Wet Ink and Paper Retention Requirements are Flawed: Technology Can Fix That

Technology has changed (photo by Marilyn Swanson)

By: Donald L Swanson

Because no one can produce an original ‘wet ink’ signature of the Debtors’ Chapter 13 Petition, [schedules, etc.,] . . . the Debtors request that this Court . . . dismiss their Chapter 7 case.

In re Benton, Case No. 09-36642 in the Eastern Michigan Bankruptcy Court (February 12, 2016, Doc. 463).

The system is flawed.

  • I’m talking about our bankruptcy system of requiring, (i) debtors to make wet ink signatures on paper, and (ii) their attorneys to retain such paper.

Fortunately, technology is available to fix such flaws.

Wet ink and paper retention requirements are a flawed relic of manual systems past.  It’s time to move this relic into the highly-secure digital world.

The Flaws Highlighted

In re Benton, cited and linked above, highlights the flaws in our wet ink and paper retention system—even though the system ends up working, despite those flaws.


An attorney filed a voluntary Chapter 13 Petition and related documents in the names of Roscoe and Desi Benton.

The story begins like this: the Bentons believe they need bankruptcy because a judgment against them sets a deadline to vacate their home. So, they meet with an attorney and agree that a filing is needed. Their bankruptcy Petition and related documents, when filed, contain electronic signatures for each Debtor, using the “/s/” designation.

Then, Debtors appear at their first meeting, at which their sworn testimony includes the following Q&A with the Trustee:

Q. Mr. and Mrs. Benton, I’m going to show you here a copy of all the papers that have been filed on your behalf in this bankruptcy matter. Do these papers look familiar to you?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Yes.
Q. Right here I’m going to show you the petition. It has your names on it right there?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Okay.
Q. There’s a signature line right here. Sir – – and your attorney has the original of that. Sir, can you identify your signature there?
A. (Mr. Benton) Yes.
Q. And ma’am, can you identify your signature?
A. (Mrs. Benton) Yes.
Q. And when you signed those papers, did you sign a number of other pages as well?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Yes.
Q. And when you signed those pages, were you indicating by signing that you had reviewed the information in those pages?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Yes.
Q. And that that information was true and correct to the best of your knowledge?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Yes.
Q. Are there changes to that information since the day you signed?
A. (Mr. Benton) No.  A. (Mrs. Benton) No.. .

The Chapter 13 Trustee and a creditor object to Debtors’ Chapter 13 Plan. Debtors amend their plan, and the Court confirms it.  After confirmation, Debtors’ object to an IRS claim . . . but then withdraw the objection.

Thereafter, Debtors elect to convert their Chapter 13 case to Chapter 7, and they file various Chapter 7 documents, including Amendments to Schedules.  At the Chapter 7 first meeting, Debtors’ sworn testimony includes this Q&A with the Trustee:

Q. Did you folks have an opportunity to read and review the bankruptcy schedules before you signed them?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Yes.
Q. Did you find them to be a true and accurate reflection of your financial condition at the time you signed them?
A. (Mr. Benton) Yes.
Q. Did you list all your assets, liabilities and other financial transactions as required?
A. (Mr. Benton) Yes.  A. (Mrs. Benton) Yes.

–Denial of Discharge under § 727

The Chapter 7 trustee investigates Debtors’ financial affairs and files a nondischargeability Complaint against Desi Benton under § 727. The Complaint states, and Desi Benton responds, as follows:

  • Complaint: On December 14, 2009, Debtor filed a Voluntary Petition under Chapter 13 . . . with her spouse, Roscoe Benton, III. Benton response: Admit.
  • Complaint: Debtor testified under oath, in her initial Statement of Financial Affairs, that she owned personal property with a value of $6,000 and no real property. Benton response: Neither admit nor deny, the documents speak for themselves.
  • Complaint: Debtors received lottery winnings prior to the filing of the Chapter 13 bankruptcy petition that was not disclosed. Benton response: Admit to having lottery winnings in 2007, which were disclosed on line one of Debtors Statement of Financial Affairs.
  • Complaint: Debtor testified at the 341 meeting that the Petition and Schedules were accurate. Benton response: Deny that Debtors had an obligation to amend documents that accurately reflected their financial situation at that time of filing.

As a result of this adversary proceeding, Ms. Benton is denied a discharge—even without her wet ink signature.

–Criminal Prosecution

Debtors are indicted for bankruptcy fraud. Trial occurs, and both are convicted. Here’s the jury’s verdict:

  • COUNT ONE: Bankruptcy Fraud – omitting a vehicle from bankruptcy schedules – Both Not Guilty.
  • COUNT TWO: Bankruptcy Fraud – understating personal property and its value on bankruptcy schedules – Roscoe Guilty; Desi Not Guilty.
  • COUNT THREE: Bankruptcy Fraud – effectuating a scheme through bankruptcy to wrongfully obtain insurance money – Both Guilty.
  • COUNT FOUR: Bankruptcy Fraud – making false statements in bankruptcy about a foreclosure on and loss of a home – Both Guilty.
  • COUNT FIVE: Bankruptcy Fraud – Falsely stating a monthly payment obligation for their home on bankruptcy schedules – Both Guilty.

Criminal convictions are obtained for bankruptcy fraud—even without a wet ink signature from either Debtor.

Back in Bankruptcy Court With a New Attorney

Thereafter, Debtors retain another attorney and file motions to have their case voided or, in the alternative, dismissed.

–Evidence Received

The new attorney testifies that, (i) he received a number of files from Debtors’ prior attorney, (ii) none of those files contained Debtors’ original wet ink signature, and (iii) the files he received from the prior attorney were disorganized.

The prior attorney testifies:

  • the person who picked up the files and delivered them to the new attorney did so in an open trailer, with the suggestion that perhaps certain papers flew out in transit;
  • he had seen Debtors’ original “wet ink” signatures on the Petition and other papers;
  • He witnessed the signing of some those documents in his office;
  • Thereafter, he advised Debtors about their rights to continue in Chapter 13 or convert to Chapter 7 and recommended conversion to Chapter 7; and
  • He converted Debtors’ case to Chapter 7.

Thereafter, the prior attorney files a his own Chapter 7 bankruptcy and receives a discharge, removing any obligations he may owe to Debtors.

Debtors sign an Affidavit stating they:

  • were never required to sign the documents to commence the bankruptcy case;
  • did not authorize any attorney to sign any documents on their behalf or to electronically forge their signatures; and
  • did not sign any of the documents necessary to commence the bankruptcy case or to convert the case to Chapter 7.

–Relief Denied

The Bankruptcy Court denies Debtors’ request to void or dismiss their case—even without a wet ink signature from either Debtor.

Here are some of the Court’s explanations:

  1. Debtors seek the extraordinary relief of voiding their bankruptcy case filed over six years ago, on the theory that they (i) did not authorize their attorney to file the Petition or to sign any papers on their behalf, and (ii) no one can produce their original “wet ink” signatures; alternatively, they ask this Court to strike their Petition and schedules and dismiss their case nunc pro tunc.
  2. No statute or rule provides for the remedy requested by Debtors—applicable statutes provide that a case is commenced by filing a petition, the signature of a debtor’s attorney is sufficient to do so, and the failure to produce an original “wet ink” signature has evidentiary, but not substantive, effect.
  3. Debtors admitted, on numerous occasions, that they filed a Chapter 13 Petition—and they did not suggest, or even imply, a belief that they were in the Court improperly, until late in the process.
  4. All their actions in this Court indicate that Debtors were well aware that they were in Bankruptcy Court and that they were there on their own volition—both appeared, for example, in Flint, Michigan to attend their first meeting of creditors.
  5. Debtors confirmed at their first meeting that they signed each paper and that those papers were true and accurate—their subsequent testimony to the contrary lacks credibility.
  6. Debtors have have entered this Court numerous times requesting relief, and have paid substantial sums to the Chapter 13 Trustee.
  7. This is not a case of stolen identity or a mistake—instead, Debtors’ have ratified their bankruptcy repeatedly by, for example, amending their schedules at least eight times and affirming such amendments under penalty of perjury each time.


Many years ago, bankruptcy courts in these United States embraced technology to improve the bankruptcy system.  One exception is the requirement for a debtor’s wet ink signature and retention of the signed papers by debtor’s counsel. This exception is a relic of times past, is flawed, and needs to be replaced.

In re Benton highlights the flaws in our wet ink signature and paper retention requirements.

Highly-secure technology can be used to fix such flaws, when combined with prudent practices. It’s time to do just that.

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.

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