Do you ever feel like this (lol moment)?

[gemsnroses00]

Do you ever feel like this.. That your trustee is like the 'great wizard', "the man behind the curtain" from the Wizard of Oz LOL!? I have never personally meet or talked to our trustee because she had a fill-in the day of the meeting, but I'm always on edge waiting to hear what she has to say via our attorney, and a bit frightened at all time when she's involved! She hasn't been unfair or anything like that, and after all she is just a person doing her 'job', but dang just something about her title that makes me feel like she has superpowers or something LOL! Can anyone relate??

[justbroke]

Well, I was a Chapter 13 pro se debtor. I actually had to attend two hearings where the Trustee herself was there. I managed to get her to approve (agree to) my confirmation, after sitting with her assistant and a creditor attorney to review my Plan in a conference room. I actually had to correct the Trustee's assistant on one aspect of a Chapter 13 Plan. In any event, I was never frightened by the Chapter 13 Trustee.

Now, the Chapter 7 Trustee... that's another story! He did attend and chair my 341 Meeting and was a pretty nice guy (if your paperwork was in proper order).

The one I would worry about is the U.S. Trustee. Most people never even hear about the UST.

[paulsk]

justbroke: I am just curious, when does the UST come into the picture?

I had my 341 in April and waiting on my discharge, didn't have much of an issue with the trustee. Few general questions and got over in 5 mins.

[Pizza]

I google-searched my Ch7 trustee and UST just out of curiosity and more or less got to know them without ever meeting them. The Ch7 trustee actually worked for a BK law firm here. LOL. Mainly, they have their hands full. Everything from your run-of-the-mill Ch7 to major corporate reorganizations. If nothing in your paperwork sticks out like a sore thumb, it is doubtful that they would devote much effort into thwarting your personal BK case.

[tobee43]

Pizza true story i have to tell....someone i know filed in MA and the UST was the same one as Bernard Madoff!!!!!! now one would likely think what your wrote as very true, and i think i agree with in general, however, not in the case of this filing. i think or i'm getting the idea there are "special" UST they handle cases in the millions because this person was also scrutinized by the UST! but not by the states trustee. interesting.

[justbroke]

justbroke: I am just curious, when does the UST come into the picture?

I apologize for the late response. The UST administers the bankruptcy code. They are responsible for maintaining the integrity of the bankruptcy program. They randomly audit bankruptcy cases, and are the ones to object and seek dismissal (or conversions) of certain bankruptcies.

If you know nothing about them, and you are past your 341 Meeting... you don't need to know anything about them! It's always best when you never even hear the words United States Trustee or have one at your 341 Meeting.

Since the UST is not interested in your case, you will have a nice quiet 60 days.

[tobee43]

jb, one would wonder or at least i would just what sort of percentage of cases are scrutinized by the USTs? in think it would be interesting to know. what triggers them and what doesn't?

[Pizza]

Tobee, I've been trying to dig up some statistics for my area. No such luck. However, getting obsessed for hours on end I've probably dug up every easy-to-find story of a UST overturning BKs and there is a pattern of lavish lifestyles, sneaky misdoings, and/or a heckuva lot more income than I've ever seen. Plain ole boring BKs, though earth-shattering for the filer, are less likely to be of much interest to a UST.

[justbroke]

I don't understand any lavish lifestyle for the United States Trustee (UST). They are paid no more than a senior U.S. Attorney. The UST does not earn any commission.

The UST is tasked with auditing (less than) 0.5% of cases, or about 1 in every 250 cases. This is the so-called "automatic" audit where a case is randomly chosen. As for scrutinizing the cases, I would say that every case over the median income, would be scrutinized. Since we are using the median, it would be those that are in the upper half of the income ranges... the "above median" filers. It is probably close to 50% of cases, if the median income is correctly established. In other words, about 50% of filers are probably above median and subject to the UST. However, not all cases are filed as Chapter 7s, so the number of filers subjected to the UST's scrutiny would be lower in Chapter 7 cases.

At least, that's my assessment.

[paulsk]

JustBroke: Thanks for your response.

I got the discharge yesterday and it was closed on the same day. I am slightly over median and filed for Ch.7. The UST did not come to the 341 meeting, and I am not sure if they scrutinized my case either. But, it was classified as an asset case at first and changed later.

[justbroke]

The asset determination should not affect what the UST does. Trust me, the UST reviewed your case as you were over the median. I was over the median (by a very significant amount, think multiples), and the UST did not appear. I was a non-consumer case. The UST probably found that your expenses were in line with standards or justified and there was no reason to challenge your Means Test or schedules.

Congratulations!

[LadyInTheRed]

I don't understand any lavish lifestyle for the United States Trustee (UST). They are paid no more than a senior U.S. Attorney. The UST does not earn any commission.

I think Pizza was referring to the debtors in the cases where the US Trustee got involved.

[justbroke]

I think Pizza was referring to the debtors in the cases where the US Trustee got involved.

Oops. It is those debtors again? My apologies to pizza for the confusion. I only saw "lavish" and "UST" and somehow went to defend the UST. There are certainly cases where the debtor leads a "lavish" lifestyle, including celebrities, and they still get to file and receive a discharge in a Chapter 7 bankruptcy.

[Pizza]

Ah yes, that's what I meant. Sorry if my post was confusing. The pattern of DEBTORS having something that gets the UST's attention.

[Pizza]

The UST is tasked with auditing (less than) 0.5% of cases, or about 1 in every 250 cases. This is the so-called "automatic" audit where a case is randomly chosen....

I saw this a while back, in re: those 1 in 250 case audits. Apparently, they were (at least temporarily) suspended in April?

When Congress overhauled the Bankruptcy Code in 2005, it directed bankruptcy watchdogs to ferret out fraud by auditing consumer debtors—audits those watchdogs can no longer afford.

The U.S. Trustee Program—the arm of the Justice Department that monitors corporate and consumer bankruptcy filings—last month said it has “indefinitely suspended” the auditing process “due to budgetary constraints.” A USTP spokeswoman declined to elaborate, but this isn’t the first time that a tight budget has interfered with or halted the audits.

The Bankruptcy Code amendments of 2005 authorized U.S. trustees to randomly designate for audit one out of every 250 consumer bankruptcy cases per federal judicial district. The Code also authorized audits of any cases in which debtors posted statistically unusual income or expenditures. Trustees select the cases but don’t perform the audits; instead, that job falls to independent accountants.

The 2007 fiscal year saw random audits of “at least one out of every 250 consumer cases” per judicial district, according to a USTP report. But the following three fiscal years saw that rate reduced to one out every 1,000 consumer cases per district due to “budgetary constraints.” The auditing rate was reduced even further in the 2011 fiscal year to one of every 1,700 cases, but the audits were suspended for the last few months of that year and through the first three months of the 2012 fiscal year. While USTP resumed random audits between January and October 2012, it did so for one out of every 1,450 consumer case per district.

(Full article from WSJ)

This would mean that only the typical red flags (over-median, bizarre expenses, etc.) would drive the scrutiny, at least for the time being. I found it interesting that only 1/4th of the target was being achieved.