Insurmountable debt is a stressful life event to handle. Thankfully, the Federal bankruptcy laws provide an outlet to escape this pressure when other avenues have failed. Making the decision to begin the bankruptcy process can be an even scarier prospect. If you have committed to solving your financial problems by filing for bankruptcy it will be useful to know how to be prepared for your first visit with a local bankruptcy attorney.
You will find other helpful blogs on Bankruptcy Basics if you visit our bankruptcy practice page at https://finneylawfirm.com/practice-areas/bankruptcy/.
A consultation with a bankruptcy practitioner will be the first step in preparing for your bankruptcy case. Each attorney will have their own methods for conducting this meeting and the extent to which you will be required to provide documentation ahead of time. At Finney Law Firm the initial contact is typically a 30 minute free consultation, either in person or by phone, where basic information will be gathered by the attorney regarding income, expenses, unsecured debts and secured debts, and assets. A basic understanding of these ___ is all that is required during this conversation as the attorney will gather more extensive details and documents after being retained. However, it can be helpful to obtain a copy of your free credit report before the consultation. The goal of this meeting is to give the debtor information regarding the types of bankruptcy available and to determine on a basic level if bankruptcy is an option, are there other options, and whether the debtor qualifies to file. These determinations may change as more information is gathered from the debtor.
Questionnaire and document gathering
Once the practitioner and debtor determine whether to file for chapter 7 bankruptcy or chapter 13 bankruptcy, a questionnaire will be provided to the debtor as well as a list of required documents. Diligent and thoughtful preparation at this stage is essential to a successful case filing.
Debtors find this process tedious, but the Bankruptcy Code requires a debtor and debtor’s counsel to take these steps to provide as accurate and thorough information as possible.
Income details will include paystubs, profit/loss or proof of other income from the last six months through filing and tax returns for the previous three years. All income of the debtor, including any side jobs, are included in the bankruptcy filing. Documents pertaining to any assets owned are gathered by the debtor and provided to the attorney such as bank statements, car titles, security agreements, deeds, mortgages, contracts, leases, insurance policies and appraisals. All assets are listed in the bankruptcy regardless of whether they are owned free and clear or have a lien attached. Details regarding financial activity of the debtor are disclosed, including transfers of assets for the last four years (and in some cases ten years), payments of money to family, friends, and creditors over the last year and divorce decrees, to name a few.
Your attorney will need to know where you have resided in the last two to three years prior to filing to determine where you can file and what state or federal exemptions may be used to protect your assets.
If you have not done so already, you or your attorney will obtain a copy of your credit report. A credit report is rarely a reflection of all your debt. Some creditors do not report to credit reporting agencies. Additional details, including but not limited to, medical bills, student loans, domestic support obligations (such as child support and alimony), property settlement obligations in a divorce decree, contracts and prior bankruptcy filings must be provided to supplement the credit report. All debts must be listed in the bankruptcy petition regardless of who it is owed to or whether you intend to continue paying them after bankruptcy.
The last step prior to filing your bankruptcy case is to take an online credit counseling course provided by an accredited agency. The cost of this course varies by provider but averages around $20.00. After completion, the provided will send a copy of your certificate to you and your attorney for filing with the petition.
Filing and Post-filing
After all documents are gathered and payment is made in full to your attorney (the bankruptcy court requires attorneys to be paid in full prior to filing), the bankruptcy petition is prepared, thoroughly reviewed by debtor and attorney together, and signed by both.
If the debtor is filing a repayment plan under chapter 13, this will undergo the same process. A payment plan provides the trustee, the Court, and the creditors with details regarding the percentage of repayment to unsecured creditors, treatment of secured creditors and collateral securing those debts, intention to continue or discontinue leases and other contracts and the debtor’s proposed monthly payment.
The petition (and payment plan, if applicable) is filed electronically, a trustee will be appointed, and a date is set to have a hearing called a “341 Meeting of Creditors”. At this point, these hearing are being held telephonically due to the pandemic. Although it is uncertain, this procedure is likely to continue.
Many documents provided to your attorney will be given to the trustee for review prior to the hearing. After verifying your identity through social security card and picture identification, the trustee questions the debtor on the record regarding the information provided in the petition. These hearings are generally not lengthy and are streamlined in the questioning. Your bankruptcy attorney will prepare you for the questions and attend the hearing with you.
A chapter 13 will have an additional hearing to determine whether a proposed chapter 13 plan is confirmed by the court. These hearings are usually not attended by the attorney and debtor unless concerns and objections to the plan have not been resolved prior to the hearing.
The creditors in your case have sixty days after your bankruptcy filing to object to discharge of the debt you owe to them. If no objections are filed in this time period, a discharge will be issued on all dischargeable debts in a chapter 7. In a chapter 13 a discharge is not issued until all payments have been made under the proposed and confirmed plan.
If you are ready to begin your journey to financial stability, contact Susan Browning at Finney Law Firm, 513.797.2857, for a FREE consultation.