Bankruptcy 101

Considering Filing for Bankruptcy? You probably have some questions and concerns. No worries…

341 Hearing, commonly known as the Meeting of the Creditors, is one of the first steps in a bankruptcy proceeding.  As the person who files a petition for bankruptcy, you will meet with the trustee, who is not a judge, in the bankruptcy court. The trustee represents the interests of the creditors.   The creditors will not likely show up; if they do, they can ask you questions about your assets, but the trustee will limit them to brief questioning.

The trustee will review your bankruptcy paperwork for accuracy, and compliance with applicable bankruptcy law.  You will have to swear under oath that the information you submitted and your answers are true.  The trustee will ask you questions about your assets, to determine your ability to pay, for example whether you have a security deposit box at the bank?  Or if you have any other “hidden” assets.    Questions may focus on any errors in completing the bankruptcy forms, and search to discover undisclosed income, property of value that you have that you transferred to another in attempt to defraud the process, or any other suspected abuses of the bankruptcy process.    Be aware that failing to disclose assets or attempting to defraud the bankruptcy process can result in criminal prosecution.

Sample questions the trustee may ask at a Meeting of the Creditors

1)      Have you listed all your assets on the bankruptcy schedule?

2)      Do you have any safe deposit boxes?

3)      Have you transferred any property to another in the last year?

4)      Do you own any interest in any real estate?

5)      Is all the property listed yours?

6)      Do you have any law suits pending against you?

**Then the trustee will direct any creditors who may be present to ask any questions**

Your bankruptcy attorney will prepare you for this hearing and help you to get the best outcome in your bankruptcy estate by being strategic about managing your assets.   In fact, gathering information before this meeting is the most important step.  You must work with your attorney to locate and notify all of your creditors.  Also, you must attend the required debt counseling classes.  After the hearing, there is a waiting period for the creditors to object to your bankruptcy petition.  Then, the trustee will issue a court order.

BANKRUPTCY OVERVIEW

In a bankruptcy, your debts are discharged, which doesn’t necessarily mean you don’t owe anything.  The treatment of your bankruptcy estate depends on whether your debts are secured or unsecured.  Secured debts are those that are “secured” by some tangible thing,  i.e. a mortgage note on your home, or a car note for your car.   The debts for these items will not be discharged in bankruptcy–either you can give them up, which is probably not what you’d desire, or work with your attorney to get an affordable payment based on your income.  Everything else falls into unsecured debts, i.e. credit card payments, medical bills, utilities.  There are some exceptions, debts due to fraud, a DUI driving offense and student loans cannot be discharged in a bankruptcy.

The Bankruptcy shouldn’t be thought of as getting rid of your debt, it is literally starting over.  You get a second chance to re-establish your credit and all the existing debts that can be discharged will be after a certain time.

References

http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/DischargeInBankruptcy.aspx

http://www.alllaw.com/articles/nolo/bankruptcy/questions-meeting-creditors.html

Disclaimer: This blog is Commentary Only and nothing here is to be interpreted as legal advice, solicitation, or any claim that the quality of legal services offered by The Keli R. Edwards Law Office, LLC is greater than the quality of legal services performed by other lawyers.  I welcome your feedback and comments

Advertisements