Improved Noticing for Debtors Reduces Court Costs

While business is increasingly conducted using smart phones, tablets and laptops, debtors who file for bankruptcy protection continue to receive paper copies of court notices and orders by regular mail — a practice that consumes both time and money. Thanks to a new program available through the Bankruptcy Noticing Center (BNC), debtors in participating courts now have the option of receiving court-generated notices and orders electronically.

The program, known as Debtor Electronic Bankruptcy Noticing (DeBN), has expanded from a pilot and is open to all bankruptcy courts. DeBN is currently active in the bankruptcy courts of the Central District of California, Central District of Illinois, District of New Jersey, and District of South Carolina.

In the U.S. Bankruptcy Court for the Central District of California—which has the largest bankruptcy caseload in the country— an informal poll showed that debtors would prefer to receive simple notices from the court on their phones, tablets, or computers rather than in the mail.

“We saw it as good customer service,” said Jeffrey Cozad, a Central District of California law clerk and member of the Judiciary’s Bankruptcy Noticing Working Group. “Almost 25 percent of our debtors file for bankruptcy without an attorney in California Central. While pro se debtors are often overwhelmed, we make the process more accessible to them by offering electronic noticing, as they are constantly checking their cell phones and tablets.”

The DeBN program allows the BNC to transmit court notices and orders to debtors via email the same day they are filed in the courts. This reduces the delivery time by three or four days. A debtor wishing to receive electronic notice simply registers by completing a request form through the clerk’s office of a participating court where their case is filed. The clerk’s office creates the account through the BNC interface by entering the debtor’s case number and email address. Courts have two options for activating DeBN accounts—debtor activation via a confirmation email or automatic activation.

Another big advantage of DeBN is that the court does not have to monitor for bounce-back emails. If the email delivery fails, the BNC automatically disables the account and sends paper notices and orders to a debtor by mail.

The BNC is used by every bankruptcy court in the country, and it electronically retrieves notice files from each court’s case management system. It then prepares and transmits notices to creditors and other entities in the cases.

“Debtors seem happy to get notices by email and are pleased that DeBN is an option,” said Angela “Dory” Pasquale, case administrator/DeBN project lead, in the Bankruptcy Court for the Central District of Illinois. “Anything that gets their notices to them sooner than through the mail is a big bonus.” To encourage debtors to follow through with DeBN registration on the same day they file their cases, Pasquale advises them that “as long as their accounts are activated before 5 o’clock when the BNC picks up the court’s notices, the debtors will receive notices electronically later that night.

An additional DeBN bonus is that notices are transmitted to the debtors as PDF attachments, rather than as a one-time link. Debtors have easy access to their notices, as the PDF attachments can be read, forwarded to another party, saved and retrieved.

DeBN is also a money saver for the federal courts. It reduces costs for debtor noticing by up to 90 percent over the life of a case. “This is a great tool to help lessen the cost associated with bankruptcy noticing,” said Pasquale. “That’s a big motivating factor for us.”

“It is at least nine times cheaper to send an electronic court notice to the debtor in lieu of regular mail because paper and postage costs are avoided,” noted Matt Loughney, Bankruptcy Clerk for the Middle District of Tennessee and Chair of the Bankruptcy Noticing Working Group.

While DeBN is a voluntary program for the bankruptcy courts, a growing number of courts are interested in the program and are expected to offer DeBN to debtors in the coming months.