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Preparing for Bankruptcy Filing

The first step in preparing to file bankruptcy is to meet with a bankruptcy lawyer to discuss your financial situation.   Your attorney will analyze your finances and review various debt relief options with you. After considering your options, if you choose to file bankruptcy, the next step is to complete your bankruptcy forms. To complete your bankruptcy forms, your bankruptcy attorney needs information about your debts, property, income, expenses, and financial transactions. Your attorney obtains some of the information from your credit report and other sources. However, you need to provide some documentation and information to your attorney.  This information must be truthful and complete.

You are required to complete the first Bankruptcy Credit Counseling Course before your case is filed. The course is available online for a small fee and may be completed in less than two hours.  We help you arrange it.  Our legal staff works closely with you to gather the information necessary to complete the bankruptcy petition, schedules, and statements required by the bankruptcy court. After we prepare the required bankruptcy forms, you review each document with your bankruptcy lawyer to ensure the information is accurate and complete. Our office takes care of electronically filing the documents with the court to begin your bankruptcy case and obtain a bankruptcy case number.

Preparing for Bankruptcy Filing: What Happens Immediately After a Bankruptcy Case is Filed? 

An automatic stay goes into effect when you file a bankruptcy petition. The automatic stay prevents creditors from taking any actions to collect debts without receiving approval from the bankruptcy court. Therefore, filing a bankruptcy petition stops creditor harassment, repossessions, pending foreclosures that have not been reduced to judgment, and debt-collection lawsuits.  We recommend that you complete your second bankruptcy course (Financial Education Course) before the date of your 341 First Meeting of Creditors. The second bankruptcy course is also available online for a small fee and may be completed in about two hours. If you do need to do anything before the 341 Hearing, your bankruptcy lawyer will let you know.

Attending Bankruptcy Meetings and Hearings

All debtors must attend a 341 First Meeting of Creditors. This bankruptcy meeting is scheduled within 20 to 40 days after you file your bankruptcy petition. The meeting is conducted by the bankruptcy trustee assigned to your case and lasts about ten to twenty minutes.

All debtors must appear at a Meeting of Creditors and provide sworn testimony before the bankruptcy trustee appointed to administer the bankruptcy estate. Creditors may appear to ask questions, but it is rare for creditors to appear.   The questions asked by the trustee are questions that your attorney and his staff have asked you as they gathered information and prepared your bankruptcy forms, so you already know the answers to the questions the trustee will ask. You are required to have proof of identification (Driver’s License, Passport, or State Identification card) and your original Social Security Card.

We will prepare you for the meeting by providing detailed instructions about what you need to take with you to the hearing, how to get to the hearing location, and what to expect during the hearing. It can be very helpful to arrive at the meeting location at least 30 minutes early to watch a few cases before your case is called. The trustee asks each debtor standard questions at the beginning of each hearing. By watching a few cases, you will be more at ease and know what to expect when your case is called.  For Chapter 7 debtors, the First Meeting of Creditors is typically the only hearing they are required to attend. Chapter 13 debtors might be required to attend a Confirmation Hearing for their Chapter 13 repayment plan.

The Trustee’s Questions

If you watch a few cases, you notice that the trustee asks the some of the same questions of each debtor. Those questions typically include:

  1. State your name for the record.
  2. Did you read and sign the petition, schedules, and statements filed with the court?
  3. Are you personally familiar with the information contained in these documents?
  4. Is the information in your bankruptcy forms and any related documentation true and accurate?
  5. Do you know of any errors or do you need to make any changes to the information?
  6. Have you listed all your assets and debts in your schedules?
  7. Have you filed for bankruptcy relief previous to this filing?
  8. Do you owe or pay any domestic support obligations (alimony or child support)?
  9. Have you filed all required tax returns and submitted your most recently filed tax return to my office?
  10. Did you review the bankruptcy information sheet?
  11. Have you repaid any debts to friends or family members within the past year?
  12. Have you transferred or sold any property within the past two years?
  13. Is anyone holding any property for you?
  14. Does anyone owe you money?
  15. How did you decide what values to use for assets listed in your bankruptcy forms?

The trustee may also ask other questions that are specific to your bankruptcy case. We typically recognize when a trustee might be interested in a specific item on your forms, so we prepare you for that question.

The trustee is not attempting to trip you up or trick you. The trustee is simply asking you questions about your financial situation for the record to make decisions regarding the administration of your bankruptcy case.

What Happens If A Creditor Appears? 

Creditors can appear at a 341 Meeting and ask questions. Rarely do creditors appear at the hearing because they can obtain the information they need online or from your attorney. If a creditor appears, you answer the questions to the best of your ability. Your attorney is always present in case a problem arises.

Most Meetings of Creditors Are Quick

Because our office prepares our clients for 341 Meetings and we send documents to the trustee that are required for the hearing, most hearings take between five to ten minutes. In a Chapter 7 case, the Meeting of Creditors is the only hearing most debtors are required to attend. A Chapter 13 debtor may be required to attend the confirmation hearing for the plan. Our office makes sure you know when you need to attend court and you are prepared before you arrive in court.

What Happens in A Chapter 7 Bankruptcy Case? 

Chapter 7 bankruptcy is a liquidation bankruptcy action. When a person files for Chapter 7 relief, a bankruptcy trustee is immediately appointed. The trustee is almost always a bankruptcy attorney. In every district, there is a list (or “panel”) of qualified Chapter 7 trustees. These individuals are carefully chosen by the Office of the United States Trustee (which is part of the Federal Department of Justice). The bankruptcy trustee in a Chapter 7 case is charged with, among other things, very important aspects of administering the case, determining whether there are non-exempt assets, pursuing any claims or investigations that may lead to non-exempt assets, and distributing the assets to creditors (in accordance with their respective priorities).

One of the important functions of a trustee in a Chapter 7 bankruptcy is to liquidate non-exempt assets. Exempt assets are the assets the debtor is allowed to keep. They are described further below.

What Happens in A Chapter 13 Bankruptcy Case?

Chapter 13 is referred to as a “wage earner” bankruptcy case because it is designed for individuals and couples who have a steady income to fund a payment plan. Through your Chapter 13 plan, you reorganize your debts into an affordable monthly plan that allows you to regain control over your finances again. A Chapter 13 bankruptcy may allow you to keep all or a substantial portion of your property.  You remain in possession of your assets and are afforded an opportunity to create a repayment plan to your creditors that will allow you to repay all or a portion of what you owe, and extend the time you have to pay what you owe to your creditors. This reorganization of a debtor’s assets and debts affords him or her the opportunity to get a fresh start.

Creditors are treated differently in a Chapter 13 plan based on the category of debt.  General unsecured debts are debts that are not secured by collateral. The calculation of the amount of plan payments, and the duration of those payments, are determined based on a fairly complex analysis of the amount of your income, assets and debt. Your bankruptcy lawyer will help you formulate the plan and calculate the plan payments. Some plans require paying one hundred percent of the debtor’s debts over a period of time (three years of five years). Most do not (although it depends on your individual circumstances). If the debtor fully performs his or her obligations under the plan, the remaining balances owed to creditors holding general unsecured debts are discharged (other than certain claims that are not dischargeable).  In other words, you have no legal obligation to repay discharged unsecured debts.

One of the important functions of a trustee in a Chapter 7 bankruptcy is to liquidate non-exempt assets. Exempt assets are the assets the debtor is allowed to keep. They are described further below.

Examples of General Unsecured Debts Include:

  • Personal Loans
  • List Medical Bills
  • Credit card accounts
  • Most personal Judgements
  • Pay day advances
  • Pre-Bankruptcy rent payments and utility payments
  • Student loans are general unsecured debts. However, student loans are only dischargeable in a bankruptcy case if you meet certain legal requirements discussed further below.

Consumer cases fall into two classifications — Chapter 7 bankruptcy and Chapter 13 bankruptcy. Understanding the difference between the two types of bankruptcies available to you can help you determine which is best for you.   Additionally, there are several types of debt negotiation options available to you as a consumer, before you make a decision to file for bankruptcy.

One of the important functions of a trustee in a Chapter 7 bankruptcy is to liquidate non-exempt assets. Exempt assets are the assets the debtor is allowed to keep. They are described further below.

Request a Free Consultation With Silverberg Law Firm LLC

When you are searching for an attorney, it is important that you find someone who understands your goals and your business. You need an attorney who will pay personal attention to your situation. You need someone smart, tough, and someone will give you a clear picture of your situation at every juncture so you can make decisions. At Silverberg Law Firm LLC we understand your situation. We provide legal advice, support, and guidance when you need it most. 

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