CHAPTER 7 CHAPTER 7 PRACTICE TRENDS

• Jurisdiction: United States

CHAPTER 7 - CHAPTER 7 PRACTICE TRENDS

Debtors and their attorneys face close scrutiny in chapter 7 cases. A chapter 7 trustee will carefully review a debtor's past and current financial situation to maximize any distribution to creditors, as well as fee agreements and disclosures. Chapter 7 focuses on chapter 7 practice trends.

A trustee's obligation under §§ 544 and 548 to avoid preferential payments can be shocking to debtors as well as the person who received the payment. Trustees often seek to avoid payments made by debtors for their children's education. Pre-filing investigation and planning is important to protect those education payments. There may be some defenses to a trustee's avoidance. For example, payments made from a 11 U.S.C. § 529 education savings account are not subject to avoidance. There may be other defenses where the education payments are required for the support and care of a minor child. Attorneys should anticipate the trustee's attempts to avoid the preferential payments and be ready to raise those defenses.

The chapter 7 trustee and U.S. Trustee review attorneys' fee agreements and required disclosures. Attorneys' fees are...