§ 53.5     Advise and Assist Debtor
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 53.5, at ¶ ____, LundinOnChapter13.com (last visited __________).

The Chapter 13 trustee has a statutory duty to advise and assist the debtor in performance under the plan, but the trustee is prohibited from giving legal advice and is not a substitute for effective debtor’s counsel.1 The trustee also has important fiduciary responsibilities to creditors. These roles inevitably conflict, rendering the trustee an inadequate advocate for individual debtors.


There is a fine line between advising and assisting the debtor and giving legal advice. The Chapter 13 trustee can maintain a lawsuit against a creditor on the debtor’s behalf without violating the proscription against legal advice to the debtor.2 On unusual facts, one court of appeals chided the Chapter 13 trustee for violating the obligation to assist debtors when the trustee recovered an overpayment to a creditor in one Chapter 13 case by withholding payments to that same creditor in an unrelated Chapter 13 case.3


In some jurisdictions, the standing trustee provides extensive counseling and education to all Chapter 13 debtors in the form of videotapes or seminars that the debtor may be required to attend. Advice is included regarding budgeting, credit, shopping, transportation, housing and the like. In other jurisdictions, the Chapter 13 trustee plays no role other than to receive and disburse funds. It has been held that it is appropriate for a Chapter 13 trustee to provide financial counseling to a debtor.4


The Bankruptcy Court for the Southern District of Ohio has broadly conceived the role of the Chapter 13 trustee to advise and assist debtors:

[I]t is the view of this Court that the Trustee is far more than a mere disbursing agent and has the statutory authority and ability to assist eligible debtors in their credit transactions that occur between confirmation and consummation of the plan. Standing chapter 13 Trustees should be encouraged by the U.S. Trustee Program to make reasonable efforts to provide credit rehabilitation services to chapter 13 debtors both pre- and post-consummation. It is only through such efforts that cycles of poor financial judgment can be broken and debtors can be returned to the market and credit community with a greater likelihood of success.5


1  11 U.S.C. § 1302(b)(4).


2  Boyajian v. Associates Fin. Servs. Co. (In re Sherman), 13 B.R. 259 (Bankr. D.R.I. 1981) (Trustee is permitted to maintain truth-in-lending action against a creditor without violating 11 U.S.C. § 1302(b)(4).).


3  Ford Motor Credit Co. v. Stevens (In re Stevens), 130 F.3d 1027 (11th Cir. 1997).


4  Gulf Petroleum, S.A. v. Marrero, 7 B.R. 586 (Bankr. D.P.R. 1980). See In re Kutner, 3 B.R. 422 (Bankr. N.D. Tex. 1980).


5  In re Brown, 170 B.R. 362, 366 (Bankr. S.D. Ohio 1994).