Going to court for your first meeting of creditors?

What are they going to ask me?, you wonder.

My bankruptcy clients imagine a quiz on the contents of their bankruptcy papers.

Or worse, an inquisition on why they needed to file bankruptcy.

That’s not likely.  The first meeting of creditors is much more likely to be a snooze.

Jay Fleischman set out a very comprehensive list of questions a Chapter 7 trustee might ask at your bankruptcy hearing.

Let me add my rules for answering those questions.

1.  Listen to the question

Just because you’ve read Jay’s list and think you know what’s coming, listen to the trustee’s question, all the way to the end.

First of all, it’s only polite.  Second, you want to make sure that you know what the trustee wants to know.

Your answer is being recorded.  You want to make sure you are answering the question that the trustee asked.

2.  Answer truthfully

Honest disclosure is the price of getting a bankruptcy discharge.  This is not the time to be cute or tell anything less than the truth.

You are answering under oath.  You are subject to the penalties of perjury if you are intentionally are less than honest.

3.  Be brief

Answer the question that the trustee has asked, truthfully, in as few words as possible.

Don’t explain, don’t justify, don’t ramble.

Just answer the question.

If the trustee needs to know more, he can ask a follow up question.

Usually, the trustee is just trying to make a record that he has done his job.

He has a list of cases he has complete.  Don’t make his day any longer by volunteering more than he wants to know.

4.  Don’t guess

If you don’t know the answer to a question, say so.  If the answer is honest, it’s perfectly OK.

Perhaps your counsel can help.  Maybe there are documents that provide the information.

Don’t pretend to a level of certainty if you don’t really know.

All’s well

If you’ve been diligent about getting your attorney all the requested information, chances are the first meeting of creditors will be the last, and you’ll be on your way to a fresh start.

Image:  © Innovated Captures – Fotolia.com

Your bankruptcy case is filed.

What happens next?

After you’ve assembled all the paper, after you’ve answered endless lawyer questions, and after you’ve filed all the bankruptcy schedules in your case with the court, what do you need to do now?

Actually, relatively little happens after you’ve filed your bankruptcy.  The heavy lifting is done.

But for a successful outcome to your case, you need to stay engaged.  Bankruptcy is not the kind of law you just hand to your lawyer and bow out.

Here’s what you need to do to as a member of your bankruptcy team. [Read more…]

Believe it or not, certain unsecured loans from government entities are dischargeable in bankruptcy.

This includes SBA loans, and loans made through The Department of Veteran’s Affairs (VA), Department of Housing and Urban Development (HUD) and others.

That’s the good news.

What is CAIVRS and How is it a Problem?

The bad news is that the government keeps a list known as “CAIVRS”. [Read more…]

One of the great mysteries of debtor/creditor law is the community property discharge in bankruptcy.

When only one spouse files bankruptcy in a community property state like California, the non filing spouse reaps bunches of benefits that creditors can’t imagine.

Benefits that aren’t explicitly described in books about bankruptcy or understood by creditors.

Those benefits start with the non filer’s wages being absolutely protected after bankruptcy from that person’s debts existing when the case was filed.

How can that be? frustrated creditors shriek.

It’s community property law, is the reply.

The   phantom discharge works like this. [Read more…]

What do Unicorns, Wookies, and Medical Bankruptcies  have in common?

Each is a figment of our imagination.

None of them exists in the real world.

Medical bankruptcy does not exist, despite the suggestion in a recent FoxBusiness article, where the author talked about medical bankruptcy contrasted to personal bankruptcy.

When it comes to medical bankruptcy, consumers need to look at it the same way they would for personal bankruptcy, which means their credit will take a hit for as long as 10 years depending on the type they file

Different types of bankruptcy have discharges that differ, but the difference between types of bankruptcy has nothing to do with the kind of debts  involved.  Understand Chapter 7 and Chapter 13.

The source of the debts in the bankruptcy may be consumer debt, business debt, or medical bills.

But the bankruptcy, the legal remedy for those debts, is personal.

And  a person’s bankruptcy case addresses all of the person’s debts.  No picking and choosing.

Included in bankruptcy

The idea that a bankruptcy case might include just selected debts may be promoted by the language of credit reports. [Read more…]

It’s about WHO you owe,

not so much about HOW MUCH you owe,

when you file bankruptcy.

WHO, WHO, WHO.

If your debt is subject to discharge,  your bankruptcy wipes out all of your deb  to a creditor  you’ve listed.  Even if you got the amount wrong.

Why we list creditors

It’s all about due process.  Remember from civics class?

Notice of your bankruptcy case is the due process that a creditor must get.

Notice gives the creditor a chance to share in any distribution in a bankruptcy case;  notice gets the creditor gets a chance to contest your right to get a bankruptcy discharge.  A creditor can challenge the discharge of your debt to the creditor if there are legal grounds.

The creditor would lose those rights if he didn’t have notice of the case.

Every creditor listed in your bankruptcy schedules gets notice of the filing of your case from the court clerk.  That same list is used by the court to provide every listed creditor a copy of the order granting your discharge.

Myth

There’s a worry among bankruptcy debtors that only the amount that is listed in the bankruptcy papers will be discharged.

Not so.

The bankruptcy discharge works to discharge all of your obligation to that creditor.  Say you owe the credit union on a personal loan and on a credit card.  Even if you listed only one of those loans, both would be discharged, because the creditor (the credit union) had notice.

Secured liens after bankruptcy

Focus

In preparing to file bankruptcy, spend your energy finding all the entities who might have a legal claim on you.

Don’t limit yourself to the creditors who send you a monthly bill.  Look for debts you’ve guaranteed for others, disputes with business partners or co owners, and even claims by governmental units.

.

It’s OK to estimate what you might owe, or to list an entity and dispute that you owe them anything.

If a creditor gets notice of your bankruptcy filing, they are bound by the resulting discharge.

In the end, it’s all about WHO knows.

More

Why so much paper in bankruptcy

How to interview a bankruptcy lawyer before you hire them

What should bankruptcy cost

Image courtesty of Rronenow and Wikimedia.