U.S. DEPARTMENT OF JUSTICE EXECUTIVE OFFICE FOR UNITED STATES TRUSTEES HANDBOOK FOR CHAPTER 7 TRUSTEES Effective October 1, 2012 TABLE OF CONTENTS 1. INTRODUCTION ............................................................................................................... 1-1 A. PURPOSE ............................................................................................................... 1-1 B. ROLE OF THE UNITED STATES TRUSTEE ...................................................... 1-1 C. STATUTORY DUTIES OF A TRUSTEE ............................................................. 1-2 2. APPOINTMENT TO THE PANEL OF TRUSTEES ......................................................... 2-1 A. ELIGIBILITY TO SERVE ON A PANEL ............................................................. 2-1 B. QUALIFICATIONS FOR PANEL MEMBERSHIP .............................................. 2-1 C. APPOINTMENT TO A PANEL ............................................................................. 2-3 D. ELIGIBILITY TO SERVE IN A CASE ................................................................. 2-3 E. APPOINTMENT OF PANEL TRUSTEES TO CASES ........................................ 2-3 F. METHOD OF CASE ASSIGNMENT .................................................................... 2-4 G. NON-PANEL TRUSTEES IN CONVERTED CASES ......................................... 2-5 H. INVOLUNTARY CASES ...................................................................................... 2-5 I. SUCCESSOR TRUSTEES ..................................................................................... 2-6 J. RESIGNATION OF A TRUSTEE .......................................................................... 2-6 K. TRUSTEE PROFESSIONALISM AND ETHICS ................................................. 2-7 CONFLICTS OF INTEREST ..................................................................... 2-7 USE OF TRUSTEE DESIGNATION ......................................................... 2-8 SOLICITATION OF GRATUITIES, GIFTS, OR OTHER REMUNERATION OR THING OF VALUE ............................................ 2-8 SELF-DEALING AND INSIDER TRANSACTIONS ............................... 2-8 L. TRUSTEE BONDS ................................................................................................. 2-9 3. DUTIES OF DEBTORS AND MEETING OF CREDITORS ........................................... 3-1 A. ELIGIBILITY FOR CHAPTER 7 AND VENUE .................................................. 3-1 B. INITIAL DOCUMENTS ........................................................................................ 3-1 C. FINANCIAL DOCUMENTS .................................................................................. 3-4 D. MEETING OF CREDITORS .................................................................................. 3-4 PRESIDING OFFICER ............................................................................... 3-4 SCHEDULING, NOTICING, RESCHEDULING, AND CONTINUANCES ...................................................................................... 3-4 MEDIA AND THIRD PARTY RECORDING........................................... 3-5 APPEARANCES ......................................................................................... 3-5 VERIFICATION OF DEBTOR IDENTITY AND SOCIAL SECURITY NUMBER .................................................................................................... 3-5 LANGUAGE INTERPRETERS ................................................................. 3-6 DISABILITY ............................................................................................... 3-6 i TABLE OF CONTENTS OATH .......................................................................................................... 3-6 CONDUCTING THE MEETING ............................................................... 3-7 QUESTIONING THE DEBTOR ................................................................ 3-7 INVOCATION OF FIFTH AMENDMENT BY THE DEBTOR .............. 3-8 RECORD OF MEETING ............................................................................ 3-8 NON-ATTENDANCE BY DEBTORS ...................................................... 3-9 NON-ATTENDANCE BY ATTORNEYS ................................................. 3-9 4. DUTIES OF A TRUSTEE IN THE ADMINISTRATION OF A CASE ........................... 4-1 A. INTRODUCTION ................................................................................................... 4-1 B. STATUTORY AND GENERAL DUTIES ............................................................. 4-1 C. COLLECTION AND LIQUIDATION OF ASSETS, 11 U.S.C. § 704(a)(1), AND ACCOUNTABILITY OF THE TRUSTEE FOR ALL PROPERTY RECEIVED , 11 U.S.C. § 704(a)(2) ....................................................................... 4-2 DETERMINATION AND ADMINISTRATION OF ASSET CASES ...... 4-3 DETERMINATION AND ADMINISTRATION OF NO-ASSET CASES ......................................................................................................... 4-3 FURTHER CONSIDERATIONS IN DETERMINING WHETHER TO ADMINISTER ASSETS ............................................................................. 4-3 a. INVENTORY OF ESTATE PROPERTY ............................................ 4-3 b. AUTOMATIC STAY ........................................................................... 4-4 c. EXEMPTIONS ..................................................................................... 4-4 d. VALUATION OF PROPERTY ........................................................... 4-5 e. ABANDONMENT OF ESTATE PROPERTY .................................... 4-5 f. CONTROL AND PRESERVATION OF ESTATE PROPERTY ........ 4-6 g. ENVIRONMENTAL ISSUES ............................................................. 4-7 CLAIMS BAR DATE ................................................................................. 4-7 TAX CONSIDERATIONS IN THE ADMINISTRATION OF ESTATE ASSETS ....................................................................................................... 4-7 a. OVERVIEW ......................................................................................... 4-7 b. INCOME TAXES ................................................................................. 4-8 c. EMPLOYMENT TAXES AND OTHER TAX FORMS ..................... 4-9 d. EMPLOYEE W-2 FORMS ................................................................ 4-10 e. SALES AND ABANDONMENTS .................................................... 4-10 f. PROPERTY TAXES ........................................................................... 4-10 ii TABLE OF CONTENTS g. PROCEDURES FOR DETERMINING ESTATE TAX LIABILITY ......................................................................................... 4-11 TURNOVER DEMANDS ........................................................................ 4-11 EXECUTORY CONTRACTS AND UNEXPIRED LEASES ................. 4-12 AVOIDANCE POWERS .......................................................................... 4-12 SALE OF ASSETS ................................................................................... 4-14 a. GENERAL STANDARDS ................................................................. 4-14 b. SALE FREE AND CLEAR OF LIENS ............................................. 4-15 c. SALE OF JOINTLY OWNED PROPERTY ...................................... 4-16 d. SALE OF ENCUMBERED PROPERTY .......................................... 4-16 e. INTERNET AUCTIONS AND SALES ............................................. 4-16 f. SALE OR LEASE OF PERSONALLY IDENTIFIABLE INFORMATION ................................................................................. 4-17 g. CONDUCT OF SALES ...................................................................... 4-17 h. PERIODIC PAYMENTS ................................................................... 4-17 EMPLOYMENT OF PROFESSIONALS................................................. 4-18 a. GENERAL STANDARDS ................................................................. 4-18 b. DEFINITION OF PROFESSIONALS ............................................... 4-18 c. EMPLOYMENT STANDARDS ........................................................ 4-19 d. EMPLOYMENT PROCEDURES...................................................... 4-20 e. SUPERVISION OF PROFESSIONALS ............................................ 4-20 f. TRUSTEE AS ATTORNEY OR ACCOUNTANT FOR THE ESTATE ..................................................................................... 4-21 g. AUCTIONEERS ................................................................................. 4-22 COMPENSATION AND EXPENSES OF TRUSTEES .......................... 4-24 COMPENSATION OF PROFESSIONALS ............................................. 4-24 CASE PROGRESS .................................................................................... 4-25 D. EXAMINE THE DEBTOR’S STATEMENT OF INTENTION, 11 U.S.C. § 704(a)(3) ............................................................................................ 4-26 E. INVESTIGATE THE FINANCIAL AFFAIRS OF THE DEBTOR, 11 U.S.C. § 704(a)(4) ............................................................................................ 4-26 F. EXAMINE PROOFS OF CLAIM, 11 U.S.C. § 704(a)(5).................................... 4-26 REVIEW OF CLAIMS ............................................................................. 4-26 OBJECTIONS TO CLAIMS..................................................................... 4-27 iii TABLE OF CONTENTS TRUSTEE FILING PROOFS OF CLAIM ............................................... 4-28