Justice Department Announces New Director of the U.S. Trustee Program

Consumer and business bankruptcy attorneys alike have been conditioned to feel fear or awe, depending on the circumstances, at hearing the name Clifford White for almost 20 years. When White announced in 2022 that he would retire, consumer practitioners had been looking forward to the announcement of the new director, mostly to identify the focus that the U.S. Trustee Program would take. Could we anticipate a director with a business focus as interest rates grow and the controversial Texas Two-Step is in limbo, or a consumer-experienced director with the anticipated rise in consumer filings and the struggles of inflation coming to light?

As it turns out, consumer practitioners of all types should look forward to their time in the sun, as consumer advocate Tara Twomey has been designated to take the position. In a recent press announcement, Attorney General Merrick B. Garland explained that the USTP “plays a critical role in ensuring the fairness of the bankruptcy process — including by providing impartial oversight and protecting consumer debtors from fraud and abuse.” [1]

Twomey brings extensive bankruptcy and consumer credit experience to her new role. As executive director for the National Consumer Bankruptcy Rights Center and Of Counsel to the National Consumer Law Center, she has already spent years working to defend the integrity of the bankruptcy system and consumer debtors alike. Twomey also has authored several books and articles on bankruptcy law and practice, and she is a contributing author of several books published by the NCLC, including Foreclosures: Defenses, Workouts and Mortgage Servicing. In addition, she has authored numerous amicus curiae briefs at the Supreme Court and courts of appeals, including in Bartenwerfer v. Buckley, decided by the Supreme Court this term.

In 2019, Twomey was appointed as the special consumer counsel to the Official Committee of Consumer Creditors in the chapter 11 cases of Ditech Holding Corp. and its affiliates. In that role, she evaluated the consumer claims arising from Ditech’s servicing practices and made determinations as to which claims would be paid out of the $10 million claim fund. In addition, she was appointed by Chief Justice Roberts to the Judicial Conference Advisory Committee on Bankruptcy Rules in 2021.

Consumer attorneys nationwide have been aware of and been involved in multiple national settlements between the USTP and mortgage-servicing companies since 2015. Whether clients are parties to the settlement or have mortgages with those parties, those settlements have affected everyone’s practice. The USTP ostensibly serves to provide impartial oversight on and protect the integrity of the bankruptcy process, and that objective has often resulted in these large actions against large creditors regarding improper bankruptcy practices and filings.

Twomey’s appointment may signal an increased focus and scrutiny on creditor practices in consumer bankruptcy cases after a short time without such large settlements, and in light of the filing hiatus of the COVID-19 pandemic era. Additionally, the USTP has focused on poorly performing consumer lawyers and, where necessary, brought enforcement actions against lawyers who misrepresent their services to vulnerable clients and/or engage in misconduct in the course of their dealings with consumers, including their failure to clearly explain services and costs, as well as nonbankruptcy alternatives. Under Twomey’s leadership, the USTP is likely to continue prioritizing consumer-protection efforts for consumer debtors in bankruptcy. Consumer Committee members can therefore anticipate more of a focus on consumer bankruptcy by major regulatory players both in and out of the courtroom.