[Federal Register Volume 78, Number 50 (Thursday, March 14, 2013)]
[Rules and Regulations]
[Pages 16159-16177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04364]
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DEPARTMENT OF JUSTICE
28 CFR Part 58
[Docket No EOUST 104]
RIN 1105-AB31
Application Procedures and Criteria for Approval of Providers of
a Personal Financial Management Instructional Course by United States
Trustees
AGENCY: Executive Office for United States Trustees (``EOUST''),
Justice.
ACTION: Final rule.
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SUMMARY: This final rule (``rule'') sets forth procedures and criteria
United States Trustees shall use when determining whether applicants
seeking to become and remain approved providers of a personal financial
management instructional course (``providers'') satisfy all
prerequisites of the United States Code, as implemented under this
rule. Under the current law, individual debtors must participate in an
instructional course concerning personal financial management
(``instructional course'' or ``debtor education'') before receiving a
discharge of debts. The current law enumerates mandatory prerequisites
and minimum standards applicants seeking to become approved providers
must meet. Under this rule, United States Trustees will approve
applicants for inclusion on publicly available provider lists in one or
more federal judicial districts if an applicant establishes it meets
all the requirements of the United States Code, as implemented under
this rule. After obtaining such approval, a provider shall be
authorized to provide an instructional course in a federal judicial
district during the time the provider remains approved.
EOUST intends to add to its regulations governing debtor education
providers, two new provisions not previously included in the proposed
rule. The first provision will amend section 58.30(c)(5) to require
providers to notify the United States Trustee of certain actions
pursuant to 11 U.S.C. 111(g)(2) or other consumer protection statutes,
such as an entry of judgment or mediation award, or the provider's
entry into a settlement order, consent decree, or assurance of
voluntary compliance. The second provision will amend section 58.33(i)
to require a provider to assist an individual with limited English
proficiency by expeditiously directing the individual to a provider
that can provide instruction in the language of the individual's
choice. Because these provisions were not discussed in the proposed
rule published on November 14, 2008, EOUST will publish another Notice
of Proposed Rulemaking requesting public comment with respect to these
two provisions.
DATES: Effective Date: This rule is effective April 15, 2013.
ADDRESSES: EOUST, 441 G Street, NW., Suite 6150, Washington, DC, 20530.
FOR FURTHER INFORMATION CONTACT: Doreen Solomon, Assistant Director for
Oversight on (202) 307-2829 (not a toll-free number), Wendy Tien,
Deputy Assistant Director for Oversight on (202) 307-3698 (not a toll-
free number), or Larry Wahlquist, Office of the General
[[Page 16160]]
Counsel on (202) 307-1399 (not a toll-free number).
SUPPLEMENTARY INFORMATION: On July 5, 2006, EOUST published an interim
final rule entitled Application Procedures and Criteria for Approval of
Nonprofit Budget and Credit Counseling Agencies and Approval of
Providers of a Personal Financial Management Instructional Course by
United States Trustees (``Interim Final Rule''). 71 FR 38,076 (July 5,
2006). Due to the necessity of quickly establishing a regulation to
govern the debtor education application process, EOUST promulgated the
Interim Final Rule rather than a notice of proposed rulemaking
(``proposed rule''). On November 14, 2008, at 73 FR 67,435, EOUST
published a proposed rule on this topic in an effort to maximize public
input, rather than publishing a final rule after publication of the
Interim Final Rule. Before the comment period closed on January 13,
2009, EOUST received eleven comments. The comments received and EOUST's
responses are discussed below. This rule finalizes the proposed rule
with changes that, in some cases, reduce the burden on providers while
maintaining adequate protection for debtors.
This rule implements the debtor education sections of the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
(``BAPCPA''), Public Law 109-8, 119 Stat. 23, 37, 38 (April 20, 2005),
which are codified at 11 U.S.C. 111. Effective October 17, 2005,
individual debtors under chapters 7, 13, and in some instances chapter
11, must receive from an approved provider debtor education before they
may receive a discharge of their debts. 11 U.S.C. 111, 727(a)(11),
1141(d)(3), 1328(g)(1).
Section 111(b) of title 11, United States Code, governs the
approval by United States Trustees of debtor education providers for
inclusion under 11 U.S.C. 111(a)(1) on publicly available provider
lists in one or more United States district courts. Section 111 of
title 11 provides that, in applicable jurisdictions, a United States
Trustee may approve an application to become an approved provider only
after the United States Trustee has thoroughly reviewed the applicant's
(a) qualifications, and (b) instructional course. 11 U.S.C. 111(b)(1).
A United States Trustee has statutory authority to require an applicant
to provide information with respect to such review. 11 U.S.C.
111(b)(1). EOUST reserves the right to publish on its public Web site
non-confidential business information relating to debtor education
providers, including contact information, services provided, language
support services offered, and fees charged for services.
After completing that thorough review, a United States Trustee may
approve a debtor education provider only if the provider establishes
that it fully satisfies all requisite standards. 11 U.S.C. 111(b).
Among other things, an applicant must establish it will (a) provide
trained personnel with adequate experience in providing effective
instruction and services, (b) provide learning materials and teaching
methodologies designed to assist debtors in understanding personal
financial management, (c) if applicable, provide adequate facilities
for providing an instructional course, (d) prepare and retain
reasonable records to permit evaluation of the effectiveness of an
instructional course, and (e) if a fee is charged, charge a reasonable
fee, and provide services without regard to ability to pay the fee. 11
U.S.C. 111(d)(1).
This rule will implement those statutory requirements. By
accomplishing that, the rule will help debtors obtain effective
instruction from competent providers. It also will provide an
appropriate mechanism by which applicants can apply for approval under
section 111 of title 11 to become approved providers, and will enable
such applicants to attempt to meet their burden of establishing they
should be approved by United States Trustees under 11 U.S.C. 111.
Summary of Changes in Final Rule
The final rule modifies the proposed rule by making it: (1) Less
burdensome on providers; and (2) by providing technical or clarifying
modifications. The modifications are summarized according to their
classification below. A parenthetical reference to the regulatory text
has been added to assist the reader in locating the relevant provisions
of the rule. In addition, where applicable, a reference to the comment
number, where a more detailed explanation of these changes is
discussed, is included:
Modifications To Make the Final Rule Less Burdensome on Providers
The definition of ``material change'' has been revised to
eliminate staff other than the provider's management or instructors
(Sec. 58.25(b)(22)--comment B6).
A provider may disclose to debtors that, to the extent the
provider is approved as a nonprofit budget and credit counseling agency
pursuant to 11 U.S.C. 111(c), the United States Trustee has reviewed
those credit counseling services (Sec. 58.33(k)(8)--comment
B23).
The reference to ``any applicable law'' in the prohibition
that a provider take no action to limit debtors from bringing claims
against the provider as provided in 11 U.S.C. 111(g)(2) has been
deleted (Sec. 58.33(n)(5)--comment B25).
The rule has been revised to add a rebuttable presumption
that a debtor lacks the ability to pay the instructional fee if the
debtor's current household income is less than 150 percent of the
poverty guidelines updated periodically in the Federal Register by the
U.S. Department of Health and Human Services under the authority of 42
U.S.C. 9902(2), as adjusted from time to time, for a household or
family of the size involved in the fee determination (Sec.
58.34(b)(1)--comment B28).
The United States Trustee is required to review the basis
for the mandatory fee waiver policy one year after the effective date
of the rule, and then periodically, but not less frequently than every
four years (Sec. 58.34(b)(2)--comment B28).
The requirement that, for a provider to send an
instructional certificate to a debtor's attorney, the debtor must make
the request in writing to the provider has been deleted (Sec.
58.35(a)--comment B30).
The requirement that providers provide original signatures
on certificates, in recognition of electronic filing in the bankruptcy
courts and the technology used to generate certificates, has been
deleted (Sec. 58.35(j)(2)--comment B34).
The prohibition that providers not file certificates with
the court has been deleted to enable providers to file certificates
with the court should the Federal Rules of Bankruptcy Procedure be
amended to authorize providers to file certificates with the court or
to otherwise notify the bankruptcy court of course completion (Sec.
58.35(i) of the proposed rule).
Technical or Clarifying Modifications
The definition of ``debtor'' has been revised to apply
only to such debtors that have sought an instructional course from an
approved provider (Sec. 58.25(b)(8)--comment B2).
The definition of ``limited English proficiency'' has been
revised to be consistent with that used by the Civil Rights Division of
the Department of Justice (Sec. 58.25(b)(21)--comment B5).
The definition of ``material change'' has been amended to
include a change in language services provided by the provider.
Providers are already required to inform the United States Trustee of
the languages they provide when
[[Page 16161]]
applying for approval. This clarification emphasizes the importance of
notifying the United States Trustee whenever a provider adds or removes
a language from its available services (Sec. 58.25(b)(22)).
The rule has been amended to clarify that providers may
not use direct mail or electronic mail solicitations to contact
debtors, unless the solicitations include a prominent disclaimer
stating, ``This is an advertisement for services,'' and to refrain from
using seals or logos that may be confused easily with those used by any
federal government agency (Sec. 58.33(c)(4)--comment B14).
The rule has been amended to clarify that a provider must
disclose its policy, if any, concerning fees associated with generating
an instructional certificate prior to rendering any instructional
services (Sec. 58.33(k)(1)--comment B32).
The rule has been amended to clarify that approved
providers who publish information on the Internet concerning their fees
must include their policies enabling debtors to obtain an instructional
course for free or at reduced rates based upon the debtor's lack of
ability to pay. This is not an additional burden on providers as the
proposed rule requires providers to disclose their fee polices prior to
providing services; the final rule makes it clear that this requirement
includes Internet based instruction (Sec. 58.33(k)(2)).
The rule has been amended to clarify that a provider's
duty to disclose its fee policy before providing services includes
disclosing the provider's policy to provide free bilingual instruction
to any limited English proficient debtor. This is not an additional
burden on providers as the proposed rule requires providers to disclose
their fee polices prior to providing services; the final rule makes it
clear that this requirement includes disclosing providers' fee policies
regarding services for limited English proficient individuals (Sec.
58.33(k)(3)).
The rule has been amended to clarify that a provider's
duty to maintain records regarding limited English proficiency debtors
includes maintaining records regarding the methods of delivery of an
instructional course, the types of languages and methods of delivery
requested by debtors, the number of debtors served, and the number of
referrals made to other providers. Because the proposed rule already
requires providers to maintain records regarding the delivery of
services to limited English proficiency individuals, this is not an
additional burden in the final rule. Rather, the final rule makes
clearer what is expected of providers in terms of record-keeping for
limited English proficient individuals (Sec. 58.33(m)(3)).
The rule has been amended to clarify that certificates
must bear not only the date, but also the time and the time zone when
the instructional course was completed by the debtor. This technical
modification does not impose an additional burden as the proposed rule
requires certificates to contain the date of completion and including
the time and time zone is a minor modification to the date on the
certificate (Sec. 58.35(l)(3)).
The rule has been amended to correct non-substantive
stylistic, numbering and typographical errors.
Discussion of Public Comments
EOUST received eleven comments on the proposed rule. Many of the
comments contained several sub-comments. EOUST appreciates the comments
and has considered each comment carefully. EOUST's responses to the
comments are discussed below, either in the ``General Comments''
section or in the ``Section-by-Section Analysis.''
A. General Comments
1. Cost of the Rule to Providers
Comment: EOUST received several comments that the rule will make it
more expensive for providers to operate and that they will pass the
costs on to debtors.
Response: EOUST recognizes that the rule may cause providers to
incur additional costs, but those costs are minimal. Additionally, the
extra costs for such measures as procedures to verify a debtor's
identity, and mandatory disclosure of the provider's fee policy, are
sufficiently important to protect consumers to warrant the extra costs
to the provider.
B. Comments on Specific Subsections of the Proposed Rule
1. Use of the Terms Accreditation and Certification [Sec. 58.25(b)(1)
and (2)]
Comment: EOUST received one comment that the rule erroneously uses
the terms accreditation and certification interchangeably, when
accreditation refers to organizations and certification refers to
individuals. One other comment recommended an amendment to section
58.25(b)(2)(i) to accommodate providers who certify other, unrelated,
providers.
Response: EOUST has reviewed the rule carefully and found no
instances in which accreditation was used to refer to individuals and
certification was used to refer to organizations. In a few instances, a
provider representative must sign a certification attesting to a
particular fact or facts; these instances, however, do not use the term
erroneously.
No change to the rule is necessary to permit providers to certify
unrelated providers. Such a business practice is not permitted under
the final rule.
2. Definition of Debtor [Sec. Sec. 58.25(b)(8) and 58.33(n)(10)]
Comment: EOUST received one comment recommending limiting the
restriction on sale of information about debtors to those debtors who
have received instruction from a provider, not all persons who have
contacted a provider (Sec. 58.33(n)(10)).
Response: Providers cannot provide services to debtors who never
seek an instructional course. Thus, the definition of ``debtor'' has
been revised to apply only to such debtors that have sought an
instructional course from an approved provider. The restriction on
selling information about debtors, however, applies with equal force to
debtors who seek, but ultimately do not receive, instructional services
from a particular provider.
3. Definition of Effective Instruction [Sec. 58.25(b)(10)]
Comment: EOUST received one comment seeking the incorporation of a
separate standard that does not incorporate the criteria set forth in
11 U.S.C. 111(d)(2).
Response: EOUST has reviewed the statutory criteria, as
incorporated in the definition, and has determined that the statutory
criteria effectively set forth the standard for evaluating the quality
of instruction.
4. Definition of Legal Advice [Sec. Sec. 58.25(b)(20) and 58.33(b)]
Comment: One comment expressed concern about the rule's reference
to 11 U.S.C. 110(e)(2) when defining legal advice. Because 11 U.S.C.
110(e)(2) includes bankruptcy procedures and rights, and because
debtors may ask instructors bankruptcy-related questions during an
instructional course, the comment expressed concern that the very act
of instruction could cause instructors and providers to give ``legal
advice'' in violation of the rule's prohibition.
Response: Because of the differences among the states concerning
the definition of the unauthorized practice of law, and the resulting
difficulty in defining ``legal advice,'' EOUST concluded the most
appropriate approach is to adopt the definition
[[Page 16162]]
Congress provided in 11 U.S.C. 110(e)(2). EOUST is sensitive to the
concern that an instructor's explanation of bankruptcy principles to
debtors may be considered ``legal advice,'' but interprets 11 U.S.C.
110(e)(2) to mean that instructors shall not advise debtors concerning
the application of bankruptcy laws, principles, or procedures to a
particular individual's circumstances, and may not describe how
bankruptcy laws, principles, or procedures would affect a particular
individual's case. Rather, the instructor may explain basic bankruptcy
principles and how such procedures are applied generally.
5. Definition of Limited English Proficiency [Sec. 58.25(b)(21)]
Comment: EOUST received four comments seeking revision of this
definition to clarify its meaning.
Response: EOUST concurs that a technical modification is necessary
and has revised the definition of the term to match that used by the
Civil Rights Division of the Department of Justice, as set forth in
Notice, Guidance to Federal Financial Assistance Recipients Regarding
Title VI, Prohibition Against National Origin Discrimination Affecting
Limited English Proficient Persons, 67 FR. 41,455 (June 18, 2002).
Though the wording is slightly different, the meaning of limited
English proficiency is essentially the same, i.e. individuals who do
not speak English as their primary language or who have difficulty
understanding English.
6. Definition of Material Change [Sec. 58.25(b)(22)]
Comment: Three comments stated that staff changes should be deleted
from the definition of material change since the requirement is
unnecessarily burdensome; one also sought to eliminate management from
the definition of material change.
Response: EOUST agrees that this requirement may be overly
burdensome, as it concerns staffing changes. Not every change in staff
requires EOUST notification. The purpose of this requirement is to
ensure that EOUST remains aware of changes in key personnel. Because
the definition of ``material change'' already specifies notification
for changes in management, the rule has been modified to change
``staffing'' to ``instructors'' and thereby reduce the burden on
providers.
7. Definition of Referral Fees [Sec. 58.25(b)(26)]
Comment: One comment stated that the definition of referral fees
contains a loophole that would allow an entity to charge a referral fee
merely by calling it something else.
Response: EOUST has deleted the definition of ``locator,''
eliminating any concerns that a loophole exists in the definition of
referral fees. The revised definition of ``referral fees'' prohibits
the transfer or passage of any money or other consideration between a
provider and another entity as consideration or in exchange for the
referral of clients for instructional services.
8. Definition of Relative [Sec. 58.25(b)(27)]
Comment: EOUST received one comment requesting that the definition
of ``relative'' be limited to the second degree of consanguinity.
Response: No change is necessary. The requirement does not impose a
material burden on providers necessitating a change to the rule.
9. Mandatory Duty To Notify--Material Change [Sec. 58.30(a)]
Comment: One comment objected to the need to inform EOUST promptly
of material changes, proposing that monthly notification is sufficient.
Response: No change is necessary. Because the material changes
requiring notice to EOUST are specific and involve matters of public
interest and consumer protection, such as cessation of the provider's
business, revocation of a provider's articles of incorporation, or
suspension of accreditation, EOUST requires immediate notice.
10. Mandatory Duty To Notify--Consumer Litigation [Sec. 58.30(c)]
Comment: One comment observed that, although 11 U.S.C. 111(g)(2)
confers a private right of action against nonprofit budget and credit
counseling agencies who violate section 111, the proposed rule does not
require providers to notify EOUST of such actions. The comment
suggested an additional mandatory disclosure to EOUST requiring
affirmative notification of actions pursuant to 11 U.S.C. 111(g)(2) or
other consumer protection statutes.
Response: The proposed change would enhance consumer protection by
providing EOUST with information concerning private litigation based on
consumer protection statutes and government enforcement actions. EOUST
will publish a notice of proposed rulemaking to solicit public comments
regarding whether EOUST should require notification of such actions.
11. Mandatory Duty To Notify--Inaccurate Information [Sec. 58.30(e)]
Comment: One comment objected to the requirement that a provider
notify EOUST of inaccuracies on the list of approved providers. The
comment suggested that, because EOUST possesses the information that
comprises the approved list, placing the burden of notification on the
provider is inappropriate.
Response: A provider is in the best position to recognize whether
the information about the provider posted on the list of approved
providers is accurate. Accordingly, the duty to notify EOUST of any
inaccuracies necessarily rests with the provider. Although EOUST
corrects inaccuracies of which it becomes aware internally or from
other outside sources, to the extent the provider is aware of
inaccurate information, the provider must notify EOUST. No change to
the rule is necessary.
12. Duty To Obtain Prior Consent [Sec. 58.31(a)]
Comment: One comment objected to the requirement that a provider
seek approval of any listed changes other than the engagement of an
independent contractor. The comment recommended simple notice for other
listed changes.
Response: Because the list of approved providers constitutes
EOUST's principal means of conveying information to the public, and
because debtors and debtors' counsel rely on the list of approved
providers to locate providers in their judicial districts who provide
instruction by the various methods, providers must notify EOUST of any
proposed changes to judicial districts or methods of delivery.
Furthermore, because United States Trustees require notice and the
opportunity to comment on a provider's fitness to provide instruction
in a judicial district, simple notice is inadequate. Finally, as
discussed below concerning sections 58.34(a) and 58.34(b), because fees
in excess of $50 per debtor are not presumed to be reasonable, and
because 11 U.S.C. 111(d)(1)(E) requires providers who charge a fee to
provide services without regard to the debtor's ability to pay the fee,
EOUST must approve changes to a provider's fee and fee waiver policy in
advance. Accordingly, no change to this rule is necessary.
13. Criteria To Become Approved Providers [Sec. Sec. 58.32 and
58.33(f)]
Comment: EOUST received one comment recommending that instructional
curricula should include
[[Page 16163]]
bankruptcy-specific content to address the specific hurdles debtors
face upon emerging from bankruptcy.
Response: The detailed substantive curriculum requirements in
section 58.33(f) mandate debtor education spanning a broad range of
financial matters, including budgeting, financial management, credit,
consumer information, and coping with financial crisis. The elements of
the curriculum address the areas of greatest concern to consumers
without posing undue risk that providers and their instructors will
provide legal advice concerning bankruptcy or financial regulation to
debtors. As noted elsewhere, EOUST interprets 11 U.S.C. 110(e)(2) to
permit instructors to explain basic bankruptcy principles and
procedures and their general application; such matters may form part of
the required debtor education curriculum.
14. Restrictions on Advertising [Sec. 58.33(c)(4)]
Comment: One comment advocated including two additional ethical
rules concerning direct mail and telephone advertising. The first would
bar providers from contacting debtors via outbound telephone calls,
unless the provider already has provided instructional services to the
debtor in question, and the call is in response to a request for
contact by the debtor or debtor's counsel, either directly or through a
contact form or locator service. The second would bar providers from
using direct mail or electronic mail solicitations to contact debtors,
unless the solicitations include a prominent disclaimer stating, ``This
is an advertisement for services,'' refrain from using seals or logos
that may be confused easily with those used by any federal government
agency, do not include certain words (such as ``trustee'' or
``bankruptcy court''), and the solicitation is in response to a request
for contact by the debtor or debtor's counsel, either directly or
through a contact form or locator service.
Response: EOUST acknowledges that some restrictions on advertising
and solicitation are necessary to protect consumers. However, the first
proposed restriction, which prohibits providers from contacting debtors
unless the debtor initiates the contact after the instructional course,
forecloses a substantial body of contact between debtors and providers.
Such a limitation may be more restrictive of commercial speech than is
necessary to advance the government's interest in consumer protection.
EOUST concurs with the second proposed restriction. Some types of
mail solicitations from providers to recently-filed debtors may be
confused with bankruptcy court correspondence, as they bear barcodes,
case numbers, and other misleading markings, and, on at least one
occasion, bear the words ``Bankruptcy Court'' on the envelope.
Accordingly, the requirements that mail solicitations bear a prominent
disclaimer and include only logos, seals, or similar marks that are
substantially dissimilar to those used by federal agencies and courts
constitute reasonable restrictions on advertising. These restrictions
minimize consumer deception arising from the false impression that the
solicitation constitutes an official court or United States Trustee
Program communication. These restrictions are narrowly tailored to
advance the government's interest in consumer protection and are
consistent with First Amendment principles governing commercial speech.
See, e.g., Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447
U.S. 557 (1980) (holding that restrictions on commercial speech must
directly advance an important interest and shall be no more restrictive
of speech than necessary and recognizing the constitutionality of
regulations restricting deceptive advertising).
Furthermore, the restrictions on advertising are not an additional
burden on providers as the proposed rule requires providers to ``comply
with the United States Trustee's directions on approved advertising,
including without limitation those set forth in appendix A to the
application'' (Sec. 58.33(n)(7) of the proposed rule). In that
appendix, it states that approved providers shall not use the
Department of Justice's seal, the United States Trustee's seal, the
Bankruptcy Court's seal, or any seal of the United States or a likeness
thereof. Providers have been aware of this prohibition since the
inception of the debtor education application in 2005. The final rule
clarifies the contours of this restriction on advertising.
15. Instructor Qualifications [Sec. 58.33(d)(1)]
Comment: One comment objected to the requirement that instructors,
rather than the provider, hold specific qualifications. The comment
suggested that the listed requirements should apply to the provider as
an entity, rather than to individual instructors. Another comment
recommended imposing an additional requirement that instructors receive
credit counseling-specific training before initial certification and be
required to receive annual continuing education.
Response: The instructor qualification requirements are meant to
ensure that each instructor possesses sufficient expertise in financial
matters to provide substantive instruction to consumers. Accordingly,
inexperienced instructors either must complete a financial course of
study or must work a minimum of six months in a related area to ensure
they are qualified to serve as instructors. Based upon experience
administering the Interim Final Rule and its interactions with
providers, EOUST concluded the requirements set forth in this rule are
sufficient to ensure that instructors will be qualified to provide the
statutorily mandated instruction to debtors. Accordingly, no change to
the rule is necessary.
16. Verification of Identity [Sec. 58.33(d)(3) and (e)(2)]
Comment: EOUST received comments concerning identity verification.
One expressed the opinion that verification of debtor identity in the
context of Internet and telephone instruction is impossible, and
another sought further guidance concerning the appropriate means of
identity verification.
Response: Establishing an individual's identity in the context of
telephone and Internet instruction may pose difficulties. This does
not, however, obviate identity verification requirements. Indeed, many
providers already have implemented effective identity verification
procedures. For in-person instruction, an individual may present his or
her driver's license, or similar photo identification, to establish his
or her identity. Because the instructor is physically present and can
confirm that the photo in the driver's license matches the debtor, this
identification procedure is sufficient for in-person instruction. In
the case of Internet and telephone instruction the individual is not in
the instructor's physical presence and additional measures are
necessary to confirm the individual's identity. In such cases,
providers successfully have requested that debtors supply their
mothers' maiden names, or other information known specifically to the
individual debtors, to confirm identity.
17. Learning Materials and Methodologies [Sec. 58.33(f) and (g)]
Comment: One comment recommended that the rule incorporate the
National Standards for Adult Financial Literacy Education, established
by the commenter, as the substantive standard for personal financial
instruction. The commenter also recommended a clarification that
[[Page 16164]]
``learning materials'' should be ``written learning materials.''
Response: No change to the rule is necessary. EOUST declines to
adopt standards established by one source as the substantive standard
for instruction by all providers.
18. Course Procedures--Length of Time [Sec. 58.33(g)(1)(i)]
Comment: EOUST received one comment that requiring ``a minimum'' of
two hours for an instructional course emphasizes the time actually
spent in class rather than the topics covered and the knowledge
transferred to the debtor. The commenter suggested replacing the word
``minimum'' with ``approximately.''
Response: No change is necessary. Based upon experience
administering the Interim Final Rule and its interactions with
providers, EOUST has determined that two hours, at a minimum, are
necessary to cover all the substantive topics set forth in 11 U.S.C.
Sec. 111(d)(1) and 28 CFR Sec. 58.33(f).
19. Course Procedures--When Course Is ``Complete'' [Sec. 58.33(g)]
Comment: One comment sought clarification about when Internet
instruction is ``complete'' and suggested that completion should be
defined specifically. The comment noted that, in the case of Internet
instruction, providers and debtors are uncertain whether instruction is
considered complete when the debtor finishes the online course, or
whether further interaction with an instructor is necessary.
Response: Unlike budget and credit counseling, which, by statute,
require client-specific counseling with respect to credit and financial
problems and development of a plan to address each individual client's
financial problems, post-bankruptcy personal financial management
instruction does not require individualized counseling and the
development of a personalized plan. Accordingly, the instruction is
``complete'' (1) when the debtor has finished an instructional course
that complies with the provisions of 11 U.S.C. 111(d) and the other
provisions of this rule, and that EOUST has approved; (2) after the
debtor has established his or her identity as described in this rule;
and (3) after the debtor has taken any test required by the provider,
and if the debtor failed to obtain at least a 70 percent passing grade,
received follow-up instruction from the provider; the scope of the
follow-up instruction is left to the discretion of the provider.
20. Course Procedures--Telephonically Present [Sec. 58.33(g)(3)(i)]
Comment: One comment sought clarification regarding the meaning of
the term ``present'' for telephone-based courses.
Response: The requirement that an instructor is telephonically
present to instruct and interact with debtors does not require the
instructor to provide live course instruction on the telephone, but
requires that the instructor be present to respond to debtor inquiries.
21. Course Procedures--Internet Providers [Sec. 58.33(g)(4)(i)]
Comment: One comment objected to the application of Sec.
58.33(g)(3)(v) to Internet course providers, noting that it does not
obtain telephone numbers from its Internet clients.
Response: To the extent instruction takes place by Internet, the
provider may satisfy this requirement by providing direct communication
from an instructor by electronic mail, live chat, or telephone.
22. Special Needs [Sec. 58.33(j)]
Comment: One comment stated that ``special needs'' should be a
defined term.
Response: The term ``special needs'' is in the public vernacular
and commonly refers to people with disabilities. No further
clarification is necessary.
23. Mandatory Disclosures [Sec. 58.33(k)]
Comment: EOUST received several comments concerning the number of
mandatory disclosures. One comment stated that the number of mandatory
disclosures is excessive and should be reduced to avoid confusing
debtors; the comment suggested deleting paragraphs 58.33(k)(4) and (5)
as unnecessary, and allowing paragraphs (6) and (9) to be given during
the instructional session rather than before, at the instructor's
discretion.
EOUST also received a comment recommending that, to the extent a
provider also is approved as a nonprofit budget and credit counseling
agency pursuant to 11 U.S.C. 111(c), the provider be able to state that
the United States Trustee has reviewed those services.
Response: While EOUST recognizes that the disclosures are numerous,
they are necessary to protect consumers. Paragraphs (4) and (5) provide
debtors with essential information concerning the qualifications of the
course instructor and inform debtors who otherwise may be unaware that
providers may not charge or receive referral fees. These disclosures
allow debtors to make informed decisions concerning the choice of
provider by giving debtors complete information before they engage the
provider. Paragraphs (6) and (9) inform consumers that the provider
must provide a certificate promptly and the certificate will be
provided only if the consumer completes the instruction. These
disclosures are particularly important to eliminate misunderstandings
between the provider and debtor and make clear to debtors that they
must complete instruction before receiving a certificate.
Though the proposed rule did not prohibit providers from informing
debtors that they were, if applicable, also approved credit counseling
agencies, the rule did not expressly allow it either. To reduce a
restriction on providers, paragraph (k)(8) has been revised to permit a
provider to disclose that, to the extent that provider is also approved
as a nonprofit budget and credit counseling agency pursuant to 11
U.S.C. 111(c), the United States Trustee has reviewed those credit
counseling services.
24. Recordkeeping Requirements [Sec. 58.33(m)]
Comment: EOUST received several comments concerning recordkeeping
requirements. A number of comments objected that the recordkeeping
requirement was burdensome. One objected to the requirement in section
58.33(m)(3) that Internet instructional course providers assess the
language debtors use in daily life. Another comment objected to the
requirement that providers maintain records concerning the provision of
free or reduced-fee services on a voluntary basis.
Response: Certain recordkeeping requirements, such as the
requirement to maintain records concerning the numbers of debtors who
seek instruction in languages other than English, are necessary to
advance the underlying purpose of the statute and to assist EOUST in
ensuring that instructional services are available to the broadest
range of consumers. Accordingly, the final rule retains most
recordkeeping requirements regarding all debtors but has limited this
requirement concerning prohibiting bundling or tying agreements as to
debtors who seek but ultimately do not receive instructional services
from a particular provider. In those instances, the broad reference to
``debtors'' does not advance a legitimate regulatory objective.
Accordingly, the definition of ``debtors'' has been revised to conform
to 11 U.S.C. 101(13), to the extent that the individual has sought an
[[Page 16165]]
instructional course from an approved provider.
The requirement that providers retain hard copies of signed
certificates for two years has been deleted. The final rule no longer
requires providers to provide original signatures on certificates in
recognition of electronic filing in the bankruptcy courts and the
technology used to generate certificates. Copies of such certificates
shall be retained for 180 days from the date of issuance.
25. Additional Minimum Requirements [Sec. 58.33(n)(5)]
Comment: Two comments regarding provider obligations objected to
the rule's requirement that providers take no action to limit debtors
from bringing claims against providers ``under any applicable law,
including but not limited to 11 U.S.C. Sec. 111(g)(2).'' The comment
expressed the opinion that the phrase ``any applicable law'' exceeds
the scope of 11 U.S.C. Sec. 111(g)(2).
Response: To reduce the burden on providers, the rule has been
amended to strike the reference to ``any applicable law.''
26. Advertising [Sec. 58.33(n)(7) and (n)(9)]
Comment: EOUST received one comment suggesting that the phrase
``approval does not endorse or assure the quality of a Provider's
services'' should be deleted. The comment claimed advertising is
protected speech and that the quoted phrase raises doubts in the mind
of the consumer concerning the meaning of approval. The comment also
objected to the restrictions on commercial advertising during the
instructional course on First Amendment grounds.
Response: This disclaimer is necessary to inform consumers that,
although the provider is approved to issue instructional course
certificates, such approval does not constitute a government guarantee
or endorsement of the quality of the provider's services. This
disclaimer protects consumers who otherwise might infer that approval
means all provider actions automatically carry the approval or
endorsement of the federal government. In addition, after obtaining
approval, a provider may change its business practices or employ
unqualified instructors, and EOUST may not learn of these changes in
quality immediately. Finally, advertising constitutes commercial speech
and is subject to regulations that directly advance a substantial
governmental interest, provided there exists a reasonable fit between
the regulations and the governmental interest. As EOUST has a
substantial interest in ensuring that the public is not misled
regarding the meaning of provider approval, and as the disclaimer is
narrowly tailored to advance EOUST's interest without otherwise
controlling or otherwise limiting the content of a provider's
advertisements, the disclaimer is reasonable.
For the same reasons, the limitation on commercial advertising
during the instructional course constitutes a reasonable time, place,
and manner restriction on speech.
27. Fees [Sec. 58.34(a)]
Comment: EOUST received numerous comments regarding the
determination of reasonable fees. Comments spanned suggestions for the
dollar amount of a reasonable fee, ranging from $60 to $100, to
suggestions that the proposed $50 reasonable fee is unreasonable and
should be adjusted for regional variations. A number of comments stated
that the establishment of a fixed reasonable fee runs afoul of the
market economy, and that competition will keep fees low while taking
regional variations and cost changes into account. One comment
expressed the concern that the proposed reasonable fee and fee waiver
requirements would render it unable to cover the costs of providing
instruction.
Response: EOUST has considered carefully the comments concerning
both the amount of a reasonable fee and the policies underlying the
establishment of a fixed fee, both in the context of the policies
underlying the statute and the experiences of approved providers since
passage of the Interim Final Rule, and has determined: (a) Fees in
excess of $50 per person are not presumptively reasonable; (b) EOUST
shall review the amount of the presumptively reasonable fee one year
after the effective date of the rule, and then periodically, but not
less frequently than every four years; (c) providers may request
permission to charge a larger fee, which EOUST will consider on a case-
by-case basis; and (d) whether a provider charges fees for an
instructional session per individual or per couple is within the
business discretion of the provider.
EOUST acknowledges that local variations in income, cost of living,
overhead, inflation, and other factors may influence and lead to inter-
provider differences in determining the reasonableness of instructional
course fees. However, based on EOUST's experience with approved
providers, the $50 presumptively reasonable fee adequately incorporates
the costs associated with complying with the statute and rule, taking
into account the increasing prevalence of telephone and Internet
instruction, both of which have lower costs than in-person instruction,
and the prevalence of group instruction in the post-bankruptcy course
setting. The rule permits providers to exceed the presumptively
reasonable fee after receiving approval from EOUST by demonstrating, at
a minimum, that its costs for delivering the instructional services
justify the requested fee. The provider bears the burden of
establishing that its proposed fee is reasonable. Such requests may
occur at the time of the provider's annual re-application for approval
to provide instructional services, or at any other time the provider
deems necessary. Providers that have previously submitted requests to
charge more than $50, and have been granted permission to do so, will
not be required to resubmit such requests if the provider continues to
charge that fee in the same amount. Of course, any new requests must be
submitted to EOUST for approval.
28. Fee Waivers [Sec. 58.34(b)]
Comment: EOUST received numerous comments concerning the
requirement that providers offer instructional services at a reduced
cost, or waive the fee entirely, for debtors who are financially unable
to pay. The proposed rule requires providers to waive or reduce fees
for debtors whose income is less than 150 percent of the poverty
guidelines updated periodically in the Federal Register by the U.S.
Department of Health and Human Services under the authority of 42
U.S.C. 9902(2), as adjusted from time to time, for a household or
family of the size involved in the fee determination (the ``poverty
level'').
While one comment expressed concern that the association between
the poverty level and the determination of a debtor's ability to pay
necessitated further study and assessment of financial impact on the
providers, one comment objected to the use of 150 percent of the
poverty level as a mandatory fee waiver requirement and suggested that
100 percent of the poverty level was appropriate. Another comment
suggested permitting or implementing a schedule of discounts for
debtors whose incomes fall below the poverty level, but who can afford
to pay some amount, while yet another comment suggested not only that a
debtor should bear the burden of demonstrating inability to pay, but
that a debtor should affirmatively request the fee waiver.
Response: Based on these comments and EOUST's existing fee waiver
data, EOUST has revised the rule to reduce
[[Page 16166]]
the burden on providers while still maintaining adequate protection for
debtors. EOUST acknowledges that standardization may not take into
account local differences, and may have a disparate impact on providers
located in geographic areas of concentrated low income. Although a
provider may apply to EOUST to increase its instructional fee, such fee
increases ultimately shift the fee burden to those debtors more able to
pay.
Furthermore, a mandatory fee waiver for debtors with income at
below 150 percent of the poverty level likely would result in a
substantial increase in the number of fee waivers granted. Although
some commentators urged EOUST to adopt rigid criteria requiring
providers to offer services without charge, such an inflexible rule
would be inconsistent with similar court practices concerning waiver of
court filing fees for in forma pauperis debtors that do not require the
wholesale waiver of filing fees for all debtors with incomes below a
certain income level. Under BAPCPA, debtors earning less than 150
percent of the poverty level are eligible to apply for a waiver of the
court filing fee and the court determines whether an eligible debtor
has the ability to pay the filing fee. Not all debtors who are eligible
for a waiver of the filing fee apply, and not all debtors who apply are
eligible. Fewer than two percent of debtors ultimately obtain a waiver
of court filing fees. In comparison, based on available data from 2005,
approximately 30 percent of chapter 7 debtors are eligible to apply for
a waiver of the court filing fee. If EOUST were to require providers to
adopt a mandatory fee waiver policy with respect to all such debtors,
some providers could suffer severe financial losses that would render
them unable to provide services, reducing capacity to serve the overall
debtor population. As of July 2009, according to self-reporting by
approved debtor education providers, without the proposed mandatory fee
waiver, 12.2 percent of certificates were issued at no cost, with
another 13.9 percent issued at reduced cost.
In response to these concerns, EOUST has adopted a rebuttable
presumption of a mandatory fee waiver or fee reduction policy for
debtors whose income is less than the poverty level, based on the in
forma pauperis standard set forth in 28 U.S.C. Sec. 1930(f)(1). Under
this rebuttable presumption policy, instead of waiving the fee
entirely, a provider may charge a debtor a reduced fee if the provider
determines that the debtor does, in fact, have the ability to pay some
of the fee; the amount may be determined using a sliding scale, of the
provider's design, that takes into account the debtor's financial
circumstances. If the provider determines that the debtor has the
ability to pay some of the fee, there is no minimum amount by which the
provider should reduce the fee; the amount of fee reduction is entirely
dependent upon the debtor's ability to pay as determined by the
debtor's financial circumstances. This rebuttable presumption satisfies
the statutory mandate that instructional services be provided without
regard to a debtor's ability to pay the fee while taking into account
the provider's need to generate sufficient income from fees to cover
operational costs. Accordingly, this policy establishes a uniform,
objective standard by which providers, debtors, and EOUST can evaluate
debtor entitlement to a fee waiver or a fee reduction depending on each
particular debtor's ability to pay. The provider makes the
determination of whether to grant the fee waiver or fee reduction when
the provider provides instruction to the debtor; the provider need not
consult with EOUST before making its determination. EOUST will review a
provider's fee waiver policies and statistics during the provider's
annual review or during a quality of service review. Finally, because
the poverty level is updated periodically and takes into account the
debtor's household size, this policy accounts for nationwide changes in
the cost of living over time.
Establishing a presumptively mandatory but rebuttable fee waiver or
fee reduction policy for debtors whose household income falls below 150
percent of the poverty level recognizes providers' need to generate
sufficient income from fees to cover operational costs in light of the
statutory mandate. To the extent a provider believes the fee waiver
policy set forth in the rule adversely impacts its financial viability,
the provider may apply to EOUST to increase its fee. The provider shall
demonstrate that its costs of delivering instructional services
(including opportunity costs associated with waived or foregone fees)
justify the proposed fee. The rates of both full and partial fee
waivers based on debtor income levels, and the mechanisms by which
providers implement the rebuttable presumption, are subject to EOUST
scrutiny during the annual application review for each approved
provider and during quality of service reviews to assess compliance
with 11 U.S.C. 111 and this final rule.
To permit EOUST to periodically evaluate the cost and business
impact of this mandatory fee waiver policy on debtors and providers,
and determine whether providers are applying the mandatory fee waiver
policy uniformly and fairly, the rule has been amended to add a new
section, Sec. 58.34(b)(2), requiring the United States Trustee to
review the basis for the mandatory fee waiver policy one year after the
effective date of the rule, and then periodically, but not less
frequently than every four years. When reviewing the basis for the
mandatory fee waiver or fee reduction policy, EOUST may consider the
impact on both providers and debtors by evaluating data from providers
concerning the instructional fees, increases to such fees, and rates of
total and partial fee waiver. By retaining the mandatory, objective fee
waiver policy but requiring its periodic review, EOUST advances the
statutory mandate that instructional services be provided without
regard to the debtor's ability to pay, while enabling EOUST to revisit
the objective standard in light of provider operational costs and
impact on debtors. The reasonableness of provider determinations will
continue to be subject to EOUST oversight during the application
process, during on-site reviews, and in the course of resolving
specific complaints.
29. Certificates--Bundling [Sec. 58.34(d)]
Comment: One comment recommended revising this provision to permit
providers who also offer credit counseling to offer a discount to
credit counseling clients who return to the provider for post-
bankruptcy instruction. The comment recommended new language to read,
``A provider shall not combine a debtor's purchase of an instructional
course with the purchase of any other service offered by the
provider.''
Response: EOUST does not prohibit the practice of discounting post-
bankruptcy instructional course fees for credit counseling clients who
return to take the instructional course as long as the provider does
not require the client to purchase both courses. The rule's prohibition
against linking services does not prohibit credit counseling agencies
from offering a discount to debtors who wish to return for post-
bankruptcy instruction. No change to the rule is necessary.
30. Delivery of Certificates--to Whom [Sec. 58.35(a)]
Comment: EOUST received several comments concerning delivery of
certificates to a debtor's attorney. The proposed rule required a
debtor to authorize, in writing, the delivery of the instructional
certificate to the debtor's attorney. The comments expressed the
opinion that requiring a debtor to provide written consent to a
provider is
[[Page 16167]]
inefficient, particularly when the debtor receives instruction by
telephone or Internet. In such instances, the comments stated, mail
transmission of written consent to a provider delays the delivery of
the certificate. Rather than requiring written consent, the rule should
permit the debtor to authorize verbally the provider to send the
certificate to the debtor's attorney.
Response: EOUST agrees that written consent to deliver a
certificate to a debtor's attorney is unnecessary and unduly impedes
the efficiency of telephone and Internet instruction. Accordingly, the
rule has been revised to permit verbal authorization to send a
certificate to a debtor's attorney. In the case of Internet
instruction, electronic mail authorization or an electronic affirmation
(such as a radio button or a box on a Web page) is sufficient.
31. Delivery of Certificates--Time [Sec. 58.35(b)]
Comment: Several comments objected to the requirement that a
provider deliver the certificate to a debtor within three business days
of completion of the instructional course. One comment suggested that
the rule specify that ``delivery'' means transmission, not receipt.
Response: The requirement that a provider send the certificate to a
debtor within three business days accords the provider adequate time
and is commercially reasonable. The term ``deliver'' has been changed
to ``send'' to encompass a wide range of transmission methods. To the
extent a provider is unable to send the certificate within the
specified time because of extenuating circumstances, such as problems
with generating or printing the certificate, illness of the instructor,
or other circumstances beyond the provider's control, EOUST can
evaluate such incidents on a case-by-case basis.
32. Certificates--Fees [Sec. Sec. 58.33(k)(1) and 58.35]
Comment: Several comments objected to permitting providers to
charge separate fees for certificates; other comments sought
clarification concerning the type of consent providers must obtain
before charging additional fees for certificates. One comment sought
clarification in the case of telephone and Internet instruction, and
suggested that clients be able to consent verbally or electronically in
such cases.
Response: EOUST concludes that the rule should not have specific
instructions for circumstances that arise infrequently as most
providers do not charge a separate fee for the issuance of the
certificate. Accordingly, the rule has been amended to strike the
specific and additional instructions for providers that charge separate
fees for certificates. Instead, the final rule requires the general
disclosures to include disclosure of all fees, including any additional
fees for certificates. This is not an additional burden on providers as
the proposed rule, and Interim Final Rule, already require providers to
disclose their fee policy before rendering services.
33. Certificates--Issuance [Sec. 58.35(h)]
Comment: One comment objected to the proposed rule on the grounds
that certificate issuance is a purely administrative function, and
entities operating under the authority of an approved provider, in
addition to providers, should be permitted to issue certificates.
Response: The certificate avers that the instructor has provided
the represented instruction to the debtor. Accordingly, the requirement
that only approved providers generate certificates, and not subsidiary
or related but unapproved entities, serves quality control and consumer
protection functions. Accordingly, no change to the rule is necessary.
34. Certificates--Original Signature [Sec. 58.35(j)(2)]
Comment: Several comments objected to the requirement that
certificates generated for electronic filing must be generated in paper
form as well and must bear the original signature of the instructor.
The comments criticized the requirement as expensive and time-
consuming, and noted that the rule contains precautions against
creation of forged or fraudulent certificates.
Response: EOUST agrees and has reduced the burden on providers by
deleting the requirement that, when a certificate is generated for
electronic filing with the court, the provider must provide the debtor
a paper certificate bearing the instructor's original signature as
well.
35. Certificates--Information [Sec. 58.35(l)]
Comment: Two comments sought revisions concerning information on
the certificate. One comment recommended a revision to the rule
specifically authorizing providers to verify the judicial district in
which the debtor's bankruptcy case is pending via PACER or other court
records, to minimize debtor error. Another comment objected to the
requirement that the certificate bear the instructor's name.
Response: No change to the rule is necessary. Nothing in the rule
or 11 U.S.C. 111(d) prohibits instructors or providers from accessing
public records, to the extent authorized, to verify the judicial
district in which the debtor's bankruptcy case is pending, or from
requesting that debtors bring a copy of a court document to the
instructional course. Furthermore, the requirement that the certificate
bear the instructor's name is necessary to permit EOUST to confirm the
quality of instruction by a particular instructor.
36. Certificates--Legal Name [Sec. 58.35(m)]
Comment: EOUST received several comments concerning the display of
two names on the certificate when a third party (such as an attorney-
in-fact acting under a valid power of attorney) completes instruction
on behalf of the debtor. The comments expressed doubt that a
certificate can display two names rather than one. Several comments
expressed the opinion that, rather than leaving open the possibility
that a third party can complete the course on behalf of the debtor
under certain circumstances, the rule expressly should prohibit third
parties from taking instruction on behalf of debtors.
EOUST also received one comment recommending an amendment to the
rule permitting the provider to ``affix debtor's name as it appears on
debtor's bankruptcy filing.''
Response: Certificates may display more than one name (e.g., John
Doe, as Attorney-In-Fact for Jane Doe). No clarification is necessary
to permit such a display, and the display of both names removes the
need for providers to engage in legal analysis concerning the proper
party to list on the certificate, while providing full disclosure to
courts and other parties concerning the debtor's participation in
instruction. Furthermore, EOUST declines to prohibit third parties from
completing instruction on behalf of a debtor under appropriate
circumstances, such as under a valid power of attorney sufficient to
authorize the individual to file a bankruptcy petition on behalf of a
client. To the extent state law authorizes powers of attorney, EOUST
does not object to the completion of instruction by duly authorized
attorneys-in-fact on behalf of debtors.
No change to the rule is necessary to permit providers to affix a
debtor's name as it appears on the debtor's bankruptcy filing. The
debtor bears the burden of providing the provider with the proper name.
37. Appeals [Sec. 58.36]
Comment: One comment sought clarification concerning several
aspects
[[Page 16168]]
of the appeal process. First, the comment requested inclusion of a
specific statement that interim directives removing a provider from the
approved list are rare and should be used only in extraordinary
circumstances. Second, the comment also requested clarification that
the appeal period begins to run upon the provider's receipt of the
United States Trustee's removal decision, rather than from the date the
United States Trustee made the decision. Finally, the comment sought to
limit the authority of the Director to extend its review period due to
exigent circumstances.
Response: No change to the rule is necessary. First, by their
nature, the specifically enumerated circumstances permitting interim
directives ensure that only in limited circumstances will the United
States Trustee remove a provider from the approved list pursuant to the
interim directive procedure. Second, the rule provides that, to be
timely, appeal documents shall be received not later than 21 calendar
days from the date of the notice to the provider. The rule is
unambiguous. The Director shall receive the documents within 21
calendar days of the date of the notice, even if the provider does not
have 21 calendar days to respond. The rule also requires the United
States Trustee to deliver removal documents to the provider by
overnight courier to avoid loss of time and prejudice to the provider.
Finally, the Director will generally not extend the deadline to issue a
final decision unless the provider agrees to the extension of time.
However, there may be circumstances where the Director needs to extend
the deadline but the provider unreasonably declines to extend the
deadline. In such instances, the Director must have the authority to
extend the deadline to ensure that a thorough and fair consideration of
the provider's request for review has occurred before issuing a final
decision.
38. Appeals--Return of Client Fees [Sec. 58.36(q)(3)]
Comment: One comment recommended extending the time for providers
removed from the list of approved providers to explain why they require
additional time to complete refunds to debtors. The comment also
recommended changing the criteria for debtors eligible to receive a
return of fees to those who had ``substantially'' received instruction,
rather than those who had ``completely'' received instruction.
Response: No change to the rule is necessary. EOUST will consider
prompt and reasonable requests for extension of time and the rule
already provides for the return of fees for anyone who has paid for
services but not received them.
Executive Order 12866
This rule has been drafted and reviewed in accordance with
Executive Order 12866, ``Regulatory Planning and Review,'' section
1(b), The Principles of Regulation. The Department has determined that
this rule is a ``significant regulatory action'' and, accordingly, this
rule has been reviewed by the Office of Management and Budget
(``OMB'').
The Department has also assessed both the costs and benefits of
this rule as required by section 1(b)(6) and has made a reasoned
determination that the benefits of this regulation justify its costs.
The costs considered in this regulation include the required costs for
the submission of an application. Costs considered also include the
cost of establishing and maintaining the approved list in each federal
judicial district. In an effort to minimize the burden on applicants,
the application keeps the number of items on the application to a
minimum.
The costs to an applicant of submitting an application will be
minimal. The anticipated costs are the photocopying and mailing of the
requested records, along with the salaries of the employees who
complete the applications. Based upon the available information,
experience with the instructional course industry, and informal
communications with providers, EOUST anticipates that this cost for
submitting an application should equal approximately $500 per
application for providers. This cost is not new. It is the same cost
that providers incurred when applying under the Interim Final Rule.
Although providers may charge a fee for providing the financial
management instructional course, providers must provide the
instructional course without regard to a debtor's ability to pay the
fee in accordance with 11 U.S.C. 111(d)(1)(E). Based upon the available
information, current practice of many providers, experience with the
instructional course industry, and informal communications with
providers, $50 is presumed to be a reasonable fee for an instructional
course. This rule does not prevent providers from charging more than
$50. It requires providers to notify EOUST of any additional charge
prior to implementing the additional fee and justify the additional
cost to obtain EOUST approval for the increased fee.
The amount presumed to be reasonable for instructional course fees
will be reviewed one year after the effective date of this rule, and
then periodically, but not less frequently than every four years. The
amount presumed to be reasonable will be published by notice in the
Federal Register and identified on the EOUST Web site. In addition, all
providers must waive or reduce the fee if the debtor demonstrates a
lack of ability to pay the fee, which shall be presumed if the debtor's
current household income is less than 150 percent of the poverty level,
as adjusted from time to time, for a household or family of the size
involved in the fee determination. A provider may rebut this
presumption if the provider determines, based on financial information
provided by the debtor in connection with instructional services, that
the debtor is able to pay the fee in a reduced amount. Please refer to
the Regulatory Flexibility Act section for a discussion on fees, fee
waivers and fee reductions.
Additionally, providers will incur de minimus recordkeeping costs.
For instance, a provider will be required to maintain various records,
such as records on which it relied in submitting its application;
copies of the semi-annual reports; records on instruction provided in
languages other than English; fees, fee waiver and fee reduction
statistics; complaints; and records enabling the provider to issue
replacement certificates. All of these records combined should not
equal more than a few pages or megabytes of information. Moreover, the
increased specificity in this rule regarding records retention
requirements reduce the burden on providers because the Interim Final
Rule required providers to maintain records, but did not specify which
records needed to be kept, nor for how long. With implementation of
this rule, providers no longer need to keep every record for an
unspecified amount of time in case such records are requested during an
annual review or quality of service review.
The number of applicants that will ultimately apply is unknown,
though EOUST currently has approved approximately 270 providers. The
annual hour burden on providers is estimated to be ten hours. This
estimate is based on consultations with individuals in the
instructional course industry, and experience with providers who
completed the initial applications. EOUST consulted with the Federal
Trade Commission and with the Internal Revenue Service in drafting this
rule and concludes that the rule does not have an adverse effect upon
either agency.
The benefits of this rule include the development of standards that
increase
[[Page 16169]]
consumer protections, such as a limit on the presumption of reasonable
fees, and the requirement that providers give adequate disclosures
concerning providers' policies. These disclosures include notifying
debtors that they may qualify for reduced or free services to further
the BAPCPA's requirement that services be provided without regard to
ability to pay the fee. This rule also provides for greater supervision
by the United States Trustee to ensure providers deliver effective
instruction to debtors concerning personal financial management.
Additionally, this rule assists in reducing fraud by requiring
providers to identify debtors before providing an instructional course
and corresponding certificate of completion. Another benefit of this
rule is clarifying that providers who cannot provide instruction in the
debtor's language shall expeditiously direct the debtor to a provider
who can provide services in the debtor's language. These benefits
justify the rule's costs in complying with Congress' mandate that a
list of approved providers be established. Public Law 109-8, Sec.
106(e)(1).
Executive Order 13132
This rule will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, in accordance with Executive Order
13132, it is determined that this rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
Paperwork Reduction Act
The information collection requirements contained in this rule have
been approved by OMB in accordance with the Paperwork Reduction Act of
1995, 44 U.S.C. 3501 to 3520, and assigned OMB control number 1105-0085
for form EOUST-DE1, the ``Application for Approval as a Provider of a
Personal Financial Management Instructional Course.'' The Department
notes that full notice and comment opportunities were provided to the
general public through the Paperwork Reduction Act process, and that
the application and associated requirements were modified to take into
account the concerns of those who commented in this process.
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act, 5 U.S.C. 605(b),
the Director has reviewed this rule and, by approving it, certifies
that although it will affect a substantial number of small entities,
the rule will not have a significant economic impact upon them.
This rule sets forth guidance concerning the reasonable fee a
provider may charge (a presumptively reasonable fee of $50), and the
criteria for determining fee waiver eligibility (presumed eligibility
at household income of 150 percent of the poverty level). EOUST sought
to establish formal guidance concerning fees, fee waivers and fee
reductions based on a debtor's ``ability to pay the fee'' using
objective criteria, taking into account the potential financial impact
on the agencies as well as the needs of clients. 11 U.S.C.
111(d)(1)(E).
After carefully evaluating the financial management instructional
course industry, EOUST based its fee guidance on current industry
practice. Over 90 percent of approved providers charge $50 or less.
According to a U.S. Government Accountability Office (``GAO'') report
in 2007, the mean fee for providers among all providers was $43. See
U.S. Gov't Accountability Office, GAO-07-203, Bankruptcy Reform: Value
of Credit Counseling Requirement is Not Clear 30 (2007) (the ``GAO
Report''). As of 2011, the mean fee for providers among all providers
is $42. Among the ten largest providers (by certificate volume), nearly
all charge $50 or less in fees. Only two of the ten largest providers
charge more than $50 (one of the providers in question charges $50, but
increases the fee to $75 for telephone instruction; the other provider
charges $55, but increases the fee to $59 for telephone instruction).
Four of the ten largest providers charge substantially less than $50:
one charges $25; one charges $24; one charges $19; and the other
charges $14.95. According to EOUST records, fee policies have not
changed among the ten largest providers since 2006.
In 2011, EOUST took a random sampling of ten providers that were
not among the ten largest providers to determine these providers' fees.
Of these ten providers, one charges $50; one charges $40; one charges
$37.50; one charges $35; four charge $25; one charges $9; and one is
free of charge. Accordingly, a $50 presumptively reasonable fee not
only strikes an appropriate balance between the financial condition of
debtors and the financial viability of approved providers, but is
generally equivalent to the general practice in the debtor education
industry. Thus, establishing a presumptively reasonable fee of $50 does
not impose a significant economic impact on providers. Rather, it
embodies a fee structure that encompasses that already widespread in
the industry.
Regarding fee waivers, similar to the requirement to charge
``reasonable'' fees, the requirement to waive fees when a client cannot
pay is mandated by statute. 11 U.S.C. 111(d)(1)(E). With respect to the
development of the fee waiver standard, the GAO undertook a study
concerning, among other things, the incidence of fee waivers based on
ability to pay. The GAO noted that the Interim Final Rule did not
provide specific guidance on the criteria providers should use to
determine a client's ability to pay. See GAO Report at 29-32. The GAO
noted variations in the rate of fee waivers and recommended that EOUST
adopt clearer guidance to providers to reduce uncertainty among
providers concerning appropriate fee waiver criteria, to improve
transparency concerning EOUST's assessment of fee waiver policies, and
to increase the availability of fee waivers by setting clear minimum
benchmarks for ability to pay. Id. at 32, 40-41.
Among the ten largest providers, six use household income at or
below 150 percent of the poverty level as the threshold for determining
eligibility for a fee waiver. Two providers consider the debtor's
income and whether the debtor was granted a court fee waiver; one
provider uses 100 percent of poverty level; and one provider assesses
the debtor's housing status and existence of severe hardship. In 2011,
EOUST took a random sampling of ten providers that were not among the
ten largest providers to determine these providers' fee waiver
policies. Half of the providers use the 150 percent of poverty level
standard; one provider uses the in forma pauperis or pro bono standard
without specifying 150 percent; two providers use 100 percent of the
poverty level; one provider uses 200 percent of the poverty level; and
one provider does not charge a fee for its instructional course.
In the proposed rule, EOUST proposed a bright-line standard
establishing entitlement to a fee waiver for debtors with household
income equal to or less than 150 percent of the poverty level. That
standard was based on the in forma pauperis standard set forth in 28
U.S.C. 1930(f)(1), which permits the bankruptcy court to waive filing
fees for eligible individuals. The proposed rule standard did not grant
debtors the discretion to determine whether clients otherwise were able
to pay the fees.
Subsequently, EOUST received and considered comments to the
proposed rule. EOUST agreed that
[[Page 16170]]
implementation of the proposed standardized fee waiver raised some
policy concerns. Because standardization fails to take into account
local differences, disparate impact on providers may result when
providers located in geographic areas of concentrated low income
individuals are required to grant fee waivers at a higher rate than
those in more affluent areas. Although a provider may apply to EOUST to
increase its fee by demonstrating that its costs of delivering services
(including opportunity costs associated with waived or reduced fees)
justify the proposed fee, increases in fees ultimately shift the fee
burden to those debtors more able to pay. As of July 2009, according to
self-reporting by approved debtor education providers, without the
proposed mandatory fee waiver, 12.2 percent of certificates were issued
at no cost, with another 13.9 percent issued at reduced cost. In
comparison, based on available data from 2005, approximately 30 percent
of chapter 7 debtors were eligible to apply for a waiver of the court
filing fee pursuant to the 150 percent in forma pauperis standard.
Based on this analysis, EOUST concluded that if providers were subject
to a mandatory fee waiver policy with respect to all such debtors based
on the in forma pauperis standard, some providers might suffer
financial losses that would render them unable to provide services,
reducing capacity to serve the overall debtor population.
Accordingly, EOUST revised this rule to include a rebuttable
presumption to the objective fee waiver standard. In adopting the
presumption, EOUST seeks to balance the need for an objective fee
waiver standard and complying with 11 U.S.C. 111(d)(1)(E) with
providers' need to collect adequate fees for services provided. Under
the rebuttable presumption, a debtor with household income equal to or
less than 150 percent of the poverty level is presumptively entitled to
a fee waiver, but the provider may determine, based on information it
receives from the debtor, that the debtor actually is able to pay the
fee in part. In that case, the provider may charge the debtor a reduced
fee, taking into account the debtor's actual ability to pay. This
rebuttable presumption balances the need for an objective fee waiver
standard, consumer protection, and the need to ensure provider
compliance with the Bankruptcy Code with the providers' need to collect
adequate fees.
Additionally, although EOUST considered indexing fee waivers to
debtor income, EOUST determined that such an indexing system fails to
take into account the variation in ability to pay for debtors at the
same income level. For example, two debtors may have income at 150
percent of the poverty level, but one debtor lives in a rent-free home
and has few expenses while the other has significant expenses, such as
accumulated medical debts or child support payments. An inflexible
indexing standard does not take into account the individual's actual
ability to pay the fee, as set forth in 11 U.S.C. 111(d)(1)(E). EOUST
concluded that each provider should determine each debtor's eligibility
based on the debtor's individual financial circumstances.
Unfunded Mandates Reform Act of 1995
This rule does not require the preparation of an assessment
statement in accordance with the Unfunded Mandates Reform Act of 1995,
2 U.S.C. 1531. This rule does not include a federal mandate that may
result in the annual expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of more than
the annual threshold established by the Act ($100 million). Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C.
801 et seq. This rule will not result in an annual effect on the
economy of $100 million or more; a major increase in costs or prices;
or significant adverse effects on competition, employment, investment,
productivity, and innovation; or on the ability of United States-based
companies to compete with foreign-based companies in domestic and
export markets.
Privacy Act Statement
Section 111 of title 11, United States Code, authorizes the
collection of this information. The primary use of this information is
by the United States Trustee to approve providers of a personal
financial management instructional course. The United States Trustee
will not share this information with any other entity unless authorized
under the Privacy Act, 5 U.S.C. 552a et seq. EOUST has published a
System of Records Notice that delineates the routine use exceptions
authorizing disclosure of information. 71 FR 59,818, 59,827 (Oct. 11,
2006), JUSTICE/UST-005, Credit Counseling and Debtor Education Files
and Associated Records.
Public Law 104-134 (April 26, 1996) requires that any person doing
business with the federal government furnish a Social Security Number
or Tax Identification Number. This is an amendment to section 7701 of
title 31, United States Code. Furnishing the Social Security Number, as
well as other data, is voluntary, but failure to do so may delay or
prevent action on the application.
List of Subjects in 28 CFR Part 58
Administrative practice and procedure, Bankruptcy, Credit and
debts.
Accordingly, for the reasons set forth in the preamble, Part 58 of
chapter I of title 28 of the Code of Federal Regulations is amended as
follows:
PART 58--[AMENDED]
0
1. The authority citation for Part 58 continues to read as follows:
Authority: 5 U.S.C. 301, 552; 11 U.S.C. 109(h), 111, 521(b),
727(a)(11), 1141(d)(3), 1202, 1302, 1328(g), 28 U.S.C. 509, 510,
586, 589b.
0
2. Sections 58.25 through 58.27 are revised to read as follows:
Sec. 58.25 Definitions.
(a) The following definitions apply to Sec. Sec. 58.25 through and
including 58.36 of this Part, as well as the applications and other
materials providers submit in an effort to establish they meet the
requirements necessary to become an approved provider of a personal
financial management instructional course.
(b) These terms shall have these meanings:
(1) The term ``accreditation'' means the recognition or endorsement
that an accrediting organization bestows upon a provider because the
accrediting organization has determined the provider meets or exceeds
all the accrediting organization's standards;
(2) The term ``accrediting organization'' means either an entity
that provides accreditation to providers or provides certification to
instructors, provided, however, that an accrediting organization shall:
(i) Not be a provider or affiliate of any provider; and
(ii) Be deemed acceptable by the United States Trustee;
(3) The term ``affiliate'' means:
(i) Every entity that is an affiliate of the provider, as the term
``affiliate'' is defined in 11 U.S.C. 101(2), except that the word
``provider'' shall be substituted
[[Page 16171]]
for the word ``debtor'' in 11 U.S.C. 101(2);
(ii) Each of a provider's officers and each of a provider's
directors; and
(iii) Every relative of a provider's officers and every relative of
a provider's directors;
(4) The term ``application'' means the application and related
forms, including appendices, approved by the Office of Management and
Budget as form EOUST-DE1, Application for Approval as a Provider of a
Personal Financial Management Instructional Course, as it shall be
amended from time to time;
(5) The term ``approved list'' means the list of providers
currently approved by a United States Trustee under 11 U.S.C. 111 as
currently published on the United States Trustee Program's Internet
site, which is located on the United States Department of Justice's
Internet site;
(6) The term ``approved provider'' means a provider currently
approved by a United States Trustee under 11 U.S.C. 111 as an approved
provider of a personal financial management instructional course
eligible to be included on one or more lists maintained under 11 U.S.C.
111(a)(1);
(7) The term ``certificate'' means the document an approved
provider shall provide to a debtor after the debtor completes an
instructional course, if the approved provider does not notify the
appropriate bankruptcy court in accordance with the Federal Rules of
Bankruptcy Procedure that a debtor has completed the instructional
course;
(8) The term ``debtor'' shall have the meaning given that term in
11 U.S.C. 101(13), to the extent that individual has sought an
instructional course from an approved provider;
(9) The term ``Director'' means the person designated or acting as
the Director of the Executive Office for United States Trustees;
(10) The term ``effective instruction'' means the actual receipt of
an instructional course by a debtor from an approved provider, and all
other applicable services, rights, and protections specified in:
(i) 11 U.S.C. 111; and
(ii) this part;
(11) The term ``entity'' shall have the meaning given that term in
11 U.S.C. 101(15);
(12) The terms ``fee'' and ``fee policy'' each mean the aggregate
of all fees an approved provider charges debtors for providing an
instructional course, including the fees for any materials; ``fee
policy'' shall also mean the objective criteria the provider uses in
determining whether to waive or reduce any fee, contribution, or
payment;
(13) The term ``final decision'' means the written determination
issued by the Director based upon the review of the United States
Trustee's decision either to deny a provider's application or to remove
an approved provider from the approved list;
(14) The term ``financial benefit'' means any interest equated with
money or its equivalent, including, but not limited to, stocks, bonds,
other investments, income, goods, services, or receivables;
(15) The term ``governmental unit'' shall have the meaning given
that term in 11 U.S.C. 101(27);
(16) The term ``independent contractor'' means a person or entity
who provides any goods or services to an approved provider other than
as an employee and as to whom the approved provider does not:
(i) Direct or control the means or methods of delivery of the goods
or services being provided;
(ii) Make financial decisions concerning the business aspects of
the goods or services being provided; and
(iii) Have any common employees;
(17) The term ``instructional course'' means a course in personal
financial management that is approved by the United States Trustee
under 11 U.S.C. 111 and this part, including the learning materials and
methodologies in Sec. 58.33(f), which is to be taken and completed by
the debtor after the filing of a bankruptcy petition and before
receiving a discharge under 11 U.S.C. 727(a)(11), 1141(d)(3) or
1328(g)(1);
(18) The term ``instructor'' means an individual who teaches,
presents or explains substantive instructional course materials to
debtors, whether provided in person, by telephone, or through the
Internet;
(19) The term ``languages offered'' means every language other than
English in which an approved provider offers an instructional course;
(20) The term ``legal advice'' shall have the meaning given that
term in 11 U.S.C. 110(e)(2);
(21) The term ``limited English proficiency'' refers to individuals
who:
(i) Do not speak English as their primary language; and
(ii) Have a limited ability to read, write, speak, or understand
English;
(22) The term ``material change'' means, alternatively, any change:
(i) In the name, structure, principal contact, management,
instructors, physical location, instructional course, fee policy,
language services, or method of delivery of an approved provider; or
(ii) That renders inapplicable, inaccurate, incomplete, or
misleading any statement a provider previously made:
(A) In its application or related materials; or
(B) To the United States Trustee;
(23) The term ``method of delivery'' means one or more of the three
methods by which an approved provider can provide some component of an
instructional course to debtors, including:
(i) ``In person'' delivery, which applies when a debtor primarily
receives an instructional course at a physical location with an
instructor physically present in that location, and with the instructor
providing oral and/or written communication to the debtor at the
facility;
(ii) ``Telephone'' delivery, which applies when a debtor primarily
receives an instructional course by telephone; and
(iii) ``Internet'' delivery, which applies when a debtor primarily
receives an instructional course through an Internet Web site;
(24) The term ``notice'' in Sec. 58.36 means the written
communication from the United States Trustee to a provider that its
application to become an approved provider has been denied or to an
approved provider that it is being removed from the approved list;
(25) The term ``provider'' shall mean any entity that is applying
under this part for United States Trustee approval to be included on a
publicly available list in one or more United States district courts,
as authorized by 11 U.S.C. 111(a)(1), and shall also mean, whenever
appropriate, an approved provider;
(26) The term ``referral fees'' means money or any other valuable
consideration paid or transferred between an approved provider and
another entity in return for that entity, directly or indirectly,
identifying, referring, securing, or in any other way encouraging any
debtor to receive an instructional course from the approved provider;
(27) The term ``relative'' shall have the meaning given that term
in 11 U.S.C. 101(45);
(28) The term ``request for review'' means the written
communication from a provider to the Director seeking review of the
United States Trustee's decision either to deny the provider's
application or to remove the provider from the approved list;
(29) The term ``state'' means state, commonwealth, district, or
territory of the United States;
(30) The term ``United States Trustee'' means, alternatively:
(i) The Executive Office for United States Trustees;
[[Page 16172]]
(ii) A United States Trustee appointed under 28 U.S.C. 581;
(iii) A person acting as a United States Trustee;
(iv) An employee of a United States Trustee; or
(v) Any other entity authorized by the Attorney General to act on
behalf of the United States under this part.
Sec. 58.26 Procedures all providers shall follow when applying to
become approved providers.
(a) A provider applying to become an approved provider shall obtain
an application, including appendices, from the United States Trustee.
(b) The provider shall complete the application, including its
appendices, and attach the required supporting documents requested in
the application.
(c) The provider shall submit the original of the completed
application, including completed appendices and the required supporting
documents, to the United States Trustee at the address specified on the
application form.
(d) The application shall be signed by a representative of the
provider who is authorized under applicable law to sign on behalf of
the applying provider.
(e) The signed application, completed appendices, and required
supporting documents shall be accompanied by a writing, signed by the
signatory of the application and executed on behalf of the signatory
and the provider, certifying the application does not:
(1) Falsify, conceal, or cover up by any trick, scheme or device a
material fact;
(2) Make any materially false, fictitious, or fraudulent statement
or representation; or
(3) Make or use any false writing or document knowing the same to
contain any materially false, fictitious, or fraudulent statement or
entry.
(f) The United States Trustee shall not consider an application,
and it may be returned if:
(1) It is incomplete;
(2) It fails to include the completed appendices or all of the
required supporting documents; or
(3) It is not accompanied by the certification identified in the
preceding subsection.
(g) The United States Trustee shall not consider an application on
behalf of a provider, and it shall be returned if:
(1) It is submitted by any entity other than the provider; or
(2) Either the application or the accompanying certification is
executed by any entity other than a representative of the provider who
is authorized under applicable law to sign on behalf of the provider.
(h) By the act of submitting an application, a provider consents to
the release and disclosure of its name, contact information, and non-
confidential business information relating to the services it provides
on the approved list should its application be approved.
Sec. 58.27 Automatic expiration of providers' status as approved
providers.
(a) Except as provided in Sec. 58.28(c), if an approved provider
was not an approved provider immediately prior to the date it last
obtained approval to be an approved provider, such an approved provider
shall cease to be an approved provider six months from the date on
which it was approved unless the United States Trustee approves an
additional one year period.
(b) Except as provided in Sec. 58.28(c), if an approved provider
was an approved provider immediately prior to the date it last obtained
approval to be an approved provider, such a provider shall cease to be
an approved provider one year from the date on which it was last
approved to be an approved provider unless the United States Trustee
approves an additional one year period.
0
3. Sections 58.28 through 58.36 are added and read as follows:
Sec. 58.28 Procedures all approved providers shall follow when
applying for approval to act as an approved provider for an additional
one year period.
(a) To be considered for approval to act as an approved provider
for an additional one year term, an approved provider shall reapply by
complying with all the requirements specified for providers under 11
U.S.C. 111, and under this part.
(b) Such a provider shall apply no later than 45 days prior to the
expiration of its six month probationary period or annual period to be
considered for approval for an additional one year period, unless a
written extension is granted by the United States Trustee.
(c) An approved provider that has complied with all prerequisites
for applying to act as an approved provider for an additional one year
period may continue to operate as an approved provider while its
application is under review by the United States Trustee, so long as
either the application for an additional one year period is timely
submitted, or a provider receives a written extension from the United
States Trustee.
Sec. 58.29 Renewal for an additional one year period.
If an approved provider's application for an additional one year
period is approved, such renewal period shall begin to run from the
later of:
(a) The day after the expiration date of the immediately preceding
approval period; or
(b) The actual date of approval of such renewal by the United
States Trustee.
Sec. 58.30 Mandatory duty of approved providers to notify United
States Trustees of material changes.
(a) An approved provider shall immediately notify the United States
Trustee in writing of any material change.
(b) An approved provider shall immediately notify the United States
Trustee in writing of any failure by the approved provider to comply
with any standard or requirement specified in 11 U.S.C. 111, this part,
or the terms under which the United States Trustee approved it to act
as an approved provider.
(c) An approved provider shall immediately notify the United States
Trustee in writing of any of the following events:
(1) Cessation of business by the approved provider or by any office
of the provider, or withdrawal from any federal judicial district(s)
where the approved provider is approved;
(2) Any investigation of, or any administrative or judicial action
brought against, the approved provider by any governmental unit;
(3) Any action by a governmental unit or a court to suspend or
revoke the approved provider's articles of incorporation, or any
license held by the approved provider, or any authorization necessary
to engage in business; or
(4) A suspension, or action to suspend, any accreditation held by
the approved provider, or any withdrawal by the approved provider of
any application for accreditation, or any denial of any application of
the approved provider for accreditation; or
(5) [reserved].
(d) A provider shall notify the United States Trustee in writing if
any of the changes identified in paragraphs (a) through (c) of this
section occur while its application to become an approved provider is
pending before the United States Trustee.
(e) An approved provider whose name or other information appears
incorrectly on the approved list shall immediately submit a written
request to the United States Trustee asking that the information be
corrected.
[[Page 16173]]
Sec. 58.31 Mandatory duty of approved providers to obtain prior
consent of the United States Trustee before taking certain actions.
(a) By accepting the designation to act as an approved provider, a
provider agrees to obtain approval from the United States Trustee,
prior to making any of the following changes:
(1) The engagement of an independent contractor to provide an
instructional course;
(2) Any increase in the fees received from debtors for an
instructional course or a change in the provider's fee policy;
(3) Expansion into additional federal judicial districts;
(4) Any changes to the method of delivery the approved provider
employs to provide an instructional course; or
(5) Any changes in the approved provider's instructional course.
(b) A provider applying to become an approved provider shall also
obtain approval from the United States Trustee before taking any action
specified in paragraph (a) of this section. It shall do so by
submitting an amended application. The provider's amended application
shall be accompanied by a contemporaneously executed writing, signed by
the signatory of the application, that makes the certifications
specified in Sec. 58.26(e).
(c) An approved provider shall not transfer or assign its United
States Trustee approval to act as an approved provider.
Sec. 58.32 Continuing requirements for becoming and remaining
approved providers.
(a) To become an approved provider, a provider must affirmatively
establish, to the satisfaction of the United States Trustee, that the
provider at the time of approval:
(1) Satisfies every requirement of this part; and
(2) Provides effective instruction to its debtors.
(b) To remain an approved provider, an approved provider shall
affirmatively establish, to the satisfaction of the United States
Trustee, that the approved provider:
(1) Has satisfied every requirement of this part;
(2) Has provided effective instruction to its debtors; and
(3) Will continue to satisfy both paragraphs (b)(1) and (2) of this
section in the future.
Sec. 58.33 Minimum qualifications providers shall meet to become and
remain approved providers.
To meet the minimum qualifications set forth in Sec. 58.32, and in
addition to the other requirements set forth in this part, providers
and approved providers shall comply with paragraphs (a) through (n) of
this section on a continuing basis:
(a) Compliance with all laws. A provider shall comply with all
applicable laws and regulations of the United States and each state in
which the provider provides an instructional course including, without
limitation, all laws governing licensing and registration.
(b) Prohibition on legal advice. A provider shall not provide legal
advice.
(c) Ethical standards. A provider shall:
(1) Ensure no member of the board of directors or trustees, officer
or supervisor is a relative of an employee of the United States
Trustee, a trustee appointed under 28 U.S.C. 586(a)(1) for any federal
judicial district where the provider is providing or is applying to
provide an instructional course, a federal judge in any federal
judicial district where the provider is providing or is applying to
provide an instructional course, or a federal court employee in any
federal judicial district where the provider is providing or is
applying to provide an instructional course;
(2) Not enter into any referral agreement or receive any financial
benefit that involves the provider paying to or receiving from any
entity or person referral fees for the referral of debtors to or by the
provider; and
(3) Not enter into agreements involving an instructional course
that create a conflict of interest; and
(4) Not contact any debtor utilizing the United States Postal
Service, or other mail carrier, or electronic mail for the purpose of
soliciting debtors to utilize the provider's instructional course,
unless:
(i) Any such solicitations include the phrase ``This is an
advertisement for services'' or ``This is a solicitation;''
(ii) Prominently displayed at the beginning of each page of the
solicitation;
(iii) In a font size larger than or equal to the largest font size
otherwise used in the solicitation;
(iv) Any such solicitations include only logos, seals, or similar
marks that are substantially dissimilar to the logo, seal, or similar
mark of any agency or court of the United States government, including
but not limited to the United States Trustee Program.
(d) Instructor training, certification and experience. A provider
shall:
(1) Use only instructors who possess adequate experience providing
an instructional course, which shall mean that each instructor either:
(i) Holds one of the certifications listed below and who has
complied with all continuing education requirements necessary to
maintain that certification:
(A) Certified as a Certified Financial Planner;
(B) Certified as a credit counselor by an accrediting organization;
(C) Registered as a Registered Financial Consultant; or
(D) Certified as a Certified Public Accountant; or
(ii) Has successfully completed a course of study or worked a
minimum of six months in a related area such as personal finance,
budgeting, or credit or debt management. A course of study must include
training in personal finance, budgeting, or credit or debt management.
An instructor shall also receive annual continuing education in the
areas of personal finance, budgeting, or credit or debt management;
(2) Demonstrate adequate experience, background, and quality in
providing an instructional course, which shall mean that, at a minimum,
the provider shall either:
(i) Have experience in providing an instructional course for the
two years immediately preceding the relevant application date; or
(ii) For each office providing an instructional course, employ at
least one supervisor who has met the qualifications in paragraph
(d)(2)(i) of this section for no fewer than two of the five years
preceding the relevant application date; and
(iii) If offering any component of an instructional course by a
telephone or Internet method of delivery, use only instructors who, in
addition to all other requirements, demonstrate sufficient experience
and proficiency in providing such an instructional course by those
methods of delivery, including proficiency in employing verification
procedures to ensure the person receiving the instructional course is
the debtor, and to determine whether the debtor has completely received
an instructional course.
(e) Use of the telephone and the Internet to deliver a component of
an instructional course. A provider shall:
(1) Not provide any debtor a diminished instructional course
because the debtor receives any portion of the instructional course by
telephone or Internet;
(2) Confirm the identity of the debtor before commencing an
instructional course by telephone or Internet by:
(i) Obtaining one or more unique personal identifiers from the
debtor and assigning an individual access code,
[[Page 16174]]
user ID, or password at the time of enrollment;
(ii) Requiring the debtor to provide the appropriate access code,
user ID, or password, and also one or more of the unique personal
identifiers during the course of delivery of the instructional course;
and
(iii) Employing adequate means to measure the time spent by the
debtor to complete the instructional course.
(f) Learning materials and methodologies. A provider shall provide
learning materials to assist debtors in understanding personal
financial management and that are consistent with 11 U.S.C. 111, and
this part, which include written information and instruction on all of
the following topics:
(1) Budget development, which consists of the following:
(i) Setting short-term and long-term financial goals, as well as
developing skills to assist in achieving these goals;
(ii) Calculating gross monthly income and net monthly income; and
(iii) Identifying and classifying monthly expenses as fixed,
variable, or periodic;
(2) Money management, which consists of the following:
(i) Keeping adequate financial records;
(ii) Developing decision-making skills required to distinguish
between wants and needs, and to comparison shop for goods and services;
(iii) Maintaining appropriate levels of insurance coverage, taking
into account the types and costs of insurance; and
(iv) Saving for emergencies, for periodic payments, and for
financial goals;
(3) Wise use of credit, which consists of the following:
(i) Identifying the types, sources, and costs of credit and loans;
(ii) Identifying debt warning signs;
(iii) Discussing appropriate use of credit and alternatives to
credit use; and
(iv) Checking a credit rating;
(4) Consumer information, which consists of the following:
(i) Identifying public and nonprofit resources for consumer
assistance; and
(ii) Identifying applicable consumer protection laws and
regulations, such as those governing correction of a credit record and
protection against consumer fraud; and
(5) Coping with unexpected financial crisis, which consists of the
following:
(i) Identifying alternatives to additional borrowing in times of
unanticipated events; and
(ii) Seeking advice from public and private service agencies for
assistance.
(g) Course procedures.
(1) Generally, a provider shall:
(i) Ensure the instructional course contains sufficient learning
materials and teaching methodologies so that the debtor receives a
minimum of two hours of instruction, regardless of the method of
delivery of the course;
(ii) Use its best efforts to collect from each debtor a completed
course evaluation at the end of the instructional course. At a minimum,
the course evaluation shall include the information contained in
Appendix E of the application to evaluate the effectiveness of the
instructional course;
(2) For an instructional course delivered in person, the provider
shall:
(i) Ensure that an instructor is present to instruct and interact
with debtors; and
(ii) Limit class size to ensure an effective presentation of the
instructional course materials;
(3) For instructional courses delivered by the telephone, the
provider shall:
(i) Ensure an instructor is telephonically present to instruct and
interact with debtors;
(ii) Provide learning materials to debtors before the telephone
instructional course session;
(iii) Incorporate tests into the curriculum that support the
learning materials, ensure completion of the course, and measure
comprehension;
(iv) Ensure review of tests prior to the completion of the
instructional course; and
(v) Ensure direct oral communication from an instructor by
telephone or in person with all debtors who fail to complete the test
in a satisfactory manner or who receive less than a 70 percent score;
(4) For instructional courses delivered through the Internet, the
provider shall:
(i) Comply with Sec. 58.33(g)(3)(iii), (iv), and (v); provided,
however, that to the extent instruction takes place by Internet, the
provider may comply with Sec. 58.33(g)(3)(v) by ensuring direct
communication from an instructor by electronic mail, live chat, or
telephone; and
(ii) Respond to a debtor's questions or comments within one
business day.
(h) Services to hearing and hearing-impaired debtors. A provider
shall furnish toll-free telephone numbers for both hearing and hearing-
impaired debtors whenever telephone communication is required. The
provider shall provide telephone amplification, sign language services,
or other communication methods for hearing-impaired debtors.
(i) [reserved].
(j) Services to debtors with special needs. A provider that
provides any portion of its instructional course in person shall comply
with all federal, state and local laws governing facility
accessibility. A provider shall also provide or arrange for
communication assistance for debtors with special needs who have
difficulty making their service needs known.
(k) Mandatory disclosures to debtors. Prior to providing any
information to or obtaining any information from a debtor, and prior to
delivering an instructional course, a provider shall disclose:
(1) The provider's fee policy, including any fees associated with
generation of the certificate;
(2) The provider's policies enabling debtors to obtain an
instructional course for free or at reduced rates based upon the
debtor's lack of ability to pay. To the extent an approved provider
publishes information concerning its fees on the Internet, such fee
information must include the provider's policies enabling debtors to
obtain an instructional course for free or at reduced rates based upon
the debtor's lack of ability to pay;
(3) The provider's policy to provide free bilingual instruction or
professional interpreter assistance to any limited English proficient
debtor;
(4) The instructors' qualifications;
(5) The provider's policy prohibiting it from paying or receiving
referral fees for the referral of debtors;
(6) The provider's obligation to provide a certificate to the
debtor promptly upon the completion of an instructional course;
(7) The fact that the provider might disclose debtor information to
the United States Trustee in connection with the United States
Trustee's oversight of the provider, or during the investigation of
complaints, during on-site visits, or during quality of service
reviews;
(8) The fact that the United States Trustee has reviewed only the
provider's instructional course (and, if applicable, its services as a
credit counseling agency pursuant to 11 U.S.C. 111(c)), and the fact
that the United States Trustee has neither reviewed nor approved any
other services the provider provides to debtors; and
(9) The fact that a debtor will only receive a certificate if the
debtor completes an instructional course.
(l) Complaint Procedures. A provider shall employ complaint
procedures that adequately respond to debtors' concerns.
(m) Provider records. A provider shall prepare and retain records
that enable the United States Trustee to evaluate whether the provider
is providing effective instruction and acting in
[[Page 16175]]
compliance with all applicable laws and this part. All records,
including documents bearing original signatures, shall be maintained in
either hard copy form or electronically in a format widely available
commercially. Records that the provider shall prepare and retain for a
minimum of two years, and permit review of by the United States Trustee
upon request, shall include:
(1) Upon the filing of an application for probationary approval,
all information requested by the United States Trustee as an estimate,
projected to the end of the probationary period, in the form requested
by the United States Trustee;
(2) After probationary or annual approval, and for so long as the
provider remains on the approved list, semi-annual reports of
historical data (for the periods ending June 30 and December 31 of each
year), of the type and in the form requested by the United States
Trustee; these reports shall be submitted within 30 days of the end of
the applicable periods specified in this paragraph;
(3) Records concerning the delivery of services to debtors with
limited English proficiency and special needs, and to hearing-impaired
debtors, including records:
(i) Of the number of such debtors, and the methods of delivery used
with respect to such debtors;
(ii) Of which languages are offered or requested, and the type of
language support used or requested by such debtors (e.g., bilingual
instructor, in-person or telephone interpreter, translated Web
instruction);
(iii) Detailing the provider's provision of services to such
debtors; and
(iv) Supporting any justification if the provider did not provide
services to such debtors, including the number of debtors not served,
the languages involved, and the number of referrals provided;
(4) Records concerning the delivery of an instructional course to
debtors for free or at reduced rates based upon the debtor's lack of
ability to pay, including records of the number of debtors for whom the
provider waived all of its fees under Sec. 58.34(b)(1)(i), the number
of debtors for whom the provider waived all or part of its fees under
Sec. 58.34(b)(1)(ii), and the number of debtors for whom the provider
voluntarily waived all or part of its fees under Sec. 58.34(c);
(5) Records of complaints and the provider's responses thereto;
(6) Records that enable the provider to verify the authenticity of
certificates their debtors file in bankruptcy cases; and
(7) Records that enable the provider to issue replacement
certificates.
(n) Additional minimum requirements. A provider shall:
(1) Provide records to the United States Trustee upon request;
(2) Cooperate with the United States Trustee by allowing scheduled
and unscheduled on-site visits, complaint investigations, or other
reviews of the provider's qualifications to be an approved provider;
(3) Cooperate with the United States Trustee by promptly responding
to questions or inquiries from the United States Trustee;
(4) Assist the United States Trustee in identifying and
investigating suspected fraud and abuse by any party participating in
the instructional course or bankruptcy process;
(5) Take no action that would limit, inhibit, or prevent a debtor
from bringing an action or claim for damages against a provider, as
provided in 11 U.S.C. 111(g)(2);
(6) Refer debtors seeking an instructional course only to providers
that have been approved by a United States Trustee to provide such
services;
(7) Comply with the United States Trustee's directions on approved
advertising, including without limitation those set forth in Appendix A
to the application;
(8) Not disclose or provide to a credit reporting agency any
information concerning whether a debtor has received or sought
instruction concerning personal financial management from a provider;
(9) Not expose the debtor to commercial advertising as part of or
during the debtor's receipt of an instructional course, and never
market or sell financial products or services during the instructional
course provided, however, this provision does not prohibit a provider
from generally discussing all available financial products and
services;
(10) Not sell information about any debtor to any third party
without the debtor's prior written permission;
(11) Comply with the requirements elsewhere in this part concerning
fees for the instructional course and fee waiver policies; and
(12) Comply with the requirements elsewhere in this part concerning
certificates.
Sec. 58.34 Minimum requirements to become and remain approved
providers relating to fees.
(a) If a fee for, or relating to, an instructional course is
charged by a provider, such fee shall be reasonable:
(1) A fee of $50 or less for an instructional course is presumed to
be reasonable and a provider need not obtain prior approval of the
United States Trustee to charge such a fee;
(2) A fee exceeding $50 for an instructional course is not presumed
to be reasonable and a provider must obtain prior approval from the
United States Trustee to charge such a fee. The provider bears the
burden of establishing that its proposed fee is reasonable. At a
minimum, the provider must demonstrate that its cost for delivering the
instructional course justifies the fee. A provider that previously
received permission to charge a higher fee need not reapply for
permission to charge that fee during the provider's annual review. Any
new requests for permission to charge more than previously approved,
however, must be submitted to EOUST for approval; and
(3) The United States Trustee shall review the amount of the fee
set forth in paragraphs (a)(1) and (2) of this section one year after
the effective date of this part and then periodically, but not less
frequently than every four years, to determine the reasonableness of
the fee. Fee amounts and any revisions thereto shall be determined by
current costs, using a method of analysis consistent with widely
accepted accounting principles and practices, and calculated in
accordance with the provisions of federal law as applicable. Fee
amounts and any revisions thereto shall be published in the Federal
Register.
(b)(1) A provider shall waive the fee in whole or in part whenever
a debtor demonstrates a lack of ability to pay the fee.
(i) A debtor presumptively lacks the ability to pay the fee if the
debtor's household current income is less than 150 percent of the
poverty guidelines updated periodically in the Federal Register by the
U.S. Department of Health and Human Services under the authority of 42
U.S.C. 9902(2), as adjusted from time to time, for a household or
family of the size involved in the fee determination.
(ii) The presumption shall be rebutted, and the provider may charge
the debtor a reduced fee, if the provider determines, based on income
information the debtor submits to the provider, that the debtor is able
to pay the fee in a reduced amount. Nothing in this subsection requires
an provider to charge a fee to debtors whose household income exceeds
the amount set forth in paragraph (b)(1)(i) of this section, or who are
able to demonstrate ability to pay based on income as described in this
subsection.
(iii) A provider shall disclose its fee policy, including the
criteria on which
[[Page 16176]]
it relies in determining a debtor's eligibility for reduced fees, and
the provider's policy for collecting fees pursuant to paragraph
(b)(1)(ii) of this section, in accordance with Sec. 58.33(k)(2).
(2) The United States Trustee shall review the basis for the
mandatory fee waiver policy set forth in paragraph (b)(1) of this
section one year after the effective date of this part and then
periodically, but not less frequently than every four years, to
determine the impact of that fee waiver policy on debtors and
providers. Any revisions to the mandatory fee waiver policy set forth
in paragraph (b)(1) of this section shall be published in the Federal
Register.
(c) Notwithstanding the requirements of paragraph (b) of this
section, a provider also may waive fees based upon other
considerations, including, but not limited to:
(1) The debtor's net worth;
(2) The percentage of the debtor's income from government
assistance programs;
(3) Whether the debtor is receiving pro bono legal services in
connection with a bankruptcy case; or
(4) If the combined current monthly income, as defined in 11 U.S.C.
101(10A), of the debtor and his or her spouse, when multiplied times
twelve, is equal to or less than the amounts set forth in 11 U.S.C.
707(b)(7).
(d) A provider shall not require a debtor to purchase an
instructional course in connection with the purchase of any other
service offered by the provider.
(e) A provider who is also a chapter 13 standing trustee may only
provide the instructional course to debtors in cases in which the
trustee is appointed to serve and may not charge any fee to those
debtors for the instructional course. A standing chapter 13 trustee may
not require debtors in cases administered by the trustee to obtain the
instructional course from the trustee. Employees and affiliates of the
standing trustee are also bound by the restrictions in this section.
Sec. 58.35 Minimum requirements to become and remain approved
providers relating to certificates.
(a) An approved provider shall send a certificate only to the
debtor who took and completed the instructional course, except that an
approved provider shall instead send a certificate to the attorney of a
debtor who took and completed an instructional course if the debtor
specifically directs the provider to do so. In lieu of sending a
certificate to the debtor or the debtor's attorney, an approved
provider may notify the appropriate bankruptcy court in accordance with
the Federal Rules of Bankruptcy Procedure that a debtor has completed
the instructional course.
(b) An approved provider shall send a certificate to a debtor, or
notify the appropriate bankruptcy court in accordance with the Federal
Rules of Bankruptcy Procedure, that a debtor has completed the
instructional course no later than three business days after the debtor
completed an instructional course and after completion of a debtor
course evaluation form that evaluates the effectiveness of the
instructional course. The approved provider shall not withhold the
issuance of a certificate or notice of course completion to the
appropriate bankruptcy court because of a debtor's failure to submit an
evaluation form, though the provider should make reasonable effort to
ensure that debtors complete and submit course evaluation forms.
(c) If a debtor has completed instruction, a provider may not
withhold certificate issuance or notice of course completion to the
appropriate bankruptcy court for any reason, including, without
limitation, a debtor's failure to obtain a passing grade on a quiz,
examination, or test. A provider may not consider instructional
services incomplete based solely on the debtor's failure to pay the
fee. Although a test may be incorporated into the curriculum to
evaluate the effectiveness of the course and to ensure that the course
has been completed, the approved provider cannot deny a certificate to
a debtor or notice of course completion to the appropriate bankruptcy
court if the debtor has completed the course as designed.
(d) An approved provider shall issue certificates only in the form
approved by the United States Trustee, and shall generate the form
using the Certificate Generating System maintained by the United States
Trustee, except under exigent circumstances with notice to the United
States Trustee.
(e) An approved provider shall have sufficient computer
capabilities to issue certificates from the United States Trustee's
Certificate Generating System.
(f) An approved provider shall issue a certificate, or provide
notice of course completion to the appropriate bankruptcy court in
accordance with the Federal Rules of Bankruptcy Procedure, with respect
to each debtor who completes an instructional course. Spouses receiving
an instructional course jointly shall each receive a certificate or
notice of course completion to the appropriate bankruptcy court shall
be made for both individuals.
(g) An approved provider shall issue a replacement certificate to a
debtor who requests one.
(h) Only an authorized officer, supervisor or employee of an
approved provider shall issue a certificate, or provide notice of
course completion to the appropriate bankruptcy court, and an approved
provider shall not transfer or delegate authority to issue a
certificate or provide notice of course completion to any other entity.
(i) An approved provider shall implement internal controls
sufficient to prevent unauthorized issuance of certificates.
(j) An approved provider shall ensure the signature affixed to a
certificate is that of an officer, supervisor or employee authorized to
issue the certificate, in accordance with paragraph (h) of this
section, which signature shall be either:
(1) An original signature; or
(2) In a format approved for electronic filing with the court (most
typically in the form /s/ name of instructor).
(k) An approved provider shall affix to the certificate the exact
name under which the approved provider is incorporated or organized.
(l) An approved provider shall identify on the certificate:
(1) The specific federal judicial district requested by the debtor;
(2) Whether an instructional course was provided in person, by
telephone or via the Internet;
(3) The date and time (including the time zone) when instructional
services were completed by the debtor; and
(4) The name of the instructor that provided the instructional
course.
(m) An approved provider shall affix the debtor's full, accurate
name to the certificate. If the instructional course is obtained by a
debtor through a duly authorized representative, the certificate shall
also set forth the name of the legal representative and legal capacity
of that representative.
Sec. 58.36 Procedures for obtaining final provider action on United
States Trustees' decisions to deny providers' applications and to
remove approved providers from the approved list.
(a) The United States Trustee shall remove an approved provider
from the approved list whenever an approved provider requests its
removal in writing.
(b) The United States Trustee may issue a decision to remove an
approved provider from the approved list, and thereby terminate the
approved provider's authorization to provide an instructional course,
at any time.
[[Page 16177]]
(c) The United States Trustee may issue a decision to deny a
provider's application or to remove a provider from the approved list
whenever the United States Trustee determines that the provider has
failed to comply with the standards or requirements specified in 11
U.S.C. 111, this part, or the terms under which the United States
Trustee designated it to act as an approved provider, including, but
not limited to, finding any of the following:
(1) If any entity has suspended or revoked the provider's license
to do business in any jurisdiction; or
(2) Any United States district court has removed the provider under
11 U.S.C. 111(e).
(d) The United States Trustee shall provide to the provider in
writing a notice of any decision either to:
(1) Deny the provider's application; or
(2) Remove the provider from the approved list.
(e) The notice shall state the reason(s) for the decision and shall
reference any documents or communications relied upon in reaching the
denial or removal decision. To the extent authorized by law, the United
States Trustee shall provide to the provider copies of any such
documents that were not supplied to the United States Trustee by the
provider. The notice shall be sent to the provider by overnight
courier, for delivery the next business day.
(f) Except as provided in paragraph (h) of this section, the notice
shall advise the provider that the denial or removal decision shall
become final agency action, and unreviewable, unless the provider
submits in writing a request for review by the Director no later than
21 calendar days from the date of the notice to the provider.
(g) Except as provided in paragraph (h) of this section, the
decision to deny a provider's application or to remove a provider from
the approved list shall take effect upon:
(1) The expiration of the provider's time to seek review from the
Director, if the provider fails to timely seek review of a denial or
removal decision; or
(2) The issuance by the Director of a final decision, if the
provider timely seeks such review.
(h) The United States Trustee may provide that a decision to remove
a provider from the approved list is effective immediately and deny the
provider the right to provide an instructional course whenever the
United States Trustee finds any of the factors set forth in paragraphs
(c)(1) or (2) of this section.
(i) A provider's request for review shall be in writing and shall
fully describe why the provider disagrees with the denial or removal
decision, and shall be accompanied by all documents and materials the
provider wants the Director to consider in reviewing the denial or
removal decision. The provider shall send the original and one copy of
the request for review, including all accompanying documents and
materials, to the Office of the Director by overnight courier, for
delivery the next business day. To be timely, a request for review
shall be received at the Office of the Director no later than 21
calendar days from the date of the notice to the provider.
(j) The United States Trustee shall have 21 calendar days from the
date of the provider's request for review to submit to the Director a
written response regarding the matters raised in the provider's request
for review. The United States Trustee shall provide a copy of this
response to the provider by overnight courier, for delivery the next
business day.
(k) The Director may seek additional information from any party in
the manner and to the extent the Director deems appropriate.
(l) In reviewing the decision to deny a provider's application or
to remove a provider from the approved list, the Director shall
determine:
(1) Whether the denial or removal decision is supported by the
record; and
(2) Whether the denial or removal decision constitutes an
appropriate exercise of discretion.
(m) Except as provided in paragraph (n) of this section, the
Director shall issue a final decision no later than 60 calendar days
from the receipt of the provider's request for review, unless the
provider agrees to a longer period of time or the Director extends the
deadline. The Director's final decision on the provider's request for
review shall constitute final agency action.
(n) Whenever the United States Trustee provides under paragraph (h)
of this section that a decision to remove a provider from the approved
list is effective immediately, the Director shall issue a written
decision no later than 15 calendar days from the receipt of the
provider's request for review, unless the provider agrees to a longer
period of time. The decision shall:
(1) Be limited to deciding whether the determination that the
removal decision should take effect immediately was supported by the
record and an appropriate exercise of discretion;
(2) Constitute final agency action only on the issue of whether the
removal decision should take effect immediately; and
(3) Not constitute final agency action on the ultimate issue of
whether the provider should be removed from the approved list; after
issuing the decision, the Director shall issue a final decision by the
deadline set forth in paragraph (m) of this section.
(o) In reaching a decision under paragraphs (m) or (n) of this
section, the Director may specify a person to act as a reviewing
official. The reviewing official's duties shall be specified by the
Director on a case-by-case basis, and may include reviewing the record,
obtaining additional information from the participants, providing the
Director with written recommendations, and such other duties as the
Director shall prescribe in a particular case.
(p) A provider that files a request for review shall bear its own
costs and expenses, including counsel fees.
(q) When a decision to remove a provider from the approved list
takes effect, the provider shall:
(1) Immediately cease providing an instructional course to debtors;
(2) No later than three business days after the date of removal,
send all certificates to all debtors who completed an instructional
course prior to the provider's removal from the approved list; and
(3) No later than three business days after the date of removal,
return all fees to debtors who had paid for an instructional course,
but had not completely received the instructional course.
(r) A provider must exhaust all administrative remedies before
seeking redress in any court of competent jurisdiction.
Dated: February 14, 2013.
Clifford J. White III,
Director, Executive Office for United States Trustees.
[FR Doc. 2013-04364 Filed 3-13-13; 8:45 am]
BILLING CODE 4410-40-P