The United States Trustee
The Office of the United States Trustee is supposed to guard against preceived bankruptcy abuse. In reality, there was no factual basis for the passage of bankruptcy “reform” in 2005. In our bankruptcy practice, we find that people generally fall into one or more of the following three categories: The bankruptcy is due to (1) divorce, (2) unemployment (3) medical disability or bills. Usually it is a combination of all three. In general, people do NOT simply run up large bills intentionally and walk away from them. Very few people filing bankruptcy are well-to-do individuals trying to cheat the system and stiff their creditors. According to a 1999 study by federal bankruptcy judges, the average person filing for bankruptcy earns just $22,000 per year. Most have suffered a significant period of unemployment before filing.
According to a report by Consumers Union, publisher of the well-respected Consumer Reports magazine, 85% of elderly debtors cite medical or job problems as the reason for bankruptcy. Consumers Union also says that single moms trying to make ends meet make up a large portion of bankruptcy filers.
Half of all bankruptcies are triggered by sudden uninsured medical expenses, according to a recent Harvard study by Professor Elizabeth Warren.
The Office of the US Trustee is a large office of taxpayer funded federal bureaucrats charged with administering every bankruptcy case filed. This government agency justifies its existence, in part, by demonstrating how many bankrupt families it can prosecute for a violation of the bankruptcy laws — with the end goal of getting your case dismissed.
Statistically, the chances of your case being the target of a audit and a dismissal motion are quite small. Nevertheless, it does happen. And unfortunately, it can sometimes happen without good cause and without a sound legal basis.
Results count. In a recent case handled by William A. Morris, P.C., the U.S. Trustee moved to revoke the discharge of a single, impoverished, divorced woman. The Trustee’s actions were based on nonsense from her former spouse. The case against our client was thin and rested largely upon the former spouse’s testimony. Nevertheless, the government abused its discretion and the staff attorney for the U.S. Trustee’s Office refused to back off. Following trial, the bankruptcy court entered judgment on behalf of our client and the our law firm prevailed. This client preserved her right to walk away from tens of thousands of dollars of debt.
The actual Office of the U.S. Trustee is not to be confused with the panel trustee you will see at your bankruptcy hearing. The panel trustee is actually an independent contractor of the Office of the U.S. Trustee. For the most part, the panel trustee is looking for non-exempt property in your case that the trustee can sell for the benefit of your creditors. However, most property is exempt and cannot be taken from you. Protecting your property is a primary function of your bankruptcy attorney.
Sometimes creative, but perfectly legal, maneuvers can be used to protect your property. More often than not, the exact timing of your bankruptcy filing is critical. And in other instances, people who recently moved to Colorado (within the last two or three years) may be able to take advantage of property exemptions available in the state where they used to live — exemptions which often are much more favorable than Colorado’s restrictive exemptions. Click here for a blog entry demonstrating how an attorney can save you thousands of dollars over an attempt to file your own case.