Cite as: Keith M. Lundin, Lundin On Chapter 13, § 43.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
In a perfect storm for debtors, as BAPCPA trundled toward enactment,1 the Advisory Committee on Bankruptcy Rules of the Judicial Conference of the United States considered proposed new rules regarding the disclosure of information by consumer debtors. A forceful proponent of new disclosures was the Director of the Executive Office of the United States Trustee. The Director petitioned the Advisory Committee to add rules requiring debtors to supply bankruptcy trustees with additional documents and information without the necessity of requests in individual cases. Not all of the Director’s suggestions were accepted but, almost simultaneously with the passage of BAPCPA, the Advisory Committee reported a rewrite of Rule 4002 that includes a new subsection (b) entitled “Individual Debtor’s Duty to Provide Documentation.”
Parts of new Interim Rule 4002(b) approximate the new debtor duties in § 521 to provide tax returns to the trustee2 and to timely requesting creditors.3 But the Advisory Committee went significantly further than Congress did in BAPCPA. Interim Rule 4002(b)(1) instructs that every individual debtor “shall bring to the meeting of creditors” all of the following:
(1) Personal Identification. Every individual debtor shall bring to the meeting of creditors under § 341:
(A) a picture identification issued by a governmental unit, or other personal identifying information that establishes the debtor’s identity; and
(B) evidence of social security number(s), or a written statement that such documentation does not exist.
(2) Financial Information. Every individual debtor shall bring to the meeting of creditors under § 341 and make available to the trustee the following documents or copies of them, or provide a written statement that the documentation does not exist or is not in the debtor’s possession:
(A) evidence of current income such as the most recent payment advice;
(B) unless the trustee or the United States trustee instructs otherwise, statements for each of the debtor’s depository and investment accounts, including checking, savings, and money market accounts, mutual funds and brokerage accounts for the time period that includes the date of the filing of the petition; and
(C) documentation of monthly expenses claimed by the debtor when required by § 707(b)(2)(A) or (B).4
There are five categories of new documentation required by Interim Rule 4002(b), all of which must be physically brought to the § 341 meeting in every Chapter 13 case. First, there is a picture identification issued by a governmental unit. In the alternative, the debtor can supply personal identifying information that establishes the debtor’s identity. There is no clue what “other” identifying information would suffice. If the debtor doesn’t have a picture I.D. issued by a governmental unit, would a “private” picture I.D. be enough? Would anything that doesn’t include a picture of the debtor be satisfactory? Some banks and check-cashing services issue picture I.D.s, but these businesses are not governmental units. Who will decide whether the personal identifying information supplied by the debtor is sufficient—the Chapter 13 trustee? the U.S. trustee?
The I.D. mandate in Interim Rule 4002(b) is a not quite a perfect reflection of § 521(h), as amended by BAPCPA. The new statute requires, “if requested by the United States trustee or by the trustee,” the debtor shall provide a “document” that establishes the identity of the debtor, “including a driver’s license, passport or other document that contains a photograph of the debtor” or the debtor can supply such other “personal identifying information relating to the debtor that establishes the identity of the debtor.”5 Interim Rule 4002(b)(1)(A) requires a picture identification “issued by a governmental unit”—a requirement found nowhere in the statute. Absent entirely from the new rule is the predicate that picture identification is not required unless first requested by the U.S. trustee or by the Chapter 13 trustee. That predicate appears in other subsections of Interim Rule 4002(b),6 but is omitted entirely with respect to the picture identification requirement in Interim Rule 4002(b)(1)(A).
Second, Interim Rule 4002(b)(1)(B) requires evidence of the debtor’s social security number or “a written statement that such documentation does not exist.” This is not the first occasion in every Chapter 13 case that the Bankruptcy Rules require the debtor to prove a social security number. Bankruptcy Rule 1007(f), effective December 1, 2003, requires every Chapter 13 debtor to “submit a verified statement that sets out the debtor’s social security number, or states that the debtor does not have a social security number.”7This statement—Official Form 21—must be submitted “with the petition.”8 With Interim Rule 4002(b)(1)(B), every Chapter 13 debtor must bring to the meeting of creditors evidence of a social security number or bring another written statement that evidence of the social security number does not exist. Doing this twice seems to hold meaning for someone.
The third new documentation required of Chapter 13 debtors at the meeting of creditors is “evidence of current income such as the most recent payment advice.”9 If “payment advice” sounds familiar, it’s because BAPCPA contains a new statutory duty that every individual debtor file copies of “all payment advices or other evidence of payment” received from an employer within the 60 days before the petition.10 The statutory requirement focuses on the 60 days before the petition. Interim Rule 4002(b)(2)(A) wants “the most recent” payment advice as an example of evidence of current income. The meeting of creditors in a Chapter 13 case must be scheduled between 20 and 50 days of the petition.11 Payment advices for last month or two months ago must not be current enough for the rules drafters.
With respect to evidence of current income and the other financial information discussed below, Interim Rule 4002(b)(2) states that the debtor has the alternative of providing “a written statement that the documentation does not exist or is not in the debtor’s possession.” The third option—“not in the debtor’s possession”—is not offered for evidence of social security numbers or the picture identification discussed immediately above. Neither does this third alternative appear in other subsections of Interim Rule 4002(b) with respect to tax returns that must be provided to the trustee or to a timely requesting creditor.12 Was this lack of parallelism intended? Why would it be okay for the debtor to state that the most recent payment advice is not in the debtor’s possession but it is not okay to state that the debtor’s social security card is not in the debtor’s possession?
The fourth new documentation requirement at the meeting of creditors is statements for bank accounts, investment accounts, money market accounts, brokerage accounts and the like. This new requirement is prefaced by “unless the trustee or the United States trustee instructs otherwise.”13 The message here is that the Chapter 13 trustee can “instruct otherwise” with respect to financial information but can’t instruct otherwise with respect to redundant proof of the debtor’s social security number or evidence of more current income than the payment advices filed with the petition. The statements required by Interim Bankruptcy Rule 4002(b)(2)(B) must be for the “period that includes the date of the filing of the petition.” Statements of many depository and investment accounts will not exist for the period that includes the petition when the meeting of creditors is scheduled between 20 and 50 days from the petition. How will the trustee or the U.S. trustee “instruct otherwise”? By letter? By public announcement?
Finally, new Interim Rule 4002(b)(2)(C) instructs Chapter 13 debtors to bring to the meeting of creditors “documentation of monthly expenses” when required by § 707(b)(2)(A) or (B). Discussed elsewhere,14 when the debtor’s current monthly income exceeds applicable median family income, upon proper objection to confirmation, the disposable income test in § 1325(b) defines “amounts reasonably necessary to be expended—” in accordance with the abuse test in § 707(b)(2)(A) and (B). Within the abuse test, the over-median-income Chapter 13 debtor can claim higher expenses or additional expenses if the debtor “provides documentation.”15
Interim Rule 4002(b)(2)(C) will not apply to most Chapter 13 debtors because most Chapter 13 debtors will have current monthly income less than applicable median family income and will not be subject to any part of the § 707(b) abuse test at confirmation. Chapter 13 debtors with over-median incomes who claim additional expenses that require documentation under § 707(b)(2)(A) or (B) will have to bring that documentation to the meeting of creditors.
It would have been helpful for the new rule to suggest what “documentation” suffices for § 707(b)(2)(A) or (B) purposes. Unlike most of the other new requirements in Interim Rule 4002(b)(1) and (2), documentation of additional monthly expenses of an over-median income Chapter 13 debtor is actually required by the Bankruptcy Code, as amended by BAPCPA. But the statute provides no guidance about what constitutes documentation in this context. Neither does the new Interim Rule.
One thing is for sure about Interim Rule 4002(b): there is a lot of new work ahead for debtors, for debtors’ attorneys and for Chapter 13 trustees. Debtors’ attorneys will need to provide lists of the documents that debtors must bring to the meeting of creditors. Somehow, debtors’ attorneys must review those documents before the meeting of creditors and prepare the written statements for documentation that does not exist. Going cold into a meeting of creditors with a debtor carrying a stack of documents is an invitation to real trouble in Chapter 13 cases. Chapter 13 debtors will need copies of some or all of those documents, and it is anything but obvious how copying will be accomplished in the context of the typical Chapter 13 meeting of creditors. There are significant logistical issues here for debtors’ attorneys.
What are Chapter 13 trustees going to do with the mountains of documents they will get from debtors under this new rule? The Committee Note to Interim Rule 4002 states that the materials provided to the trustee “would not be made available to any other party in interest at the § 341 meeting of creditors . . . . Some of the documents may contain otherwise private information that should not be disseminated.”16 The Committee certainly said a mouthful. Imagine a meeting of creditors at which the Chapter 13 trustee is questioning the debtor from a stack documents just delivered by the debtor and none of the creditors sitting at the same table can look over the trustee’s shoulder. Can the Chapter 13 trustee ask the debtor questions about information in those documents without revealing the content of the documents? Not hardly. What information contained in those documents is private or confidential? Is it just the social security number of the debtor or the names of the debtor’s children?
The Committee Note to Interim Rule 4002 also states that the Rule “does not require that the debtor create documents or obtain documents from third parties; rather, the debtor’s obligation is to bring to the meeting of creditors under section 341 the documents which the debtor possesses.”17 It is unfortunate that the various subsections of new Interim Rule 4002(b) discussed above inconsistently permit the debtor to indicate that a required document does not exist or is not in the debtor’s possession. The comment is broader than the rule itself.
Arguments are likely that portions of new Interim Rule 4002(b) are inconsistent with the Code, as amended by BAPCPA. On what authority rests a new rule that requires payment advices different from the payment advices Congress requires in new § 521(a)(1)(B)(iv)? When the statute requires the debtor to file proof of a social security number, what basis is there for a rule that requires the debtor to swear a second statement of that same social security number? Much of Interim Rule 4002(b) is at least bad policy if not plainly inconsistent with the statute as amended by BAPCPA.
What are the penalties or consequences if a Chapter 13 debtor fails to provide documentation required by new Interim Rule 4002(b)? As discussed above, some of the new documentation requirements in Interim Rule 4002(b) mirror, however inaccurately, Code sections added by BAPCPA, and there are specific statutory consequences for a Chapter 13 debtor’s failure to perform some of those new statutory duties. For example, the Chapter 13 debtor who fails to file the 60 days of payment advices required by new § 521(a)(1)(B)(iv) may find that the case is automatically dismissed on the 46th day after the petition under § 521(i)(1).18 What is the consequence if the debtor fails to bring a more recent payment advice to the meeting of creditors as mandated by new Interim Rule 4002(b)(2)(A)? Will Chapter 13 trustees move to dismiss when debtors don’t bring all the right stuff to the meeting of creditors? That Interim Rule 4002(b) presumes to impose documentation requirements that are other than and different from the specific similar duties now in the Code itself will be an issue raised by debtors in defense of any such motion by the trustee.
1 See § 361.1 [ A Short History, Including “Legislative History,” of BAPCPA ] § 2.2 Brief History, Including “Legislative History,” of BAPCPA for discussion of the history of BAPCPA.
2 See Interim Bankr. R. 4002(b)(3) and 11 U.S.C. § 521(e)(2)(A)(i), discussed in § 390.1 [ Tax Return Duties Seven Days before First Scheduled Meeting of Creditors ] § 42.5 Tax Return Duties Seven Days before First Scheduled Meeting of Creditors.
3 See Interim Bankr. R. 4002(b)(4) and 11 U.S.C. § 521(e)(2)(A)(ii), discussed in § 392.1 [ Tax Return Duties—On Request ] § 42.7 Tax Return Duties—On Request.
4 Interim Bankr. R. 4002(b)(1), (2).
5 11 U.S.C. § 521(h)(1), (2).
6 See, e.g., Interim Bankr. R. 4002(b)(2)(B), discussed below.
7 Fed. R. Bankr. P. 1007(f).
8 Fed. R. Bankr. P. 1007(f).
9 Interim Bankr. R. 4002(b)(2)(A).
10 11 U.S.C. § 521(a)(1)(B)(iv), discussed in § 376.1 [ Payment Advices ] § 42.3 Payment Advices.
11 See Fed. R. Bankr. P. 2003(a), discussed in § 42.1 [ Timing and Procedure ] § 43.1 Timing and Procedure.
12 See Interim Bankr. R. 4002(b)(3) and (4), discussed in §§ 390.1 [ Tax Return Duties Seven Days before First Scheduled Meeting of Creditors ] § 42.5 Tax Return Duties Seven Days before First Scheduled Meeting of Creditors and 392.1 [ Tax Return Duties—On Request ] § 42.7 Tax Return Duties—On Request.
13 Interim Bankr. R. 4002(b)(2)(B).
15 See, e.g., 11 U.S.C. § 707(b)(2)(A)(ii)(V) (an allowance for housing and utilities in excess of the Local Standards for Housing and Utilities based on actual expense for home energy costs if the debtor provides documentation). See § 484.1 [ Home Energy Costs ] § 95.27 Home Energy Costs.
16 Committee Note, Interim Bankr. R. 4002.
17 Committee Note, Interim Bankr. R. 4002.
18 See § 388.1 [ Consequences of Failure to File Required Information, Including “Automatic Dismissal” ] § 42.2 Consequences of Failure to File Required Information, Including “Automatic Dismissal”.