Chapter 13 Debtor Education
The Fort Worth Way
By Tim Truman, Chapter 13 Trustee
	
	The Fort Worth Division of the Northern District of Texas started a Chapter 13 debtor education program in 1984.  Inspired by existing programs in North Carolina, San Antonio and El Paso, Texas, and Columbus, Ohio, the primary goal is to “assist the debtor in performance under the plan” per 11 USC 1302(b)(4).
	The debtor seminar in Fort Worth evolved over the 20 years from several short evening and Saturday classes to a single class held on the same day and in the same location as the debtor’s 341 meeting.   Both husband and wife are required to attend if they have filed a joint bankruptcy petition.  The seminar lasts four hours, beginning after the conclusion of the scheduled 341 meetings.  The average number of debtors per class is 100.  Classes are held in Fort Worth each Tuesday and two Fridays per month.  Although attendance is not specifically mandated by the Bankruptcy Code or by court order, the trustee requires such attendance as a condition to recommendations at confirmation concerning the debtor’s good faith and the feasibility of the plan.  Debtor education has become such an accepted and appreciated part of local culture that attendance is not an issue.  
	The debtor seminar begins with opening remarks by the trustee prior to starting 341 meetings.  A video presentation on the Chapter 13 legal and administrative process is shown several times during the morning for those debtors not directly involved in a 341 meeting at a particular time.  
	The afternoon session includes instruction and written materials on communication and personal planning, money management, wise use of credit, and importance of monitoring credit reports during and after bankruptcy.  Instructors use materials published by the Trustees’ Education Network (TEN).   TEN is a non-profit corporation set up by the National Association of Chapter Thirteen Trustees to assist Chapter 13 trustees who want to develop a debtor education program.  In addition to the instructor for the class, a representative of the Internal Revenue Service talks to the debtors about how the bankruptcy will affect any future income tax refunds and answers questions from the debtors.  Based on evaluations received by the trustee, the debtors are most interested in the steps in the Chapter 13 process, the effect of the bankruptcy on income tax refunds, practical budgeting suggestions, and how to prepare for the future when they are no longer in Chapter 13.   The trustee also offers more comprehensive voluntary two-hour classes on budgeting as well as an exit class for debtors preparing to reenter the world of credit after conclusion of a Chapter 13 plan.
	A recent innovative enhancement to the debtor seminar has been a “Status Conference” personally conducted by Fort Worth Bankruptcy Judge Dennis Michael Lynn.  He holds these after the 341 meetings in the same room where the seminar is taught.  Judge Lynn stresses the importance of each individual case and the fact that Chapter 13 is a judicial proceeding overseen by a federal court.  He offers suggestions and tips to debtors beginning their Chapter 13 cases.  He also answers some frequently asked questions.   
	The following are some excerpts of remarks frequently made by Judge Lynn as he addresses questions that the debtors are likely to have while they are in Chapter 13 and as he encourages them to place a high priority on doing their part in the Chapter 13 process: 

 What if there is a change in the information I originally filed?   Contact your attorney with any changes to the information originally filed.   Filing Chapter 13 is a federal judicial proceeding. You should place the highest priority on your case.  It is important to be honest and complete in every document because many of the required papers are filed under the penalty of perjury.  Tell your attorney about any address changes, job changes, or creditors you may have overlooked.   

 What if I have an emergency and cannot make a timely payment?   Payments must be made on time in order to keep your case from being dismissed.  If you cannot make a payment on time, call your attorney immediately.  Your lawyer can contact the trustee’s office.  The trustee handles thousands of cases.  With this large volume, no one will call you from the trustee’s office if you miss a payment.  The trustee’s office will automatically file a motion to dismiss.  Unless a timely response to the motion is filed, the trustee will present the order to dismiss to the judge, who will probably sign the order unless he has heard from your attorney.  Therefore, it is important to take responsibility for your case and to communicate regularly with your attorney’s office when needed.   

 What can I do to make the Chapter 13 process run smoothly?  Keep an eye on the mail.  Open and answer any mail from the court, your attorney, or the trustee’s office.  Assume all related mail contains a refund, and open it immediately.  Potential problems can be stopped before they get out of control.  It can be compared to going to the doctor.   If you find a lump where a lump should not be, you call your doctor immediately.  Practice this same “medicine” with your attorney.   

 What if I move?  Once again, communication is key.  Cases have been dismissed because the debtors left no forwarding address, and neither the trustee nor the attorney could locate them.   Update your address with the trustee’s office every time you move. 
  
 How do I know if my case is completed?  Cases have also been dismissed because a debtor accidentally miscounted the number of payments.   Do not make assumptions about the completion of your case.  Take responsibility for your personal situation, and stay in touch with your attorney.  You do not want to discover that your case was dismissed when you are turned down later for a loan due to an incomplete bankruptcy. 

	At each status conference, Judge Lynn shares a true story about President Truman.  At one point in his life, Harry S. Truman was in financial crisis and was forced to declare bankruptcy.  At that time there was no Chapter 13 or 11 provisions in the law.  However, Harry Truman personally paid back every one of his creditors one-hundred percent.  Years later when he moved into politics, his bankruptcy was not a blot on his record but a mark of his honor.  

	Judge Lynn tells the debtors: “For those of you repaying all or most of your creditors, Chapter 13 can be a mark of honor as well.  Remember, bankruptcy should be a one-time event.  Go to the classes provided by the trustee’s office, keep in touch with your attorney, and let your Chapter 13 process become a turning point in your life and your financial future.”

	The response from the debtors to the judge’s presentation has been very favorable.  They are impressed that he has taken the time and made an effort to talk to them and given their consumer case the same priority and attention as the large Chapter 11 business cases.  

	Based on many years of experience, comments from debtors, and feedback from the local bar, the trustee believes that a debtor education program does provide a benefit to debtors and creditors.  Debtors seem receptive and appreciative of information presented in a non-threatening classroom environment.  Although hard to quantify, giving them a better idea of what is going to happen, what is expected of them, and what the consequences might be of some of their decisions sets a tone conducive to better performance under the plan.

For additional information on Chapter 13 debtor education contact:
Tim Truman, Chapter 13 Trustee: joant@ch13ftw.com
Hon. Dennis Michael Lynn, U.S. Bankruptcy Judge:  Beth_Jenkins@txnb.uscourts.gov 
Trustees’ Education Network: aimee@jee.com

Reprinted from NCBJ Conference News, Summer 2004