When Do You Find Out If a Trustee Is Going to Challenge Your Filing for Bankruptcy?

Bankruptcy trustees mail opposition notices to debtors when challenging a case.

The trustee opposes discharging or confirming the bankruptcy case when the debtor fails to fulfill his obligations. Typically, the trustee files an opposition to the case within a couple of months after the case is filed. Debtors must diligently read court notices in order to timely respond to any trustee oppositions and prevent the case from being dismissed. How a debtor should respond to the trustee's opposition depends on the circumstances of the case.

Trustee Opposition

Trustee files the notice of opposition with the bankruptcy court if the debtor needs to submit documents verifying the information in the bankruptcy petition or if the debtor failed to provide proof that credit counseling and the debtor's education course were completed. A trustee opposition may also be based on the debtor's failure to create a Chapter 13 payment plan that is feasible. There could be additional reasons for the opposition that are dependent on the factors of the individual case. The notice states each item that needs to be addressed in order to proceed with the case. The trustee mails a copy of the notice to the debtor and the debtor's attorney.

Debtor Compliance

Generally, when the debtor promptly complies with the trustee's requests in the opposition notice, the trustee will proceed with the case. The debtor is responsible for fulfilling the trustee's requests as soon as possible in order to prevent any type of prejudicial delay for creditors and the administration of the case. Staying in contact with the trustee is beneficial. It is important to keep the trustee apprised of the situation and inform him of the steps being made to fulfill the requests.

Motion to Dismiss

When the debtor fails to comply with all of the requests listed in the opposition, the trustee proceeds to file a motion to dismiss with the court. The motion states why the trustee recommends dismissal of the case. A hearing date is set so that the debtor has time to file an objection to the motion. If the bankruptcy judge grants the motion to dismiss, the debtor's case will be closed without a discharge.

Debtor's Objection to Motion to Dismiss

The debtor and debtor's attorney receive a copy of the motion to dismiss and are advised of the deadline for filing an objection with the court. When the debtor is contesting the reasons for dismissal, the objection should list any extenuating circumstances that are applicable, reasons why the court shouldn't dismiss the case, and provide exhibits to support the debtor's arguments. If the judge denies the motion or if the trustee decides to withdraw the motion based on the debtor's objections, the debtor can proceed with the case.

References

• Cornell University Law School: Federal Rules of Bankruptcy Procedure
• Cornell University Law School: §704 Duties of Trustee
• U.S. Department of Justice: About the United States Trustee Program & Bankruptcy
• U.S. Courts: Bankruptcy Basics