Trustee Blog

US Trustee Questions for 707(b)

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Riverside Trustee Howard Grobstein’s job is to make sure the chapter 7 debtors qualify for chapter 7 and not a chapter 13. If Mr. Grobstein and his staff feel the debtor does not qualify, they refer the matter to the US Trustee.

 

Recently the US Trustee’s representative appeared at a creditors hearing. The Trustee asked the basic questions and the the matter was turned over to the US Trustee. The representative asked the debtor about her dependents. The petition stated that she had a grandchild as a dependent. The rep. asked how old was the grandchild and the debtor said 5 years old. Then the rep asked if the debtor supported the grandchild and she said “yes”. This was important since the means test qualified her at a household of three but not of two. The rep. was satisfied with the answer.

Listening to the hearing, the questions could have been avoided if a note had been placed on schedule I or J of the petition to explain the grandchild was 5 years old and was fully supported by the grandmother. In the previous edition of schedules, Schedule I would have provided for the age of the dependent. Now the dependent and his or her age placed in the schedule J. It appears from the US Trustee’s questions, that the age was not placed, nor was the relationship.

Another question that was asked was whether she had been employed for the last six months. She said that she changed jobs about two months before. The rep then asked if the job change was voluntary? The debtor said yes and no. The rep could see that there was something with the first job but then he decided not to ask about it.

It turns out that under that means test, in the last six months there was only five months of paychecks. This is important since it appeared that with a six paycheck, the debtor would not have qualified. The matter was concluded by the trustee, but the US Trustee’s representative said that they would review the matter with the US Trustee’s attorney. So it will be interesting to see if these facts warrant a 707(b) abusive motion.

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