DOJ Reissues Policy Easing Bankruptcy Guidelines for Debtors Affected by Natural Disasters

Bankruptcy trustees are encouraged to follow guidelines previously established for debtors affected by a natural disaster.

September 14, 2017

Effective September 14, 2017, the Department of Justice, Executive Office for United States Trustee issued a memorandum reminding bankruptcy trustees to follow relaxed natural disaster guidelines established initially in 2005 in response to Hurricane Katrina.

Specifically, the United States Trustee Program’s Enforcement Guidelines for Bankruptcy Debtors Affected by Natural Disasters call for a bankruptcy trustee to do the following when a debtor (filer) is affected by a natural disaster:

  • Refrain from taking action against a debtor who is unable to produce bankruptcy documents.
  • Accommodate reasonable requests to ease filing requirements.
  • Consider decreased income or anticipated high expenses a special circumstance.
  • Allow for alternate accommodations if a debtor cannot attend the 341 meeting of creditors at the assigned location.
  • Take into account the difficulty a debtor might have in securing required credit and debt counseling before recommending a case dismissal.
  • Refrain from taking action against a Chapter 11 small business debtor who cannot attend an initial interview, file a financial report or disclosure statement, or confirm a reorganization plan.
  • Refrain from objecting to the location of a particular case (venue) unless it constituted an abuse of the bankruptcy system.

Debtors suffering adverse consequences due to a natural disaster should not hesitate to request special bankruptcy accommodations when needed. Go here for the complete text of the memorandum and guidelines.

For an overview of the financial documents normally required in bankruptcy, read Gathering Your Documents for Bankruptcy.

Effective date: September 14, 2017