Unfortunately, large-scale natural disasters affected hundreds of thousands of Americans in 2017. The Federal Emergency Management Agency (FEMA) reported a historic year of natural disasters. FEMA reported that disasters affected 8% of the U.S. Inevitably some people filing for Bankruptcy protection will be affected by natural disasters. The United States Trustee Program has released considerations that “shall” guide the enforcement activities of bankruptcy trustees in the event of a natural disaster.
Document Requirements for Bankruptcy
The inability of a debtor to provide required documents because of a natural disaster will not be a barrier to bankruptcy relief.
“United States Trustees shall not file enforcement motions against debtors who are unable, as a result of a natural disaster, to file or produce documents required by the Bankruptcy Code, if they otherwise are eligible for bankruptcy relief. Further, United States Trustees should generally not oppose any reasonable requests filed with the court by debtors seeking relief from filing requirements due to a natural disaster.”
When a debtor earns more income than the state’s median income, adjusted for household size, in the six months leading up to filing bankruptcy, there is a presumption of abuse that must be overcome. This presumption can be overcome by running the Means Test and demonstrating that relief under Chapter 7 bankruptcy is warranted.
For debtors who are affected by natural disasters, the bankruptcy trustee is to “consider the adverse impacts of a natural disaster,” and has discretion in deciding whether to file an objection to the bankruptcy.
“In determining whether to file an enforcement action on grounds of presumed abuse, United States Trustees shall consider the adverse impacts of a natural disaster, including a major decline in anticipated income or a major increase in anticipated expenses, to constitute “special circumstances” for purposes of rebutting the presumption of abuse.”
Attendance at the Meetings of Creditors
With rare exception, every person who files for bankruptcy protection must attend a Meeting of Creditors, also known as a “341 Hearing.” While debtors who have been affected by a natural disaster must still attend the Meeting of Creditors, they may be able to do so in a remote or alternate location. Debtors are still required to be sworn in and to show acceptable personal identification.
“When, due to a natural disaster, debtors are unable to appear personally in the district where the case is filed for the mandatory section 341 meeting of creditors, United States Trustees shall exercise flexibility and offer alternative means for attendance. The debtors, however, must be able to present acceptable personal identification to the individual administering the oath in the alternate location.”
Know that if you have been affected by a natural disaster and have filed bankruptcy or are about to file for bankruptcy, the United States Trustee Program has enforcement guidelines in place to help you.
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