I-1-2-3.Representative(s) Who May Charge and Collect a Fee

1. Bankruptcy Proceeding Pending

While the bankruptcy proceeding is pending, either the claimant or the representative may ask the bankruptcy court to lift the automatic stay to allow SSA to adjudicate the amount of the fee and/or to allow SSA to pay the fee from withheld funds.

• If the bankruptcy court allows SSA to adjudicate the amount of the fee, SSA will resume its normal procedures to the extent authorized by the court. If SSA has not issued a determination on the fee agreement, it will do so. If SSA has not yet set a fee, SSA will set the fee following regular fee agreement or fee petition procedures.

• If the court lifts the stay and authorizes SSA to pay the approved fee from withheld benefits, SSA will take the actions necessary to comply with the court's action.

• If the bankruptcy court does not lift the stay, SSA will continue to hold any fee-related actions in suspense until the bankruptcy case is concluded.

2. Bankruptcy Outcomes

There are several possible outcomes of a bankruptcy case. SSA responds in accordance with the outcome.

• If the outcome of the bankruptcy case is a discharge (release) of the claimant's debt to the representative, the claimant has no further responsibility to the representative. SSA will release any withheld funds to the claimant and, if necessary (e.g., because of the representative's inquiry), advise the parties of the action taken pursuant to the court's order. SSA will not approve or disapprove a fee agreement or act on a fee petition that covers services performed while the bankruptcy proceeding was pending.

• If the outcome of the bankruptcy case does not release the claimant from his or her obligation to the representative, SSA will follow its normal procedures with regard to the fee agreement or fee petition.

• If the outcome of the bankruptcy case is a partial release by the bankruptcy court, where the claimant's creditors are entitled to some percentage of the debt, SSA will act in accordance with the court's order. The fee authorizer or decision maker will resume processing the fee agreement or fee petition, respectively, under normal procedures. The processing center (PC) will calculate and pay the court-set percentage of the approved fee to the representative and release any remaining withheld funds to the claimant.

1. Fee Agreements

If the decision maker issues a fully or partially favorable decision while a bankruptcy proceeding is pending, the decision maker or appropriate staff will:

• Make a preliminary determination on the fee agreement in accordance with the evaluation criteria in HALLEX I-1-2-12, record the evaluation on a note for the file or draft fee agreement recommendation, and retain that evaluation in the claim(s) file.

• Prepare a letter to the claimant, with copies to the appropriate parties as needed, to explain that SSA cannot approve or disapprove the fee agreement until the bankruptcy court permits us to do so, and include a statement similar to the following:

  Because you have filed for bankruptcy, I have not approved or disapproved the fee agreement that specifies the fee your representative expects to charge and you expect to pay for your representative's services in connection with your claim for benefits. The Social Security Administration (SSA) may not consider this agreement or authorize a fee for your representative's services until the court permits us to do so. Please notify SSA of the outcome of the bankruptcy court action when you receive it.

• Include a copy of the bankruptcy notification document, the fee agreement, and the letter to the claimant in the claim(s) file under a flag that reads as follows:

  BANKRUPTCY PROCEEDING PENDING

  IF THE OUTCOME OF THE BANKRUPTCY CASE DOES NOT RELEASE THE CLAIMANT FROM HIS OR HER OBLIGATION TO THE REPRESENTATIVE, PLEASE NOTIFY THE DECISION MAKER TO MAKE A DETERMINATION ON THE FEE AGREEMENT. SEND THE NOTIFICATION TO [E-MAIL ADDRESS(ES) FOR HO OR OARO CONTACT PERSON(S) OR FAX NUMBER].

• When forwarding the claim to the PC for effectuation of the decision (refer to HALLEX I-1-2-96 for the appropriate PC control mailboxes), alert the PC about the bankruptcy proceeding by adding the following to the claim(s) file folder route slip:

  NO ACTION TAKEN ON FEE AGREEMENT

  BANKRUPTCY PROCEEDING PENDING.

2. Fee Petition Anticipated or Filed

Refer to HALLEX I-1-2-1 C for guidance on informing a representative of fee regulations. If the representative has not submitted a fee agreement and has not waived the right to charge and collect a fee by the date the decision maker issues a decision, take these additional actions when issuing the decision:

• Include a copy of the bankruptcy court action or SSA's notification of the action in the claim(s) file.

• If the decision is fully or partially favorable and the representative has not waived direct payment, annotate the claims folder route slip as follows:

  BANKRUPTCY PROCEEDING PENDING.

If the representative submits a fee petition to the authorizing official while the bankruptcy proceeding is pending, respond to the representative by letter, with a copy to the claimant and any other parties to the case. The letter should state that the decision maker will not act on the petition unless he or she receives notification that the bankruptcy court has lifted the stay or did not release the claimant from the obligation to the representative. Use language similar to the following:

We have received your petition requesting a fee for the services you performed for (claimant's name). The Social Security Administration has been notified that (claimant's name) has filed a bankruptcy petition. We cannot act on your fee petition until the bankruptcy court allows us to do so. Please notify this office or ask your client to notify us of the outcome of the bankruptcy court action.

Email the petition and the letter to the PC using the appropriate control mailbox in HALLEX I-1-2-96.

1. Fee Agreements

• Court Discharges Claimant's Debt to the Representative

  1. Take no action on the fee agreement.

  2. If the PC was not the initial receiver, email the bankruptcy outcome document to the appropriate PC in accordance with HALLEX I-1-2-96. Include the following in the body of the email:

     BANKRUPTCY CASE CONCLUDED

     COURT DISCHARGED CLAIMANT'S DEBT

     TAKE NO ACTION ON THE FEE AGREEMENT

• Court Does Not Release or Partially Releases the Claimant From His or Her Obligation to the Representative

  1. Approve or disapprove the fee agreement following the policy and procedures set forth in HALLEX I-1-2-12 and I-1-2-25.

  2. Email the court's action on the bankruptcy proceeding, the fee agreement, and the order approving or disapproving the fee agreement to the control email box for the jurisdictional PC in accordance with HALLEX I-1-2-96. Include the following in the body of the email:

     BANKRUPTCY PROCEEDING CONCLUDED

     (DECISION MAKER) (APPROVED/DISAPPROVED) THE FEE AGREEMENT

     FOR YOUR NECESSARY ACTION

2. Fee Petitions

• Court Discharges (Releases) Claimant's Debt to the Representative

  1. Take no action on the fee petition.

  2. Email the petition and the court's action to the appropriate PC in accordance with HALLEX I-1-2-96. Include the following in the body of the email:

     BANKRUPTCY CASE CONCLUDED

     COURT DISCHARGED CLAIMANT'S DEBT

     TAKE NO ACTION ON THE FEE PETITION

• Court Does Not Release or Partially Releases the Claimant From His or Her Obligation to the Representative

  1. Resume processing the fee petition in accordance with the policy and procedures in HALLEX I-1-2-56 through I-1-2-59.

  2. If the bankruptcy court concludes that the claimant's creditors are entitled to some percentage of the debt, the PC will pay the court-set percentage of the approved fee to the representative and release any remaining withheld funds to the claimant.