secured claim and that the Trustee will make no further payments on this secured claim. provide for the payments made by the Trustee prior to the surrender. Also remember that any modified plan must still pay enough to the unsecured creditors to satisfy the Chapter 7 test.

4. The "Motion to Amend Plan to Extend Plan Payments/Amend Plan to Alter Plan Payments/Clarify Plan Terms/Resolve Trustee's Motion to Dismiss" and "Order" of the same title: [the "Order Resolving"] [Form#23: PDF / RTF] ] In Judge Anderson's Court the Trustee has devised a motion and consent order which will allow the debtors to resolve certain problems without having to file an amended plan. The motion and order are "check box" forms that allow the attorney to check off those paragraphs that apply to the case at hand. They allow 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. In such instances the attorney will usually also have to file an amended wage deduction order to provide for the new payment amount. We call this form the "Order Resolving." It is the same motion and order referred to in sub-paragraph F., above. The debtors will be required to endorse any such order; the attorney may endorse the order on behalf of the debtors based upon telephonic authorization.

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 required only where the debtors have had numerous problems with their plan payments or have incurred a significant delinquency without good reason.

6. Importance of checking Bankruptcy Link the day before the hearing: If a Trustee's motion to dismiss is set for a hearing, debtors' counsel should always check the Trustee's Bankruptcy Link web site [see section I. I. 2. of this outline] the day before the hearing (or, better yet, the day of the hearing) in case a late payment by the debtors or an employer has posted to the Trustee's system at the last minute. Such payments can mean the difference between a case being dismissed or not. Remember that this web site may be as much as ten days behind in showing payments sent by debtors, so obtaining evidence of recent payments from the debtors or an employer may be required.

1. For all orders submitted prior to the effective date of Standing Order #12: [Note: Standing Order #12 (see next paragraph) was to have gone into effect on 4/1/10, but on 4/2/10 its implementation was suspended pending further order of the Court]: 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#25: 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.

Also attached is the language which should be included in any order lifting stay where a party is seeking permission from the Bankruptcy Court to proceed in state court against the debtor's insurance company. [Form#26: PDF / RTF]

2. Court's proposed Standing Order #12: On March 9, 2010, Chief Judge Krumm issued Standing Order #12, but, as stated above, as of 4/2/10 its implementation was "DEFERRED pending further order of this court." [Form#27: PDF (Please note that Standing Order #12 is not in effect at this time)] In its proposed form, in both the Eastern and Western Districts the Court would require the use of "standardized forms of order for routine consent orders providing for the curing of post-petition arrearages… and providing full relief from the automatic stay, whether or not consensual..." If the parties believe that "the terms of a standard form of order are not appropriate in a particular case, the parties must place the matter on the court’s docket for presentation of a proposed order. The parties should be prepared to explain the need for additional or modified terms and to present evidence as may be appropriate. By placing the matter on the court's docket, the parties agree that the automatic stay shall remain in full force and effect until the entry of an appropriate order."

As of 12/03/10, the Trustee has not determined if he will ask the Court for permission to include in this new form order on a regular basis the additional language contained in orders lifting stay prior to 4/1/10. (Form 26, above). As of this time, the Trustee is continuing to use the forms and procedures set forth in this outline for orders lifting stay.

[This part of the website will be updated if a new Standing Order #12 is issued by the Court.]

I. Attorney's fees for post-confirmation work: Beginning June 1, 2009, the Trustee will be making recommendations to the Court regarding post-confirmation fees for debtors' attorneys based on the policy set forth below. In a nutshell, the new policy is that the first post-confirmation attorney's fee should be paid from the unsecured creditors' "pot," and all subsequent ones will be added to the total of plan payments. This will be accomplished by simply adding a sentence to the order awarding fees, thereby doing away with the prior need to amend the confirmed plan or submit an order adjusting the total of plan payments.

1. 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.

a. Effective March 26, 2010, Judge Anderson has announced the following new policy to ensure that applications for post-confirmation attorney fees are submitted in a timely fashion:

(1) If an attorney has submitted to the Court an order on an application for attorney's fees on or prior to March 26, 2010, and the Trustee has no objection to the application, the Court will enter an order allowing the requested fees regardless of the amount of time that has elapsed between the date the fee application was filed with the Court and the date on which the fee order was submitted to the Court. If the Trustee is refusing to endorse the fee order, the attorney must by June 26, 2010, set a hearing on the requested fees, or no fees will be allowed.

(2) If an attorney has submitted to the Court an application for fees on or prior to March 26, 2010, as long as the order allowing the fees is submitted to the Court by June 26, 2010, and the Trustee has no objection to the requested fees, the Court will enter an order allowing the fees. If the attorney fails to submit the order by June 26, 2010, no fees will be allowed by the Court. If the Trustee is refusing to endorse the fee order, the attorney must by June 26, 2010, set a hearing on the requested fees, or no fees will be allowed.

(3) For all fee applications submitted to the Court after March 26, 2010, the attorney will have 90 days from the date on which he or she has completed the work justifying the fees to submit to the Court both the fee application and the order allowing the fees. If the attorney fails to meet this deadline, no fees will be awarded by the Court. If the Trustee is refusing to endorse the fee order, the attorney must within 90 days from the date the work has been completed set a hearing on the requested fees, or no fees will be allowed. (E.g., if an attorney is submitting fees for defending a motion to lift stay, he would have 90 days from the date on which the order lifting stay was entered to submit both the fee application and the order or set a hearing; if she was requesting fees for an amended plan, she would have 90 days from the date on which the order confirming the amended plan was entered to submit both the fee application and the order or set a hearing.)

2. The order awarding post-confirmation fees will designate whether the fees are to be added to the total of plan payments. If the fees are being paid from the existing unsecured creditors' "pot," the order will simply say that the Trustee is to pay the fees. If the fees are to be added to the plan payments, the order will contain a separate paragraph stating that:

"The total of plan payments in the most recently confirmed plan is hereby increased by $**.00."

[**: the amount of the fees being awarded in this order, plus the Trustee's 10% commission thereon, which in most cases will be $250.00 + $28.00 = $278.00 or $150.00 + $17.00 = $167.00]

There will be no need to file any other pleadings (amended plan, order extending payments, etc.) to provide for these additional fees.

3. The Trustee will not object to the first post-confirmation fee being paid from the unsecured creditors' "pot" if there are sufficient funds in that "pot" to cover the fee and still leave at least $250.00 to be distributed to the general unsecured creditors. It will not matter how long after confirmation the problem needing attention occurred.

4. After the first post-confirmation fee has been paid from the unsecured creditors' "pot," the Trustee will ask that the amount of any subsequently awarded fee, plus the Trustee's commission thereon, be added to the total of plan payments.

5. If the problem arose pre-confirmation, but is only discovered post-confirmation (e.g., a motion to lift stay filed shortly after confirmation for mortgage payments missed prior to confirmation), the Trustee will ask that the amount of any subsequently awarded fee, plus the Trustee's commission thereon, be added to the total of plan payments, because such a motion means that the debtors’ pre-confirmation affidavit was incorrect.

In cases involving the defense of a motion to lift stay, Judge Anderson requires that debtors' counsel execute a certification [Form#28: 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 as an attachment to the order allowing the supplemental fees when the order is sent to the Trustee for his endorsement, or it can be set forth in the introductory portion of the order itself.

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.

For attorney's fees for creditor's counsel in motions to lift stay, Judge Anderson has ruled that in cases where the parties have agreed to a proposed settlement order resolving the matters in controversy without the need for a hearing, the fees which the Court will approve for the moving party will be $500.00 in attorney's fees plus reimbursement of the filing fee of $150.00, for a total of $650.00. In re Beverly Horsley, 07-61657, 4/49/08 Order. Judge Stone ruled in In re Sara Travis, #08-71735, W.D. Va. Bankr. Ct., 1/19/11 opinion, that a debtor attorney's request for fees incurred in defending a motion to lift stay would be denied because it was two weeks after a modified plan was filed and counsel's "reactive approach" to the problem and failure to contact the creditor’s attorney were not sufficient.

For objections to claims, Judge Anderson has set forth the following standards: (i) 1-2 claims where no response filed by the creditor: no additional fees; (ii) 3 or more claims where no responses filed or responses filed but matters settled without a hearing: $250; (iii) 1 or more claims and a matter was contested: $250; (iv) matters of unusual complexity: attorney may keep contemporaneous time records and request additional compensation.

6. When filing a modified plan in a case where post-confirmation attorney's fees have been, or are going to be, awarded, please explain the fees in paragraph 2 something like this: "$2,500 approved in the initially confirmed plan, plus $250 awarded by Court order dated 11/2/08, plus $250 currently being sought by application for fees dated 3/17/10, for a total of $3,000." Such language will ensure that the attorney is paid by the Trustee all the fees to which he/she is entitled.

J. Sale or refinancing of debtors' property, loan modification, and 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 or modifying an existing loan. 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#29: 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.

For loan modifications: Judge Krumm requires 15 days notice to all creditors and the Trustee, and will allow negative noticing if the attorney certifies in the motion that there is no prejudice to creditors. Judge Anderson only requires that the Trustee be noticed. Both require that the Trustee endorse any order approving the modification. The Trustee asks that the loan modification agreement be attached to the motion, and that the motion state the following: the change in monthly payment, interest rate, and principal balance; the total of any fees and charges being assessed against the debtors; the amount of arrears being included in the new loan; and the amount of any cash being received by the debtors. Attorneys should review Local Rule 6004-3 regarding sale or refinance of property post-confirmation. If under the confirmed plan the Trustee was paying pre- or post-petition arrears to the mortgagee, the order must contain the following language.

"The Trustee shall make no further payments to this creditor on the arrearage portion of it secured claim after the date on which this Order is entered. This provision supersedes any language to the contrary in the confirmed plan and/or the Confirmation Order. The amounts paid to this creditor by the Trustee through the date of this Order on the arrearage portion of the creditor’s secured claim are hereby approved. If the Debtor defaults under the terms of the loan modification being approved herein or wants the Trustee for any other reason to resume making arrearage payments to this creditor, the Trustee will not be able to resume making payments to this creditor on the arrearage portion of its secured claim until either (i) a modified plan reinstating such payments has been confirmed by the Court, or (ii) the Trustee has been instructed to resume such payments by other order of this Court."

2. Notice to closing attorney: It will be the 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."

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#30: 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 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 the value of 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 as a result of this increase 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 and the net proceeds that the debtors will receive 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 prior approval from the Court. The $5,000 figure is the principal amount of new debt, and is a cumulative figure for the entire duration of the plan.

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. A sample motion is attached. [Form#31: PDF / RTF]

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. There is no Court-approved form for such an order, but the Trustee will endorse an order if the debtors are paid ahead or there is other good cause; usually no hearing will be required by the Court. Any such order should state the reason for the refund; the amount of the refund; the Trustee is not to charge any commission on the amount being refunded; and the refund will not reduce the total amount which the debtors are required to pay under the confirmed plan. A sample of such a motion is attached [Form#32: PDF / RTF]

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 sample of a motion and order to obtain such excess funds for the debtors is attached. [Form#33: PDF / RTF] “A copy of the standard letter which the Trustee sends to insurance companies and other parties to explain this process is attached. [Form#34: PDF / RTF] The Trustee recommends that any insurance proceeds come through his office, rather than be paid directly by the insurance company to the secured creditor, because otherwise the debtors' base gross (total of plan payments) will not be reduced by amount of the insurance proceeds.

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, a plan has not yet been confirmed, 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. If a plan has been confirmed, a simple order will be required.

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 the debtors will cure their default within a specified period of time or an amended plan will be filed within a specified period of time to cure any resulting default. [Form#35: PDF / RTF] It is Judge Anderson's requirement, and therefore the Trustee's policy, that any suspension of plan payments greater than 90 days must be noticed to all parties and heard by the Court; for periods of 90 days or less, only the Trustee need be noticed. If the Trustee is paying the ongoing mortgage payment in the Plan, the mortgagee must be noticed in either event, and its right to seek a lifting of the stay will not be affected by any suspension granted by the Court. (In determining whether the current request exceeds 90 days, all prior periods of suspension granted by the Court within the past twelve months will be added to the period being requested.) The Trustee will usually not recommend a period of suspension greater than 90 days absent extraordinary circumstances. 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. Judge Krumm requires a motion and order for a suspension, but no hearing is required if the Trustee endorses the order and the suspension is for a specific reason.

N. Notice required for modified plans that do not prejudice creditors: As of 9/07, the Clerk's Office is employing a different procedure involving modified plans that do not prejudice any creditors. The 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 been entered, the previously-set hearing date will be removed from the Court's docket.

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.

a. To incur debt: To save having to redo such motions if a expected 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 confirmed plan provides for the Trustee to pay arrears, but for whatever reason they are instead to be 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.

1. Conversion: It is the Trustee's position, based on the language of paragraph 3 of the form Chapter 13 plan, that he is required to distribute to creditors pursuant to the confirmed plan any funds in his possession as of the date the Court enters an order converting the case to another chapter. In a situation where a debtor obtained permission to sell his real estate, sent the proceeds to the Trustee, and then tried to convert his case to Chapter 7 and have the funds sent to the Chapter 7 Trustee, the Court agreed that the funds should be distributed by the Trustee pursuant to the debtor's confirmed plan. In re David and Mary Halterman, #07-50584, 6/8/10 opinion by Judge Krumm.

2. Dismissal: It is the Trustee's position, based on the language of paragraph 3 of the form Chapter 13 plan, that he is required to distribute to creditors pursuant to the confirmed plan any funds in his possession as of the date the Court enters an order dismissing a case based on the debtor’s request for dismissal. In a situation where a debtor obtained permission to obtain a reverse mortgage on his property and promised to send the proceeds to the Trustee to pay off his plan, and then tried to voluntarily dismiss his case and have the proceeds returned to him, the Court agreed that the funds should be distributed by the Trustee pursuant to the debtor’s confirmed plan. In re Arley J. McCreery, #09-60858, 8/30/10 opinion by Judge Anderson.

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 completed, 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 calendar days.)

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. No hearing is required.

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 with 11 U.S.C. sec. 1328." 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. In this Form the debtors are certifying, among other things, that they have taken the personal financial management course required by Code §1328(g).

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 evidence presented 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.

[Note: If the debtors fail to file the required certification form within the 60-day period, the case may be closed by the Court Clerk's Office without the issuance of a discharge. At present, the Court's policy is to close such cases without a discharge 30 days after the expiration of the 60-day period. The Court may, in some instances, allow the reopening of a case for the purpose of complying with this certification process.]

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 with 11U.S.C. sec. 1328"; 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]. Always check the Chapter 7 test first; if it has not been met, the other two tests are moot and no hardship discharge can be granted.

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.

Check local practice for the kinds of evidence that must be presented to the Court to obtain a hardship discharge. Judge Krumm, for example, requires clear evidence that any alleged disability is permanent. E.g., In re Stockton, #5-04-00792, 5/8/07 opinion; In re William and Catherine Shifflett, #05-50345, 12/14/07 opinion.

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. The notice alerts them to the issuance of the discharge and certain information about the debtor and any of his/her non-dischargeable debts. [Form#36: 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. Revocation of discharge. In re Cathy Knupp, #06-50342, Bankr. Ct., W.D. Va., 7/26/11 Krumm opinion [a case of first impression in the W.D. of Va; Court sets out the standards and elements that must be proven and finds that in this instance the discharge should be revoked].

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. The names and addresses of these agencies are in "the Green Booklet" given to each debtor at the creditors' meeting; this booklet is reproduced in the Debtors Information section of this website.

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. 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, etc.

3. 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.

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#37: 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.

C. Internet Resources for Bankruptcy Lawyers: Nova Southeastern University published in the summer of 2011 Legal Studies Paper No. 11-003 entitled "The Bankruptcy Lawyer's Guide to the Internet," by Pearl Goldman. It contains a variety of sites that practitioners might find helpful. The paper can be downloaded without charge from The Social Science Research Network Electronic Paper Collection

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

Debtor Attorney Information (Version #41, Last revised 10/24/11)

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