Procedures Governing Administrative Review of a United States Trustee's Decision To Deny a Chapter 12 or Chapter 13 Standing Trustee's Claim of Actual, Necessary Expenses

Introduction by Vijay Malik

A debtor’s bankruptcy filing under chapter 12 and 13 includes a plan whereby the debtor pays her creditors a percentage of the amount owed to them over a certain period of time.  Upon confirmation by the bankruptcy court, a standing trustee will administer the plan under the supervision of a regional United States Trustee.  Trustees incur expenses in administering the plan and are authorized to receive a certain percentage from the debtor’s plan payments to compensate for these costs.  Prior to payment, a trustee must obtain approval from the United States Trustee by submitting projected expenses for the fiscal year.  If the budget is approved, the trustee will be notified pursuant to 28 U.S.C. 586(e); if denied, under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a trustee has the right to obtain administrative review of their “claim of actual, necessary expenses” as outlined in 28 U.S.C. 586(e)(3).

BAPCPA requires trustees to exhaust all potential administrative remedies prior to seeking judicial review and the Department of Justice’s recently published Rule, effective June 30, 2011, attempts to ensure the review process is both fair and effective. Pursuant to the Rule, a trustee must request review within 21 days after receiving a notice of denial of expenses from the United States Trustee.  The United States Trustee must also respond to a trustee’s request for review within 21 days.  Moreover, the review process cannot be delayed without reason by setting long deadlines when the United States Trustee seeks to obtain additional information from the trustee.  To read the text of the Rule, in addition to public comments, please visit:

http://www.gpo.gov/fdsys/pkg/FR-2011-05-31/pdf/2011-12187.pdf


Vijary Malik
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Mr. Malik is a law student at Creighton University in Omaha, Nebraska. Prior to law school, Mr. Malik worked in real estate private equity and investing banking for various firms in New York and Washington, D.C.

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