![](media/image1.wmf){width="6.375in" height="7.125in"}*United States
Trustee Program*

*Fiscal Year 2008 Budget Request*

January 26, 2007

Table of Contents

Page Number

I.  Overview ........3

II. Summary of Program Changes ........5

III. a\. Appropriations Language and Analysis of Appropriations
     Language\...8

> b\. General Provision
> Language......................................................9

IV. Decision Unit Justification ......10

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A.  Decision Unit: Administration of Cases \.......10

> 1\. Program Description
>
> 2\. Performance Tables
>
> 3\. Performance, Resources, and Strategies

V.  Exhibits\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....26

> A. Organizational
> Chart..................................................................27
>
> B. Summary of
> Requirements.........................................................\...28
>
> C. 2008 Program Increases/Offsets by Decision Unit
> ...............................N/A
>
> D. Resources by DOJ Strategic
> Goal/Objective.......................................29
>
> E. Justification of Base
> Adjustments............................................. ......30
>
> F. Crosswalk of 2006 Availability...........................
> ...........................31
>
> G. Crosswalk of 2007
> Availability......................................................32
>
> H. Summary of Reimbursable Resources...........................
> ...................33
>
> I. Detail of Permanent Positions by
> Category..........................................34
>
> J. Financial Analysis of Program
> Changes............................................N/A
>
> K. Summary of Requirements by
> Grade.................................................35
>
> L. Summary of Requirements by Object
> Class........................................36

I. Overview for the United States Trustee Program (USTP)

![](media/image2.png){width="1.1020833333333333in"
height="1.2763888888888888in"}

-   For FY 2008, the U.S.Trustee Program (USTP) requests a total of
    [1,519]{.underline} permanent positions (388 attorneys),
    [1,486]{.underline} workyears, and [\$231,899,000,]{.underline} an
    increase of [\$5,462,000]{.underline} over the FY 2007 appropriation
    estimate of 1,519 positions, 1,486 workyears, and \$226,437,000.

> **Mission of the United States Trustee Program**: The USTP mission is
> to promote integrity and efficiency in the nation's bankruptcy system
> by enforcing bankruptcy laws, providing oversight of private trustees,
> and maintaining operational excellence.

Introduction

The nation's bankruptcy laws are premised on the notion that honest, but
needy debtors should be able to receive a fresh start and return to
becoming productive members of society.

The USTP's mission, as set forth in Strategic Objective 2.6 of the
Department's Strategic Plan for Fiscal Years 2003-2008, buttresses these
laws by ensuring that they are fairly enforced.

The President signed into law, the Bankruptcy Abuse Prevention and
Consumer Protection Act (BAPCPA) of 2005 (P.L. 109-8) in April 2005. The
BAPCPA, which took effect October 17, 2005, provides important statutory
tools to assist the USTP in identifying and civilly prosecuting
misconduct by debtors and others who misuse the bankruptcy system.

The fraud and abuse provisions of the BAPCPA strengthened the USTP's
enforcement efforts, including the National Civil Enforcement
Initiative, which targets those who file false, misleading, or
inaccurate bankruptcy papers; debtors who can repay creditors or whose
wrongful conduct disqualifies them for a discharge; debtors who
reorganize and fail to follow through with their obligations under
bankruptcy law; attorneys who do not satisfy their obligations in a
case; bankruptcy petition preparers who do not comply with the law; and
others, including creditors, who prey on vulnerable debtors using fraud
and deceptive practices. The combined results of these efforts deter
abuse, maximize the returns to creditors, and strengthen the laws to
ensure that relief is appropriately granted.

In FY 2008, the USTP will continue its enforcement of the new law that
took effect October 17, 2005, including the means testing, credit
counseling, debtor education, debtor audit and the small business and
other chapter 11 provisions.

> Issues, Outcomes, and Strategies
>
> *The UTSP's mission is included entirely in the Department of
> Justice's Strategic Goal 2.6: Protect the Integrity and Ensure the
> Effective Operation of the Nation's Bankruptcy System. The USTP's
> strategic objectives are listed below:*

-   *Enforce compliance with federal bankruptcy laws and take civil
    actions against parties who abuse the law or seek to defraud the
    bankruptcy system.*

-   *Pursue violations of federal criminal laws pertaining to bankruptcy
    by identifying, evaluating, referring, and providing investigative
    and prosecutorial support of cases.*

-   *Promote the effectiveness of the bankruptcy system by appointing
    and regulating private trustees who administer bankruptcy cases
    expeditiously and maximize the return to creditors.*

-   *Ensure financial accountability, compliance with the Bankruptcy
    Code, and prompt disposition of chapter 11 bankruptcy cases.*

[]{.mark}

The FY 2005-2010 USTP Strategic Plan includes three goals for the USTP
that flow from the DOJ Strategic Plan: 1) Protect the integrity of the
nation's bankruptcy system, 2) Promote effectiveness and efficiency
within the nation's bankruptcy system, and 3) Maintain operational
excellence that achieves desired results through continuous improvements
in administration and services. Program goals are linked to objectives
and measures, which are contained in the Performance Table of the
budget.

In addition, the USTP invests in the development of information and
decision support systems. These efforts and investments enhance USTP
e-government capacities and make operations more effective and
efficient. The USTP's efforts in information technology are guided by
its Information Technology Strategic Plan, incorporating the Information
Technology Investment Management (ITIM) process and an Executive
Resources Board to support informed decision-making.

In January 2006, the Office of Management and Budget (OMB) completed its
joint review of USTP operations under the Program Assessment Rating Tool
(PART) and awarded the USTP its highest rating of Aeffective.@ The
USTP=s numerical score placed it among the top 15 percent of highly
performing agencies in the Executive Branch. The PART rating reflected
the USTP=s efforts over the past five years to adopt performance-based
management systems, including better measurements of results achieved
and tying programmatic success to budget formulation.

*The FY 2007 PART assessment for the USTP indicated program
effectiveness.*

> Full Program Costs

The USTP budget is contained in one decision unit, the Administration of
Cases. The decision unit encompasses all operational activities and
includes the direct cost of all outputs, indirect costs, and common
administrative systems. There are two main USTP activities: 1)
enforcement and 2) case and trustee administration. The workyears and
associated funding are allocated to these Program activities based upon
the direct labor hours of the USTP staff performing enforcement and case
and administrative activities, as well as resources directly related to
the performance of these activities. For example, the costs for chapter
7 trustee audits are attributed to the trustee oversight activity, as
are hours for trustee supervision.

Performance Challenges

**[External Challenges]{.underline}** The USTP faces a number of
external challenges. It must work cooperatively with the federal
Judiciary to implement and administer bankruptcy law. For example, the
USTP continues to work with the courts to widen the use of data enabled
"smart" forms and schedules necessary for the means testing provisions
of the BAPCPA. The USTP is litigating challenges to the new statue as
well as addressing issues relative to other stakeholders in the
bankruptcy system. These challenges are made more difficult because the
USTP does not control the rate of bankruptcy filings, hence it has no
control over its workload. In addition, the USTP's funding is entirely
fee based, so the USTP must operate within the annual revenue it
collects. Finally, the USTP faces challenges in detecting evolving and
innovative schemes of fraud and deceit that affect the bankruptcy system
as it implements the BAPCPA.

**[Internal Challenges]{.underline}** The USTP continues to face
internal challenges resulting from the passage of the BAPCPA. The USTP
must retain highly qualified staff to carry out its expanded
responsibilities under the Act. The USTP also needs to refine and
maintain information technology and data solutions to assist in
enforcing provisions of the law. Furthermore, the USTP continues to face
challenges in adapting policies and procedures pursuant to BAPCPA and
completing new data collection requirements necessary to prepare
required reports. Finally, the USTP must ensure uniformity nationwide in
enforcing the provisions of the new law.

**II. Summary of Program Changes**

  ---------------- -------------------- ------ ------ ------------- ---------
  Item Name        Description                                      Page

                                        Pos.   FTE    Dollars       
                                                      (000's)       

  Adjustments to   Inflationary changes ...    ...    \$5,462       Exhibit E
  Base                                                              
  ---------------- -------------------- ------ ------ ------------- ---------

**U.S. Trustee System Fund**

The self-funding characteristics of the USTP were a feature of Public
Law 99-554 enacted on October 27, 1986. Two categories of fees generate
most of the revenue for the U.S. Trustee System Fund. The first category
is the filing fee paid at the inception of each case for chapters 7, 11,
12 and 13, and the second category is the quarterly fees paid by chapter
11 debtors. The chapter 11 quarterly fees are determined by the cash
disbursement levels of the debtor. All fees are deposited in the Fund as
offsetting collections and are available to the USTP as specified in
Appropriations Acts. Debt collection receipts, payment of excess
percentage fees collected by chapter 12 or 13 trustees, and interest on
invested funds also generate revenue for the Fund. Revenue in the Fund
that is not needed for current expenses is invested in Treasury
securities, and the income so earned accrues to the Fund.

The following chart displays the revenue collected in FY 2005 and FY
2006 and projections for FY 2007 and FY 2008.

**[Revenue Collected in FY 2005:]{.underline}**

**[Amount]{.underline}**

Bankruptcy Fees:

Filing Fees \$73,870,863

Chapter 11 Quarterly Fees 110,721,232

Other 153,233

Interest earnings on investments [4,871,457]{.underline}

**TOTAL DEPOSITS** 189,616,785

**[Revenue Collected in FY 2006:]{.underline}**

**[Amount]{.underline}**

Bankruptcy Fees:

Filing Fees \$57,862,173

Chapter 11 Quarterly Fees 100,458,286

Other 143,370

Interest earnings on investments [9,085,026]{.underline}

**TOTAL DEPOSITS** 167,548,855

**[Revenue Projections for FY 2007:]{.underline}**

**[Amount]{.underline}**

Bankruptcy Fees:

Filing Fees \$108,579,503

Chapter 11 Quarterly Fees 92,576,922

Other 150,000

Interest earnings on investments [5,000,000]{.underline}

**TOTAL DEPOSITS** 206,306,425

**[Revenue Projections for FY 2008:]{.underline}**

**[Amount]{.underline}**

Bankruptcy Fees:

Filing Fees \$116,771,866

Chapter 11 Quarterly Fees 117,391,117

Other 150,000

Interest earnings on investments [5,000,000]{.underline}

**TOTAL DEPOSITS** 239,312,983

III\. a. Appropriations Language and Analysis of Appropriations
Language[^1]

United States Trustee System Fund

For necessary expenses of the United States Trustee Program, as
authorized, \[\$236,116,000\] ***[\$231,899,000]{.underline}***, to
remain available until expended and to be derived from the United States
Trustee System Fund: Provided, That notwithstanding any other provision
of law, deposits to the Fund shall be available in such amounts as may
be necessary to pay refunds due depositors*.*

**Analysis of Appropriation Language**

No substantive changes proposed.

III. b\. General Provision Language and Analysis of General Provision

*Sec. 110 (a). Section 1930(a) of title 28, United States Code, is
amended in paragraph (6) by striking everything after "whichever occurs
first". and inserting in lieu thereof:*

> *"The fee shall be \$325 for each quarter in which disbursements total
> less than \$15,000; \$650 for each quarter in which disbursements
> total \$15,000 or more but less than \$75,000; \$975 for each quarter
> in which disbursements total \$75,000 or more but less than \$150,000;
> \$1,625 for each quarter in which disbursements total \$150,000 or
> more but less than \$225,000; \$1,950 for each quarter in which
> disbursements total \$225,000 or more but less than \$300,000; \$4,875
> for each quarter in which disbursements total \$300,000 or more but
> less than \$1,000,000; \$6,500 for each quarter in which disbursements
> total \$1,000,000 or more but less than \$2,000,000; \$9,750 for each
> quarter in which disbursements total \$2,000,000 or more but less than
> \$3,000,000; \$10,400 for each quarter in which disbursements total
> \$3,000,000 or more but less than \$5,000,000; \$13,000 for each
> quarter in which disbursements total \$5,000,000 or more but less than
> \$15,000,000; \$20,000 for each quarter in which disbursements total
> \$15,000,000 or more but less than \$30,000,000; \$30,000 for each
> quarter in which disbursements total more than \$30,000,000. The fee
> shall be payable on the last day of the calendar month following the
> calendar quarter for which the fee is owed."*

(b) *This section and the amendment made by this section shall take
    effect January 1, 2008, or the date of the enactment of this Act,
    whichever is later.*

**Analysis of General Provision Language**

The proposed language amends 28 U.S.C. § 1930(a)(6) to increase the
quarterly fee imposed in each case filed pursuant to chapter 11 of title
11, United States Code. The fee would take effect for the quarter
beginning January 1, 2008 or the date of enactment of the Appropriations
Act, whichever is later. There is no effect on outlays.

IV\. Decision Unit Justification

**A. Decision Unit Administration of Cases**

  ---------------------------------- ---------- ---------- ---------------
  Decision Unit Administration of    Perm. Pos. FTE        Amount
  Cases                                                    

  2006 Enacted with Rescissions      1,468      1,325      \$214,402

  2006 Enacted with Rescissions and  1,468      1,325      214,402
  Supplementals                                            

  2007 President's Budget            1,519      1,486      226,437

  Adjustments to Base and Technical  ...        ...        5,462
  Adjustments                                              

  2008 Current Services              1,519      1,486      231,899

  2008 Program Increases             ...        ...        ...

  2008 Request                       1,519      1,486      231,899

  Total Change 2007-2008             ...        ...        5,462
  ---------------------------------- ---------- ---------- ---------------

  ---------------------------------- ---------- ---------- ---------------
  Decision Unit: Administration of   Perm. Pos. FTE        Amount
  Cases-Information Technology                             
  Breakout                                                 

  2006 Enacted with Rescissions      38         35         23,132

  2006 Enacted with Rescissions and  38         35         23,132
  Supplemental                                             

  2007 President's Budget            38         37         16,725

  Adjustments to Base and Technical  ...        ...        ...
  Adjustments                                              

  2008 Current Services              38         37         16,725

  2008 Program Improvements          ...        ...        ...

  2008 Request                       38         37         16,725

  Total Change 2007-2008             ...        ...        ...
  ---------------------------------- ---------- ---------- ---------------

1.  Program Description

The U.S. Trustee Program operates in 88 judicial districts through a
system of 21 regions defined pursuant to 28 U.S.C. Section 581(a). Each
region is headed by a U.S. Trustee whose basic authority is conferred
under 28 U.S.C. Section 586. U.S. Trustees are appointed by the Attorney
General to five-year terms, subject to removal by the Attorney General.
Each U.S. Trustee maintains a small regional staff that usually consists
of an administrative officer, computer specialist, and clerical
assistant. They supervise a cadre of Assistant U.S. Trustees who head 95
field offices located in 46 states.

The USTP's Executive Office is headed by the Office of the Director,
which provides comprehensive policy and management direction to the U.S.
Trustees and their staff, and directly supervises the operations of the
Executive Office for U.S. Trustees (EOUST). The Office of the Director
also has the primary responsibility for liaison with the Department,
Congress, the bankruptcy courts, private trustee organizations, and
other stakeholders in the bankruptcy system (e.g., professional
associations and debtor and creditor bar representatives). Included
within the Office of the Director are the Civil and Criminal Enforcement
Units and the Credit Counseling and Debtor Education Unit. EOUST also
includes the Office of General Counsel, the Office of Review and
Oversight, the Office of Research and Planning, and the Office of
Administration.

The President signed P.L. 109-8, the Bankruptcy Abuse Prevention and
Consumer Protection Act (BAPCPA) of 2005 on April 20, 2005. The Act
provided the USTP with new tools to enhance the integrity and efficiency
of the bankruptcy system for the benefit of all parties and in the
public interest.

Despite the difficulties presented by the unprecedented surge in filings
in the four weeks leading up to the implementation of the BAPCA, the
USTP has made great progress implementing and enforcing many of the new
law=s important provisions. Moreover, the USTP has acquired valuable
information in enforcing new statutory provisions and in carrying out
new responsibilities that were not previously part of its mission. The
USTP expects to be engaged in a significant amount of litigation as
bankruptcy courts are called upon to interpret new statutes for the
first time. The BAPCPA provided substantial new responsibilities to the
USTP primarily, but not exclusively, in five major areas: means testing;
credit counseling and debtor education; small business chapter 11s;
debtor audits; and studies and data collection.

[Means Testing]{.underline}

The means testing provisions of the BAPCPA provide an objective approach
for assessing a debtor=s eligibility for chapter 7 relief. Under the
means test, debtors with income above their State median income are
presumed abusive if they have a certain level of disposable income after
the deduction of expenses allowed under a statutory formula. The United
States Trustees (USTs) are the primary enforcers of the law. Among other
things, United States Trustees must file a statement within ten days
after conclusion of the section 341 meeting of creditors if the case is
presumed abusive. Thereafter, within thirty days, the UST must file a
motion to dismiss the case or provide an explanation as to why such a
motion is not warranted.

The USTP has worked extensively with the Judicial Conference=s Advisory
Committee on Bankruptcy Rules in the development of necessary official
forms and accompanying rules to perform the means test. The USTP
developed its own partially automated system to expedite calculations of
debtor information under the statutory means testing formula. In
addition, the USTP made a major investment in training field personnel
to perform the means test, including exercising appropriate discretion
in deciding whether to file a motion to dismiss a case under the
Apresumed abuse@ standard.

[Credit Counseling and Debtor Education]{.underline}

The credit counseling and debtor education provisions of the reform law
provide protections for consumer debtors by helping ensure that debtors
enter bankruptcy with full knowledge of their options and exit with
knowledge to help them avoid future financial calamity. The USTP is
charged with responsibility to approve eligible providers of credit
counseling and debtor education services. BAPCPA requires individual
debtors to seek credit counseling from approved providers as a condition
of filing for bankruptcy. It also requires debtors to receive debtor
education from an approved provider to receive a discharge of debts.
Although enforcement practices differ according to local rules, USTP
offices often are the primary agency ensuring debtor compliance.

As of the September 30, 2006, the USTP had approved more than 152 credit
counseling agencies covering 88 judicial districts for pre-bankruptcy
counseling. In addition to offering Internet and telephonic access, the
companies have over 800 walk-in locations for credit counseling. For
post-bankruptcy debtor education, the USTP had approved over 275 debtor
education providers covering 88 judicial districts as of September 30,
2006. In addition to debtor education providers offering Internet and
telephonic access, there were over 900 walk-in locations.

[Small Business Chapter 11 Cases]{.underline}

The small business provisions of the BAPCPA establish new deadlines and
greater uniformity in financial reporting to ensure that cases
expeditiously move through the chapter 11 process before assets are
dissipated. They also provide important new enforcement tools to the
United States Trustees. To implement the BAPCPA=s new oversight
provisions, the USTP developed a new Monthly Operating Report (MOR) form
for small business chapter 11 cases to make financial reporting simpler
and more uniform. In addition, the Bankruptcy Rules Committee also
sought input from the USTP on drafting a form for a small business plan
and disclosure statement. The documents approved by the Bankruptcy Rules
Committee will be published for public comment.

[Debtor Audits]{.underline}

Under BAPCPA, the USTP must contract for random and targeted audits to
verify the financial information provided by debtors. This provision
helps the USTP identify fraud, deter the filing of false financial
information, and potentially provide a baseline for measuring fraud,
abuse, and errors in the bankruptcy system. The debtor audits mandated
by the BAPCPA commenced on October 20, 2006. Independent auditors
conduct random audits of no fewer than 1 out of every 250 cases in each
judicial district. They also conduct non-random audits of cases filed by
debtors with income and expenses higher than the norm of the district.

[Studies and Data Collection]{.underline}

The BAPCPA required the EOUST to undertake several studies, including
(1) consulting with experts in the field of debtor education to develop,
test, and evaluate a financial management training curriculum and
materials; (2) evaluating the impact of the use of the IRS standards for
determining the current monthly expenses under 11 U.S.C. \' 707(b) on
debtors and bankruptcy courts; and (3) evaluating the impact of the
definition of Ahousehold goods@ in section 313 of the BAPCPA. These
studies are on-going.

**Proposal for a Quarterly Fee Increase**

The U.S. Trustee Program is proposing an increase in the quarterly fees
(28 U.S.C. 1930(a)(6)) assessed to debtors in chapter 11. Specifically,
an increase of 30 percent in all quarterly fee categories and the
addition of three disbursement levels at the upper end of the
disbursement table are proposed. The FY 2008 revenue estimate assumes
that the quarterly fee increase would take effect on January 1, 2008.
The current and proposed fee schedules are listed below:

  -------------------------------------------------- --------------------
  **Existing Disbursement Ranges**                   **Fee**

  \$0 to \$14,999                                    \$250

  \$15,000 to \$74,999                               \$500

  \$75,000 to \$149,999                              \$750

  \$150,000 to \$224,999                             \$1,250

  \$225,000 to \$299,999                             \$1,500

  \$300,000 to \$999,999                             \$3,750

  \$1,000,000 to \$1,999,999                         \$5,000

  \$2,000,000 to \$2,999,999                         \$7,500

  \$3,000,000 to \$4,999,999                         \$8,000

  \$5,000,000 or more                                \$10,000
  -------------------------------------------------- --------------------

  ---------------------------------------------------- ------------------
  **Proposed Disbursement Ranges**                     **Proposed Fees**

  \$0 to \$14,999                                      \$325

  \$15,000 to \$74,999                                 \$650

  \$75,000 to \$149,999                                \$975

  \$150,000 to \$224,999                               \$1,625

  \$225,000 to \$299,999                               \$1,950

  \$300,000 to \$999,999                               \$4,875

  \$1,000,000 to \$1,999,999                           \$6,500

  \$2,000,000 to \$2,999,999                           \$9,750

  \$3,000,000 to \$4,999,999                           \$10,400

  \$5,000,000 to \$14,999,999                          \$15,000

  \$15,000,000 to \$29,999,999                         \$20,000

  \$30,000,000 or more                                 \$30,000
  ---------------------------------------------------- ------------------

The revenue resulting from the increased fees totals \$46,427,055 for a
full year. In the first year of implementation, it is assumed that 50
percent of the increase will be collected.

Quarterly fees in chapter 11 cases have not increased since 1996. A 30
percent increase in chapter 11 quarterly fees is approximately equal to
the inflation rate since 1996.

Bill Language: Sec\_\_ Bankruptcy Fees.

Sec \_\_\_ (a) Section 1930(a) of title 28, United States Code, is
amended in paragraph (6) by striking everything after "whichever occurs
first". and inserting in lieu thereof:

"The fee shall be \$325 for each quarter in which disbursements total
less than \$15,000; \$650 for each quarter in which disbursements total
\$15,000 or more but less than \$75,000; \$975 for each quarter in which
disbursements total \$75,000 or more but less than \$150,000; \$1,625
for each quarter in which disbursements total \$150,000 or more but less
than \$225,000; \$1,950 for each quarter in which disbursements total
\$225,000 or more but less than \$300,000; \$4,875 for each quarter in
which disbursements total \$300,000 or more but less than \$1,000,000;
\$6,500 for each quarter in which disbursements total \$1,000,000 or
more but less than \$2,000,000; \$9,750 for each quarter in which
disbursements total \$2,000,000 or more but less than \$3,000,000;
\$10,400 for each quarter in which disbursements total \$3,000,000 or
more but less than \$5,000,000; \$15,000 for each quarter in which
disbursements total more than \$5,000,000 or more but less than
\$15,000,000; \$20,000 for each quarter in which disbursements total
more than \$15,000,000 but less than \$30,000,000; \$30,000 for each
quarter in which disbursements total more than \$30,000,000. The fee
shall be payable on the last day of the calendar month following the
calendar quarter for which the fee is owed."

\(b\) This section and the amendment made by this section, shall take
effect January 1, 2008, or the date of the enactment of this Act,
whichever is later.

<table style="width:100%;">
<colgroup>
<col style="width: 13%" />
<col style="width: 16%" />
<col style="width: 7%" />
<col style="width: 9%" />
<col style="width: 5%" />
<col style="width: 8%" />
<col style="width: 5%" />
<col style="width: 8%" />
<col style="width: 4%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12"><strong>Performance Resources Table</strong></td>
</tr>
<tr class="even">
<td colspan="12"><strong>Decision Unit: Administration of
Cases</strong></td>
</tr>
<tr class="odd">
<td colspan="12">DOJ Strategic Goal/Objective: 2.6 Protect the Integrity
and ensure the effective operation of the Nation’s bankruptcy
system.</td>
</tr>
<tr class="even">
<td colspan="2">WORKLOAD/RESOURCES</td>
<td colspan="2">Final Target</td>
<td colspan="2">Actual</td>
<td colspan="2">Projected</td>
<td colspan="2">Changes</td>
<td colspan="2">Requested (Total)</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td colspan="2"><strong>FY 2006</strong></td>
<td colspan="2"><strong>FY 2006</strong></td>
<td colspan="2"><strong>FY 2007 President’s Budget</strong></td>
<td colspan="2"><p><strong>Current</strong></p>
<p><strong>Services Adjustments and FY 2008 Program
Changes</strong></p></td>
<td colspan="2"><p><strong>FY 2008</strong></p>
<p><strong>Request</strong></p></td>
</tr>
<tr class="even">
<td colspan="2"><strong>Total Costs and FTE</strong></td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
</tr>
<tr class="odd">
<td><strong>TYPE</strong></td>
<td><strong>Performance /Resources</strong></td>
<td>1,325</td>
<td>214,402</td>
<td>1,173</td>
<td>200,621</td>
<td>1,486</td>
<td>226,437</td>
<td>…</td>
<td>5,462</td>
<td>1,486</td>
<td>231,899</td>
</tr>
<tr class="even">
<td rowspan="2">Program Activity</td>
<td rowspan="2"><strong>1. Civil Enforcement</strong></td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
</tr>
<tr class="odd">
<td>541</td>
<td>92,196</td>
<td>481</td>
<td>82,855</td>
<td>702</td>
<td>106,425</td>
<td>…</td>
<td>2,567</td>
<td>702</td>
<td>108,992</td>
</tr>
<tr class="even">
<td>Performance Measure</td>
<td><p># of motions &amp; complaints &amp; inquiries</p>
<p>% of successful motions &amp; complaints</p>
<p>Success rate of civil adversary complaints filed</p>
<p>Success in litigating means testing</p></td>
<td colspan="2"><p>37,500</p>
<p>90%</p>
<p>95%</p>
<p>N/A</p></td>
<td colspan="2"><p>48,011</p>
<p>97.5%</p>
<p>99.1%</p>
<p>N/A</p></td>
<td colspan="2"><p>40,000</p>
<p>90%</p>
<p>96%</p>
<p>75%</p></td>
<td colspan="2"><p>…</p>
<p>…</p>
<p>…</p>
<p>…</p></td>
<td colspan="2"><p>40,000</p>
<p>90%</p>
<p>96%</p>
<p>75%</p></td>
</tr>
<tr class="odd">
<td rowspan="2">Program Activity</td>
<td rowspan="2"><strong>2. Case and Trustee Administration</strong></td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
<td>FTE</td>
<td>$000</td>
</tr>
<tr class="even">
<td>784</td>
<td>122,209</td>
<td>692</td>
<td>117,766</td>
<td>784</td>
<td>120,012</td>
<td>…</td>
<td>2,895</td>
<td>784</td>
<td>122,907</td>
</tr>
<tr class="odd">
<td><mark></mark></td>
<td></td>
<td colspan="2"></td>
<td colspan="4"><mark></mark></td>
<td><mark></mark></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td><p>Performance Measure</p>
<p>Efficiency</p>
<p>Measure</p>
<p>Efficiency</p>
<p>Measure</p></td>
<td><p><u>Chapter 11</u></p>
<p># of case filings</p>
<p># of motions &amp; inquiries to convert or dismiss Chapter 11
cases</p>
<p>% of unconfirmed Chapter 11 cases over 3 years old</p>
<p><u>Chapter 7</u></p>
<p># of case filings</p>
<p>% of Chapter 7 cases over 3 years old</p>
<p><u>Chapter 13</u></p>
<p># of case filings</p></td>
<td colspan="2"><p>9,000</p>
<p>2,750</p>
<p>&lt;13.0%</p>
<p>1,023,150</p>
<p>&lt;3.50%</p>
<p>426,926</p></td>
<td colspan="2"><p>5,807</p>
<p>3,306</p>
<p>14.1%</p>
<p>804,614</p>
<p>6.1% <a href="#fn1" class="footnote-ref" id="fnref1"
role="doc-noteref"><sup>1</sup></a></p>
<p>249,692</p></td>
<td colspan="2"><p>8,230</p>
<p>3,750</p>
<p>&lt;13.0%</p>
<p>1,007,722</p>
<p>&lt;3.50%</p>
<p>441,179</p></td>
<td colspan="2"><p>…</p>
<p>…</p>
<p>…</p>
<p>…</p>
<p>…</p>
<p>…</p></td>
<td colspan="2"><p>9,000</p>
<p>3,750</p>
<p>&lt;13.0%</p>
<p>1,102,050</p>
<p>&lt;3.50%</p>
<p>482,476</p></td>
</tr>
<tr class="odd">
<td rowspan="2">Outcome:</td>
<td><p><strong>Payments to Creditors/%</strong></p>
<p><strong>of total disbursements</strong></p>
<p><strong>Chapter 7</strong></p>
<p><strong>Chapter 12</strong></p>
<p><strong>Chapter 13</strong></p></td>
<td colspan="2"><p><strong>Final Target</strong></p>
<p><strong>FY 2006</strong></p>
<p>$907,810,080</p>
<p>55%</p>
<p>$25,866,523</p>
<p>75%</p>
<p>$4,028,582,446</p>
<p>83%</p></td>
<td colspan="2"><p><strong>Actual</strong></p>
<p><strong>FY 2006</strong></p>
<p>Not yet available</p>
<p>55%</p>
<p>$24,048,893</p>
<p>84.5%</p>
<p>$4,593,187,108</p>
<p>87.4%</p></td>
<td colspan="2"><p><strong>FY 2007</strong></p>
<p><strong>President’s Budget</strong></p>
<p>$907,810,080</p>
<p>56%</p>
<p>$25,866,523</p>
<p>75%</p>
<p>$4,028,582,446</p>
<p>84%</p></td>
<td colspan="2"><p><strong>Current Services</strong></p>
<p><strong>Adjustments</strong></p>
<p>…</p>
<p>2%</p>
<p>…</p>
<p>2%</p></td>
<td colspan="2"><p><strong>FY 2008 Request</strong></p>
<p>$907,810,080</p>
<p>58%</p>
<p>$25,866,523</p>
<p>75%</p>
<p>$4,178,582,446</p>
<p>86%</p></td>
</tr>
<tr class="even">
<td><p>Potential Additional Returns to Creditors through Civil
Enforcement and Related Efforts</p>
<p># of Civil Enforcement Adversary Actions Filed</p></td>
<td colspan="2"><p>$500,000,000</p>
<p>1,267</p></td>
<td colspan="2"><p>$878,719,418</p>
<p>1,704</p></td>
<td colspan="2"><p>$500,000,000</p>
<p>1,372</p></td>
<td colspan="2"><p>...</p>
<p>…</p></td>
<td colspan="2"><p>$500,000,000</p>
<p>1,478</p></td>
</tr>
</tbody>
</table>
<aside id="footnotes" class="footnotes footnotes-end-of-document"
role="doc-endnotes">
<hr />
<ol>
<li id="fn1"><p>The percentage increase in the number of chapter 7 cases
over 3 years old is primarily due to the drastic decrease in pending
chapter 7 cases. Chapter 7 cases are now being filed at 30% of the
levels reached prior to the bankruptcy reform legislation passed in
2005. Because the pending caseload fell abruptly, the ratio of pending
old cases to pending new cases increased just as abruptly.<a
href="#fnref1" class="footnote-back" role="doc-backlink">↩︎</a></p></li>
</ol>
</aside>

**PERFORMANCE MEASURE TABLE**

  ---------------- -------- -------- -------- -------- -------- --------- -------- --------- ---------
  **Decision Unit:                                                                           
  Administration                                                                             
  of Cases**                                                                                 

  Performance      FY 2001  FY 2002  FY 2003  FY 2004  FY 2005  FY 2006            FY 2007   FY 2008
  Report and                                                                                 
  Performance Plan                                                                           
  Targets                                                                                    

                   Actual   Actual   Actual   Actual   Actual   Target    Actual   Target    Target

  \# of motions &  13,305   27,457   41,940   40,518   39,207   37,500    48,011   40,000    40,000
  complaints and                                                                             
  inquiries                                                                                  

  \% of successful 90%      92.1%    94.5%    94.9%    97.4%    90.0%     97.5%    90.0%     90.0%
  motions &                                                                                  
  complaints                                                                                 

  Success rate of  NA       NA       NA       NA       99.3%    95.0%     99.1%    95.0%     95.0%
  civil adversary                                                                            
  complaints filed                                                                           

  \# of Chapter 11 10,225   11,380   9,782    10,043   6,412    9,000     5,807    9,000     9,000
  cases filed                                                                                

  \# of motions &  6,172    8,198    6,741    4,081    3,595    2,750     3,306    3,750     3,750
  inquiries to                                                                               
  convert or                                                                                 
  dismiss Chapter                                                                            
  11 cases                                                                                   

  \% of            4.5%     2.7%     3.84%    3.15%    9.54%    \<13.0%   14.1%    \<13.0%   \<13.0%
  unconfirmed Ch.                                                                            
  11 cases over 3                                                                            
  years                                                                                      
  ---------------- -------- -------- -------- -------- -------- --------- -------- --------- ---------

<table>
<colgroup>
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 9%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td></td>
<td colspan="2"><p>FY 2001</p>
<p>Actual</p></td>
<td colspan="2"><p>FY 2002</p>
<p>Actual</p></td>
<td colspan="2"><p>FY 2003</p>
<p>Actual</p></td>
<td colspan="2"><p>FY 2004</p>
<p>Actual</p></td>
<td colspan="2"><p>FY 2005</p>
<p>Actual</p></td>
<td colspan="2">FY 2006 Target</td>
<td colspan="2"><p>FY 2006</p>
<p>Actual</p></td>
<td colspan="2">FY 2007 Target</td>
<td colspan="2">FY 2008 Target</td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"># of Chapter 7 cases filed</td>
<td colspan="2">982,934</td>
<td colspan="2">1,047,969</td>
<td colspan="2">1,137,723</td>
<td colspan="2">1,114,622</td>
<td colspan="2">1,299,824</td>
<td colspan="2">1,023,150</td>
<td colspan="2">804,614</td>
<td colspan="2">1,102,050</td>
<td colspan="2">1,102,050</td>
</tr>
<tr class="odd">
<td colspan="2">% of Chapter 7 cases over 3 years old</td>
<td colspan="2">2.2%</td>
<td colspan="2">2.1%</td>
<td colspan="2">2.18%</td>
<td colspan="2">2.31%</td>
<td colspan="2">1.38%</td>
<td colspan="2">&lt;3.5%</td>
<td colspan="2">6.1% <a href="#fn1" class="footnote-ref" id="fnref1"
role="doc-noteref"><sup>1</sup></a></td>
<td colspan="2">&lt;3.5%</td>
<td colspan="2">&lt;3.5%</td>
</tr>
<tr class="even">
<td colspan="2"># of Chapter 13 cases filed</td>
<td colspan="2">374,133</td>
<td colspan="2">410,686</td>
<td colspan="2">432,545</td>
<td colspan="2">414,747</td>
<td colspan="2">391,127</td>
<td colspan="2">426,929</td>
<td colspan="2">249,692</td>
<td colspan="2">482,476</td>
<td colspan="2">482,476</td>
</tr>
<tr class="odd">
<td colspan="20"><p>OUTCOME</p>
<p>Measure*</p>
<p>Payments &amp; % to Creditors</p></td>
</tr>
<tr class="even">
<td colspan="2">Chapter 7</td>
<td colspan="2"><p>$886.23M</p>
<p>58.6%</p></td>
<td colspan="2"><p>$724.60M</p>
<p>57.26%</p></td>
<td colspan="2"><p>$907.81M</p>
<p>57.73%</p></td>
<td colspan="2"><p>$1.02B</p>
<p>58.42%</p></td>
<td colspan="2"><p>$1.02B*</p>
<p>59.4%</p></td>
<td colspan="2"><p>$907.81M</p>
<p>55%</p></td>
<td colspan="2"><p>$907.8M</p>
<p>55%</p></td>
<td colspan="2"><p>Not</p>
<p>Available</p>
<p>56%</p></td>
<td colspan="2"><p>$907.81M</p>
<p>58%</p></td>
</tr>
<tr class="odd">
<td colspan="2">Chapter 12</td>
<td colspan="2"><p>$31.27M</p>
<p>88.8%</p></td>
<td colspan="2"><p>$27.07M</p>
<p>87.2%</p></td>
<td colspan="2"><p>$40.01M</p>
<p>84.14%</p>
<p>**</p></td>
<td colspan="2">**</td>
<td colspan="2"><p>$27.9M**</p>
<p>85.3%</p></td>
<td colspan="2"><p>$25.87M</p>
<p>75%</p></td>
<td colspan="2"><p>$24.05M</p>
<p>84.5%</p></td>
<td colspan="2"><p>$25.87M</p>
<p>75%</p></td>
<td colspan="2"><p>$27.9M</p>
<p>75%</p></td>
</tr>
<tr class="even">
<td colspan="2">Chapter 13</td>
<td colspan="2"><p>$3.15B</p>
<p>86.65%</p></td>
<td colspan="2"><p>$3.31B</p>
<p>85.8%</p></td>
<td colspan="2"><p>$3.58B</p>
<p>85.26%</p></td>
<td colspan="2"><p>$4.02B</p>
<p>85.53%</p></td>
<td colspan="2"><p>$4.39B</p>
<p>85.9%</p></td>
<td colspan="2"><p>$4.03B</p>
<p>83%</p></td>
<td colspan="2"><p>$4.6B</p>
<p>87.4%</p></td>
<td colspan="2"><p>$4.18B</p>
<p>84%</p></td>
<td colspan="2"><p>$4.18B</p>
<p>86%</p></td>
</tr>
<tr class="odd">
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="4"><mark></mark></td>
</tr>
<tr class="even">
<td colspan="2"><p><mark></mark></p>
<p>Potential Additional Returns to Creditors</p></td>
<td colspan="2">N/A</td>
<td colspan="2">$159.01M</td>
<td colspan="2">$644.62M</td>
<td colspan="2">$522.37M</td>
<td colspan="2">$593.9M</td>
<td colspan="2">$500.0M</td>
<td colspan="2">$878.7M</td>
<td colspan="2">$500.0M</td>
<td colspan="2">$500.0M</td>
</tr>
<tr class="odd">
<td colspan="2"># of Civil Enforcement adversary actions filed</td>
<td colspan="2">N/A</td>
<td colspan="2">N/A</td>
<td colspan="2">N/A</td>
<td colspan="2">N/A</td>
<td colspan="2">1,301</td>
<td colspan="2">1,267</td>
<td colspan="2">1,704</td>
<td colspan="2">1,372</td>
<td colspan="2">1,478</td>
</tr>
</tbody>
</table>
<aside id="footnotes" class="footnotes footnotes-end-of-document"
role="doc-endnotes">
<hr />
<ol>
<li id="fn1"><p>The percentage increase in the number of chapter 7 cases
over 3 years old is primarily due to the drastic decrease in pending
chapter 7 cases. Chapter 7 cases are now being filed at 30% of the
levels reached prior to the bankruptcy reform legislation passed in
2005. Because the pending caseload fell abruptly, the ratio of pending
old cases to pending new cases increased just as abruptly.<a
href="#fnref1" class="footnote-back" role="doc-backlink">↩︎</a></p></li>
</ol>
</aside>

\*Chapter 7 data for FY 2005 reflects actual payments made to creditors
as of April 2006.

\*\*The chapter 12 trustee annual cycle was changed from a calendar year
to a fiscal year (1/1/03 to 6/30/2004). During that 18 month period, a
total of \$40.01 million was distributed to creditors. Chapter 13 data
for FY 2006 is taken from unaudited annual reports.

**Data Definition, Validation, Verification, and Limitations:**

**Data Definitions:**

[Chapter 7]{.underline}: A liquidation case. A trustee is appointed to
sell the debtor's non-exempt assets and distribute the proceeds to
creditors. Generally, absent fraud or abuse, the remaining debts are
discharged.

[Chapter 11]{.underline}: A reorganization case. The debtor usually
remains in possession of its assets, continues to operate its business,
and repays and/or readjusts debts through a plan that must to be
approved by creditors and the bankruptcy court. Chapter 11 cases are
generally business cases.

[Chapter 13]{.underline}: A debt adjustment case by an individual with
regular income. The debtor retains property, but repays creditors, in
whole or in part, through a court-approved chapter 13 plan over a period
not to exceed 5 years.

**[Civil Enforcement:]{.underline}**

[Number of motions and complaints & inquiries]{.underline}: The number
of motions and complaints filed with the court by U.S. Trustees pursuant
to Sections 707, 727, and 110 of Title 11, United States Code (the
Bankruptcy Code). Section 707(a) of the Bankruptcy Code permits a
chapter 7 liquidation case to be dismissed for cause, while Section
707(b) provides that a case may be dismissed for presumed abuse, bad
faith or the totality of the circumstances. Under Section 727, a
complaint may be filed objecting to the entry of the chapter 7 debtor's
discharge. Section 110 places stringent requirements on all non-lawyers
who prepare bankruptcy petitions for compensation and establishes
penalties for those individuals who negligently or fraudulently prepare
bankruptcy petitions. In addition to formal actions filed with the
court, this performance measure also includes the number of inquiries
made by U.S. Trustees under the same Bankruptcy Code sections. An
inquiry is a written or documented verbal communication by the U.S.
Trustee to a debtor about possible violations of any of these sections,
either directly or through a third party such as the case trustee, which
requires a response. It does not rise to the level of a formal pleading.

[Percent of successful motions & complaints]{.underline}: The number of
motions and complaints filed by the U.S. Trustees pursuant to Sections
707, 727 and 110 in which the court granted the relief sought, or the
debtor/respondent agreed to the relief sought by the U.S. Trustees,
divided by the total number of motions/complaints that were filed and
resolved.

[Success rate of civil adversary complaints filed]{.underline}: The
number of complaints filed by the U.S. Trustees pursuant to Section 727
in which the court granted the relief sought, or the debtor agreed to
the relief sought by the U.S. Trustees, divided by the total number of
complaints that were filed and resolved. The success rate shows the
quality of the work done by USTP.

**[Case and Trustee Administration:]{.underline}**

[Number of cases filed]{.underline}: The number of new bankruptcy cases
filed. This data is provided by the Administrative Office of the U.S.
Courts on a quarterly basis.

[Number of motions and inquiries to dismiss or convert chapter 11
cases:]{.underline} The number of motions filed by U.S. Trustees
pursuant to Section 1112 (b) of the Bankruptcy Code. In chapter 11 case
administration, the U.S. Trustees act promptly to file a motion either
to dismiss or convert a chapter 11 case to one under chapter 7 if the
debtor is not complying with the provisions of the Bankruptcy Code or
Rules, or is unable to confirm a plan of reorganization. In addition to
the formal motions filed with the court, this performance measure also
includes the number of inquiries made by U.S. Trustees. An inquiry is a
written or documented verbal communication by the U.S. Trustee to the
debtor about issues that would be grounds for conversion or dismissal
that required a response from the debtor. It does not rise to the level
of a formal pleading.

[Percent of unconfirmed chapter 11 cases over 3 years old]{.underline}:
The percentage of chapter 11 cases pending that do not have a confirmed
plan and are more than 3 years old.

**[Outcomes:]{.underline}**

[Payments to Creditors:]{.underline} Total dollar amount of
disbursements made to creditors in chapters 7, 12, and 13 cases. For
chapter 7 cases, the USTP receives trustee distributions reports as part
of the Final Account on each chapter 7 case closed during the year. The
chapter 7 data are aggregated on a nationwide basis and reported twice a
year in January and July. Chapter 12 data come from annual reports
submitted by trustees at the end of their operating year in June.
Chapter 13 data are gathered from the standing chapter 13 trustees'
annual reports on a fiscal year basis.

[Percentage of Total Payments:]{.underline} The percentage of total
payments to creditors is calculated by dividing the payments to
creditors by either the total receipts of the bankruptcy estate (in
chapter 7 cases) or the trust fund (in chapter 12 and 13 cases). Funds
that are not distributed to creditors may include private trustee
compensation, professional fees, and other administrative costs.

[Potential Additional Returns to Creditors through Civil Enforcement
Efforts]{.underline}: The amount of scheduled general unsecured debt in
a chapter 7 case that was not immediately discharged in chapter 7
because of dismissal or conversion of the case, or because of the denial
or voluntary waiver of the debtor's discharge, plus all professional fee
reductions, professional fee disgorgements, and all fines imposed as a
result of civil enforcement actions.

[Number of Civil Enforcement Adversary Actions Filed]{.underline}: The
number of complaints filed by the U.S. Trustees pursuant to Section 727.
Under Section 727, a complaint may be filed objecting to the entry of
the chapter 7 debtor's discharge. The measure focuses on USTP's
priority; prevent and root out fraud and abuse in the bankruptcy system.

**USTP Data Validation and Verification Process**

The Significant Accomplishments and Reporting System (SARS) is the
primary database utilized in connection with the U.S. Trustee Program's
civil enforcement activity. Data of all informal and formal actions
taken are entered by each of the USTP's 95 field offices. Data is
verified at the end of each fiscal quarter by the Assistant U.S. Trustee
(AUST) in each field office. The AUST conducts a SARS data verification
process for the respective office and submits an email to the U.S.
Trustee stating the data verification protocol for the office has been
completed.

To ensure data integrity, efficiency, and effectiveness of existing and
future data collection systems and to develop long-range goals and
priorities to support the USTP mission, the Data Integrity Group (DIG)
working group was formed. DIG, which consists of four AUSTs, works
closely with the EOUST Office of Research and Planning and IT staffs. In
connection with SARS, DIG reviews a sampling of SARS reports from at
least one office in each of the 21 regions. These \"spot checks\" are
conducted twice a year, or as needed. DIG establishes data element
definitions, provides training and guidance to the field, and looks for
ways to streamline the data collection process for more efficient and
effective data collection systems.

**Departmental Strategic Goals and Objectives and Results**

The USTP mission is included in the DOJ Strategic Plan under Goal II:
Enforce Federal Laws and Represent the Rights and Interests of the
American People and Strategic Objective 2.6: Protect the integrity and
ensure the effective operation of the Nation's bankruptcy system. The
following lists USTP strategies to achieve the objectives.

**Enforce compliance with federal bankruptcy laws and take civil actions
against parties who abuse the law or seek to defraud the bankruptcy
system.**

The centerpiece of the USTP=s anti-fraud and abuse efforts has been the
National Civil Enforcement Initiative. The Initiative focuses on
wrong-doing both by debtors and by those who exploit debtors. The USTP
combats debtor fraud and abuse primarily by seeking case dismissal if a
debtor has an ability to repay debts and by seeking denial of discharge
for the concealment of assets and other violations. The USTP protects
consumer debtors from wrongdoing by attorneys, bankruptcy petition
preparers, creditors, and others by seeking a variety of remedies,
including disgorgement of fees, fines, and injunctive relief.

To accomplish these objectives, the USTP uses existing statutory tools
to combat fraud and abuse in the bankruptcy system and to protect
consumers. Civil enforcement actions include taking steps to dismiss
abusive filings, deny discharges to ineligible or dishonest debtors,
limit improper refilings by debtors, curb unfair practices by attorneys,
sanction unscrupulous bankruptcy petition preparers and others who prey
upon those in financial straits, and attack identity fraud in
bankruptcy.

From the inception of the National Civil Enforcement Initiative in
October 2001, civil enforcement related projects have included the
development and implementation of annual enforcement strategies in all
95 field offices; the appointment of national civil enforcement
coordinators who facilitate the Initiative by issuing standard guidance,
providing technical assistance and training, and coordinating
multi-district litigation; the formation of a civil enforcement resource
team consisting of some of the USTP's most experienced attorneys,
financial analysts, and litigation support personnel; and the
marshalling of resources to assist staff in their enforcement
responsibilities.

From FY 2003 through FY 2006, more than 220,000 civil enforcement and
related actions and inquiries were brought by the USTP, yielding
\$2.6 billion in monetary results. In FY 2006, more than 58,000 actions
were initiated that generated nearly \$879 million in potential returns
to creditors through debts not discharged, fines, and fee disgorgements.
USTP attorneys prevailed in over 96 percent of the actions resolved by
judicial decision or consent in the fundamental areas of dismissal for
substantial abuse (11 U.S.C. \' 707(b)), denial of discharge (11 U.S.C.
\' 727), fines against bankruptcy petition preparers (11 U.S.C. \' 110),
and disgorgements of attorneys= fees (11 U.S.C. \' 329).

**Pursue violations of federal criminal laws pertaining to bankruptcy by
identifying, evaluating, referring, and providing investigative and
prosecutorial support of cases.**

The integrity of the bankruptcy system depends upon debtors to
self-report honestly and accurately all their assets and liabilities
when they file for bankruptcy protection. The U.S. Trustees have an
affirmative duty to refer instances of possible criminal conduct to the
U.S. Attorney and to assist in the prosecution of such criminal conduct.
The bankruptcy system requires vigorous prosecution of criminal
violations to encourage honest, lawful behavior. Moreover, criminal
referrals from the USTP show that bankruptcy crimes are often linked to
other white collar crimes such as fraud in obtaining federally
guaranteed mortgage loans, money laundering, identity theft, mail fraud,
and wire fraud. The USTP tracks criminal referrals, evaluates current
efforts, and cooperates with other federal agencies (e.g., the U.S.
Attorneys and the FBI) to address this multi-faceted problem.

In 2003, the Criminal Enforcement Unit (CREU) was established to
coordinate the criminal referral responsibilities carried out by USTP's
95 field offices and to directly assist prosecutors in pursuing
bankruptcy crimes. CREU has made a marked difference in the quality of
the criminal program by providing extensive training, developing
resource materials, and enhancing coordination for the benefit of USTP
staff, federal prosecutors, and other law enforcement personnel.

[]{.mark}

In FY 2006, the USTP made 925 criminal referrals, a 24 percent increase
over FY 2005. In many cases, USTP lawyers directly prosecuted or
assisted the prosecution team in cases initiated as a result of criminal
referrals made by USTP offices. Four veteran career prosecutors within
CREU, plus approximately 25 attorneys in field offices across the
country who have been designated as Special Assistant U.S. Attorneys,
are available to try cases involving bankruptcy crimes. In addition, a
majority of USTP field offices participate in bankruptcy fraud working
groups which are headed by U.S. Attorney offices and often involve the
FBI, USPIS, IRS-CI, and HUD-OIG. With the enactment of 18 U.S.C. \' 158
as part of the BAPCPA, every U.S. Attorney office is required to
designate a prosecutor and every FBI field office an agent who will
assume primary responsibility for bankruptcy fraud cases. This provision
further strengthens existing working groups by formalizing points of
contact and provides a foundation for establishing working groups where
currently none exist.

**Promote the effectiveness of the bankruptcy system by appointing and
regulating private trustees who administer bankruptcy cases
expeditiously and maximize the return to creditors.**

Trustees are fiduciaries who administer cases filed under chapters 7,
12, and 13. They are appointed and supervised by the U.S. Trustee. It is
a bedrock duty of the U.S. Trustee to regulate and monitor the
activities of these private trustees, and to ensure their compliance
with fiduciary standards. The USTP administers a formal system for merit
selection of trustees; trains trustees and evaluates their overall
performance; regularly reviews their financial operations; and
intervenes to prevent loss of estate assets when instances of
embezzlement, mismanagement, or other improper activity are uncovered.
The USTP maintains data on trustee oversight in several database files.
To measure the return of estate assets, the USTP tracks distributions to
creditors.

**Chapter 7 distributions:** During Calendar Year 2005, \$1,021,140,941
in assets was distributed to creditors (out of a total of
\$1,719,336,323 in disbursements). Actual 2006 data for Chapter 7 will
not be available until spring, 2007.

**Chapter 13 distributions:** During FY 2006, \$4,593,087,108 was
distributed to creditors. (Unaudited FY 2006 amount; audited data will
be available in Aril 2007).

**Ensure financial accountability, compliance with the Bankruptcy Code,
and prompt disposition of Chapter 11 bankruptcy cases.**

USTP staff must continually address emerging legal issues and challenges
in chapter 11. Annually, the USTP participates in a variety of
chapter 11 reorganization cases, ranging from small, single
proprietorship cases to giant, multinational conglomerates. Without
substituting its business judgment for that of parties with a monetary
stake in a case, the USTP focuses its attention on such areas as the
appointment of official committees of creditors and equity holders, the
retention of professionals under \'327 and professional compensation
issues, and the adequacy of disclosure statements, especially in smaller
cases.

In the area of retention of professionals, the USTP focuses on the lack
of disinterestedness and actual conflicts of interest which may take the
form of the professional regularly representing other parties in matters
unrelated to the bankruptcy case such as a large shareholder, a priority
or secured creditor, or a stalking horse bidder or potential purchaser.
To the extent that a waiver may have been obtained, the U. S. Trustee
will act to make sure that the waiver allows for the professional to
meet the fiduciary duty that is owed to the debtor or committee client.
The USTP also focuses on compensation issues and continues to monitor
professional fees in large chapter 11 cases at the time of retention.
The U.S. Trustee may attempt to negotiate or ensure more favorable
rates, akin to those rates the professional might provide to its most
favorable clients, and to require professionals to submit and live
within their budgets.

During FY 2006, the USTP filed over 2,400 motions to convert or dismiss
chapter 11 cases. The grounds for such motions, which are critical to
the effective functioning of the reorganization provisions of the
Bankruptcy Code, typically include failure to file financial reports,
dissipation of estate assets without a reasonable likelihood of
rehabilitation, cancellation of insurance, or non payment of taxes.

2\. Performance, Resources, and Strategies

#### a. Performance Plan and Report for Outcomes {#a.-performance-plan-and-report-for-outcomes .unnumbered}

Performance Measure: Percent of Assets/Funds Returned to Creditors

  ------------ ---------------------------------------- ------------ ------------
  **Fiscal     **Measure**                              **Target**   **Actual**
  Year**                                                             

  FY 2001      Chapter 7 Assets returned to creditors   52%          59%

               Chapter 13 Funds returned to creditors   80%          86%

  FY 2002      Chapter 7 Assets returned to creditors   52%          57.3%

               Chapter 13 Funds returned to creditors   80%          85.8%

  FY 2003      Chapter 7 Assets returned to creditors   52%          57.3%

               Chapter 13 Funds returned to creditors   80%          85.3%

  FY 2004      Chapter 7 Assets returned to creditors   54%          58.42%

               Chapter 13 Funds returned to creditors   80%          85.53%

  FY 2005      Chapter 7 Assets returned to creditors   54%          59.39%

               Chapter 13 Funds returned to creditors   80%          85.87%

  FY 2006      Chapter 7 Assets returned to creditors   55%          N/A

               Chapter 13 Funds returned to creditors   83%          87.4%

  FY 2007      Chapter 7 Assets returned to creditors   56%          N/A

               Chapter 13 Funds returned to creditors   84%          N/A

  FY 2008      Chapter 7 Assets returned to creditors   58%          N/A

               Chapter 13 Funds returned to creditors   86%          N/A
  ------------ ---------------------------------------- ------------ ------------

### b. Strategies to Accomplish Outcomes

*Discussion:* The USTP has a comprehensive oversight process that
ensures cases filed each year are effectively and efficiently moved
through the bankruptcy system. The USTP audits and evaluates private
trustees, follows up on deficiencies, ensures that old cases are closed
promptly, and initiates action when private trustees fail to comply with
their obligations. The USTP tracks the cost of trustee operations, as
well as, distributions to creditors. In particular, the Distribution
Report for Closed Asset Cases helps trustees to identify specific
distributions in closed asset cases. Portions of all trustee operations
are closely reviewed each year by private accounting firm audits or
on-site examinations by USTP personnel. Finally, the USTP's civil
enforcement initiatives, by reducing the amount of fraud and abuse in
the system, will increase the amount of funds potentially available for
creditors. As a direct result of the USTP's oversight and effort, a
total of \$1,021,140,941 in assets was distributed to chapter 7
creditors in CY 2005; CY 2006 data is not yet available. During FY 2005,
a total of \$4,396,378,738 in disbursements was distributed to chapter
13 creditors, and in FY 2006 \$4,593,187,108 in disbursements was
distributed (unaudited), representing an increase of almost
\$200,000,000 over the FY 2005 returns of chapter 13 funds
distributions.

c\. Results of Program Assessment Rating Tool (PART) Reviews

*During FY 2005, the USTP was assessed through OMB's Program Assessment
Rating Tool (PART). At the end of the assessment, the USTP received a
rating of Effective. Other findings showed the following:*

-   *The USTP has a clear purpose and addresses a specific need for the
    efficient, effective, and fair resolution of bankruptcy cases.*

-   *The USTP has long-term, outcome oriented measures, as well as,
    annual performance targets.*

-   *There need to be regular, independent evaluations of the Program to
    measure future success in meeting program objectives.*

*Additionally, to exhibit continual improvement of our practices, the
USTP performed several follow-up actions during FY 2006, including:*

-   ***Completing a comprehensive review of performance targets to make
    them more aggressive.***

> *Status - The USTP identified those targets that could be modified and
> obtained Department and OMB approval to include the more aggressive
> targets in the Fall 2006 PART update. Those targets also are reflected
> in the performance section of this document.*

-   ***Developing an additional performance measure that reflects the
    new responsibilities assigned to the USTP as a result of the
    bankruptcy legislation enacted in 2005.***

> *Status -- The USTP obtained Departmental and OMB approval to include
> the new measure, "Success in litigating means testing" in its
> performance measurement data. The measure is*
>
> *included in the Fall 2006 PART update and in the performance section
> of this document.*

-   ***Continuing to develop a capacity for independent evaluations,
    either by re-focusing internal resources or contracting for
    evaluations by outside entities.***

> *Status -- A draft independent study on fraud, abuse and errors in the
> bankruptcy system will be available for USTP review at the end of
> January, 2007. During FY 2007, the USTP expects to draft a
> solicitation for an independent evaluation of agency operations. In
> addition, the General Accountability Office (GAO) is studying the
> credit counseling and debtor education process, the handling of
> domestic support obligations by private trustees, and the
> reaffirmation process in bankruptcy cases.*

**Exhibits**

**A: Organizational Chart**

![](media/image3.png){width="7.5in" height="5.40625in"}

[^1]: The FY 2008 President's Budget uses the FY 2007 President's Budget
    language as a base so all language is presented as new.