Bankruptcy Administration:

Justification Lacking for Continuing Two Parallel Programs

GGD-92-133: Published: Sep 28, 1992. Publicly Released: Oct 15, 1992.

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Pursuant to a congressional request, GAO reviewed the Department of Justice's (DOJ) U.S. trustee program and the judicial branch's bankruptcy administrator program, administered by the Administrative Offices of the United States Courts (AOUSC), focusing on: (1) comparing their efficiencies, costs, and results; (2) their differences; and (3) whether two programs are needed.

GAO found that: (1) operating costs for trustee districts were higher than for bankruptcy districts; (2) in Chapter 7 bankruptcy cases, creditors received similar distributions from both programs, although unsecured creditors received higher percentages in trustee districts; (3) neither program demonstrated a pattern of superiority in processing time; (4) the trustee program provided additional trustee oversight and was self-financing; (5) trustee fees exceeding 110 percent of the appropriated budget must be transferred to the Treasury general fund, and these monies might have been better used for additional staffing; (6) a potential for conflict of interest exists in the trustee program when the federal government is a creditor, but studies done for DOJ have not documented any problems; (7) DOJ and AOUSC agreed that dividing bankruptcy case administration between two programs is not sensible, but each believed its program was preferable; and (8) in previous legislation, Congress has determined that DOJ is the more appropriate entity for the case administration function.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress has decided not to rescind the statute continuing the Bankruptcy Administration Program until 2002. There are no bills pending to address this recommendation.

    Matter: To make bankruptcy administration consistent across the country, Congress should incorporate the Bankruptcy Administration program into the Trustee program.

  2. Status: Closed - Not Implemented

    Comments: In March 1992, DOJ submitted a draft bill to the Office of Management and Budget (OMB) that included a provision that would eliminate the requirement that annual excess funds be transferred to the Treasury. OMB deleted this provision, so it was not submitted to Congress. It has not been resubmitted.

    Matter: To allow excess debtor fees to be used for program purposes, Congress should take action to eliminate the provision in the legislation requiring the Trustee System Fund to transfer surplus funds to the Treasury. The legislation should retain the provision requiring the Attorney General to monitor program fees so that money generated approximates what is needed to run the program.

 

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