Cite as: Keith M. Lundin, Lundin On Chapter 13, § 53.18, at ¶ ____, LundinOnChapter13.com (last visited __________).
BAPCPA subjects Chapter 13 debtors to audits by the U.S. trustee.1 Approximately one out of every 250 randomly selected consumer debtors, and every Chapter 13 debtor whose schedules of income and expenses “reflect greater than average variances from the statistical norm of the district,” will be audited consistent with procedures to be established by the Attorney General.2 This auditing process takes effect 18 months after the April 20, 2005, enactment date of BAPCPA.
The statutory mandate to establish audit procedures and to conduct audits are addressed to the Attorney General and the U.S. trustee. For reasons not altogether obvious, BAPCPA amended § 521—the section defining Debtor’s Duties—to add these odd instructions about audits, debtors and Chapter 13 trustees:
(3) if a trustee is serving in the case or an auditor serving under section 586(f) of title 28, cooperate with the trustee as necessary to enable the trustee to perform the trustee’s duties under this title;
(4) if a trustee is serving in the case or an auditor serving under section 586(f) of title 28, surrender to the trustee all property of the estate and any recorded information, including books, documents, records, and papers, relating to property of the estate, whether or not immunity is granted under section 344 of this title.3
Perhaps something intended was omitted or misstated, but as amended by BAPCPA, § 521(a)(3) requires the Chapter 13 debtor to cooperate with the Chapter 13 trustee as necessary to enable the trustee to perform the trustee’s duties when an auditor is serving under 28 U.S.C. § 586(f). The Bankruptcy Code is silent with respect to any duty of a Chapter 13 trustee when an audit is performed by the U.S. trustee under 28 U.S.C. § 586(f). Perhaps the procedures that BAPCPA requires the Attorney General to establish will flesh out the unspecified duties of Chapter 13 trustees with which the Chapter 13 debtor must cooperate.
It is equally hard to make sense of the new duty in § 521(a)(4). An auditor serving under 28 U.S.C. § 586(f) might want access to some or all of the recorded information, documents, records and other papers that the Chapter 13 debtor is directed to surrender to the Chapter 13 trustee. If auditors for the U.S. trustee request papers, documents and financial records from the debtor, there is the problem that § 521(a)(4) requires Chapter 13 debtors to surrender all such books, records and papers to the Chapter 13 trustee. Will two copies of everything be required of debtors who are subject to audits by the Justice Department?4
1 See § 396.1 [ Audits by U.S. Trustee ] § 42.11 Audits by U.S. Trustee.
2 See 28 U.S.C. § 586(f) and Pub. L. No. 109-8, § 603, 119 Stat. 23 (2005), discussed in § 396.1 [ Audits by U.S. Trustee ] § 42.11 Audits by U.S. Trustee.
3 11 U.S.C. § 521(a)(3) and (4), discussed in § 396.1 [ Audits by U.S. Trustee ] § 42.11 Audits by U.S. Trustee.
4 In a Chapter 7 case, a Chapter 7 debtor who fails to make available for inspection all papers, documents, financial records and other papers or property requested for an audit pursuant to 28 U.S.C. § 586(f) faces revocation of discharge under 11 U.S.C. § 727(d)(4)(B), as amended by BAPCPA. There is no analogue to § 727(d)(4)(B) in Chapter 13 cases.