Minutes from the September 13, 2007 Meeting

Minutes of the Bench Bar Committee
Topeka Courtroom 210
September 13, 2007

Members Present: Emily B. Metzger, Committee Chair
William Griffin, Chapter 13 Representative
Hon. Janice M. Karlin, Judges Representative
Richard Wieland, Acting US Trustee Representative
Jay Befort
Chelsea Herring
Thomas Barnes
Jeffrey Deines
Susan Saidian
Christopher Redmond

Guest(s) Present: Hon. Robert D. Berger

Court Staff Present: Hugh Zavadil, Clerk’s Representative

The meeting was called to order at 9:44 a.m. Emily Metzger welcomed the committee. New members of the committee were introduced.

Emily explained that the Minutes from the previous meeting had been approved via an electronic mail vote. She then introduced a brief discussion of Section 707(b) motions. Judge Karlin explained that these motions are set directly to the docket. Without a response deadline, these cases often have to be continued because the debtor(s)’ defense is unknown to the U.S. Trustee. Richard observed that he would try to make noticing uniform throughout the District. Richard agreed to work with Hugh on developing a procedure with the Clerk’s office. Judge Karlin also reminded the US Trustee representative that AUSTs can often appear by telephone, if scheduled in advance, to minimize extensive travel for them.

Susan Saidian noted that nothing further has been proposed regarding the D. Kan. L.B.R. 2002 modification, which was discussed at the April meeting. She agreed to contact Emily to have the matter placed on a future agenda if more discussion is necessary.

Emily introduced a discussion which was a carry-over from the last meeting, regarding what motions/hearings, etc. need to be filed/conducted to close Chapter 13 cases upon plan completion. Bill Griffin agreed to contact his counterparts and try to develop a standard procedure to ensure that all statutory requirements are met. Some of the BAPCPA changes deal with making sure the debtor is current on DSOs, making sure the debtor has completed the personal financial course, and making a finding that 522(q)(1) is not applicable to the debtor and that no pending felony charge exists implicating federal securities law and that debtor has no debt incurred during the prior 5 years arising out of a criminal act, intentional tort, or willful/reckless conduct causing serious physical injury or death. Judge Karlin noted that the matter was discussed at a recent Judges’ meeting and the Judges requested that the Chapter 13 Trustees make a proposal rather than having the Court impose a solution.

Judge Karlin explained the background leading to the Court’s adoption of D. Kan. Bk. S.O. 07-02. She noted that the Court is not “out to get” mortgage companies. Instead, they are trying to minimize problems associated with mortgage payment changes. It is anticipated that the Standing Order will help both debtors and mortgage creditors. She also noted that any feedback on the operation of the Standing Order should be routed to members of the Bench-Bar Committee. If it becomes evident that the Standing Order needs to be modified, the Court will undertake such revision at the request of the Committee. Judge Karlin also noted that feedback on this, or any other issue, can be circulated to the full committee via electronic mail between Bench-Bar Committee meetings.

Chelsea Herring indicated that she had heard some concerns that paragraph (b)(7) of the new Standing Order did not specify a time frame for submitting notice of default to the debtor. Judge Karlin explained that while the Court did not want to specify a hard and fast time frame, any notice provided under this section should give debtor(s)/debtor(s)’ counsel adequate time to respond before the subsequent Motion for Relief from Stay is filed.

Emily noted that the sub-committee responsible for developing the first draft of this Standing Order engaged in lively and spirited discussion. While there are a number of concerns about the Standing Order, the group felt that this Order represented the best compromise between debtor and creditor interests. The consensus of the group was that we should see how the implementation of this Standing Order plays out, and respond if or when problems become apparent.

Judge Karlin updated the Committee on procedures adopted by the Clerk to issue a ‘reminder” notice, to Chapter 13 debtors, regarding the requirement to complete a post-petition course in financial management before the final payment under the plan. The notice will be issued by the Clerk’s office six months after case filing. Hugh advised the group that the Clerk’s office is now issuing these notices, starting with the oldest post-BAPCPA cases, which are the closest to discharge.

Emily introduced the discussion of proposed D. Kan. L.B.R. 3010. Judge Karlin observed that she regularly receives motions from the Chapter 13 trustee for court approval of very small distributions to unsecured creditors. Bill Griffin suggested that this rule would permit the Chapter 13 Trustees to clean up cases with small amounts of money for distribution. Chris Redmond noted that the examples listed in the proposed Rule were probably inappropriate. It was recommended that the examples form the basis for the “comments” on the proposed Rule when published for public comment, and that they be deleted from the rule, itself. Judge Karlin moved and Tom Barnes seconded to adopt the proposed L.B.R., as amended. The motion passed unanimously (Note: a copy of the Rule, which will become effective March 2008, will be posted on the court’s website).

Emily introduced the discussion of the pending changes to Federal Bankruptcy Rules which are to become effective December 1, 2007 (copies of the proposed Federal Rules and related Committee Notes are posted at : http://www.uscourts.gov/rules/newrules6.htm#proposed0805 ).

The proposed new rule, Fed. R. Bankr. P. 9037, was discussed at length. This proposed rule requires the redaction of all but the last four digits of social security numbers and financial account numbers in all pleadings filed with the Court. Some trustees have suggested that checks sent to creditors without those financial account numbers [currently listed in schedules or on the Proof of Claim] will cause payments to be returned to the trustee.

Tom Barnes noted that he has never included those numbers in schedules because the practice lends itself too easily to identity theft. Emily, likewise, expressed concerns about identity theft . It was noted that the Court’s PACER system is periodically scoured by data miners. It was also noted the D. Kan. L.B.R. 4002.2 would permit the trustee to obtain account number information directly from debtor(s)/debtor(s)’ counsel without requiring debtor file that information with the Court.

Bill Griffin said that his office currently uses an introductory letter to all debtors shortly after the case is filed. He suggested that he may modify that letter to include a request for financial account numbers for payment processing. Chris Redmond told the group that several years ago he surveyed creditors, because of the volume of returned payments he received. He found out that the complete name and address were the most important pieces of information in matching payments. After his office started including the address of the debtor on all payments, they receive much less returned mail.

Bill indicated that he would contact Jan and Laurie to work out information requests so that debtors receive consistent requests regardless of where they file. Proposed Fed. R. Bankr .P. 9037, together with Committee Notes, can be viewed at the following web site: http://www.uscourts.gov/rules/Rules_Publication_August_2005.pdf#page=47 . It was also suggested that minutes include hyperlinks to the new rules.

Hugh also noted that an additional package of Federal Rules, scheduled to become effective on December 1, 2008, have been published for public comment. These rules are available at: http://www.uscourts.gov/rules/index2.html#proposedpub . The public comment period for these changes extends until February 15, 2008.

Bill Griffin introduced a discussion about the proposed Confirmation Order developed by the three standing Chapter 13 Trustees. He noted that there are still disagreements about vesting (specifically, whether vesting occurs at confirmation or at case conclusion).

Chris Redmond shared a concern he had heard when he circulated the proposed Confirmation Order to other Chapter 7 Trustees for review prior to the meeting. He said that several jurisdictions had local rules determining that tax refunds, pending at the time of conversion, become the property of the Chapter 7 estate upon conversion. Judge Karlin observed that while we may not develop a uniform Confirmation Order used throughout the district, the possibility exists for a more consistent order, particularly between the Kansas City and Topeka offices.

Bill Griffin indicated some reservations about the paragraph of the proposed order that prevents the debtor from incurring additional debt during the pendency of the plan. He noted that in some other jurisdictions, trustees are allowed discretion to authorize debtors to incur debt up to a specified limit (e.g., $2,000), without filing a motion, pursuant to § 1305(c). After discussion, it was noted that specifying a limit might unnecessarily restrict trustee discretion in the matter. Judge Berger and Judge Karlin agreed that they would discuss the issue with the other judges. Judge Karlin also suggested that the Judges might make some other minor revisions to the confirmation order.

Emily announced the formation of an ad hoc committee, appointed by the judges, to study the possibility of requiring debtors in Chapter 13 cases to make mortgage payments through the plan when a debtor is delinquent on mortgage payments at the time of filing, or becomes delinquent during the pendency of the case. The committee, which consists of Chelsea Herring, Tracy Robinson, David Fricke, Frank Ojile, David Lund , William Griffin, Jan Hamilton, and Laurie Williams, and Judge Nugent as the chair, will meet September 14, 2007. Judge Karlin explained that the Judges are exploring this possibility in the hope that it permits debtors to stay current with home mortgage payments, improves mortgage payment record-keeping, and provides creditors with more timely payments. The committee will discuss a number of issues with the proposal including: handling the first few (pre-confirmation) payments, trustee fees, employer withholding orders, and the need for Local Rules and/or Standing Orders to support the proposal. Judge Karlin also suggested that if any member of the Bar has comments or suggestions regarding the matter, he/she should contact a member of the ad hoc committee.

The date for the March 2008 meeting will be decided and circulated via electronic mail. The meeting was adjourned at 12:53 p.m.
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