“The Bankruptcy Process – Part II”

The Bankruptcy Process – Part II

In my prior article, I walked through the initial steps in getting the required information, the need for an individual to take a pre-bankruptcy credit counseling course through an accredited credit counseling agency, and preparing the initial paperwork to get things going.  Once a draft of the papers is completed, I send that on to the client to review, mark up, and revise.  I then make all indicated corrections and schedule another meeting with the client so that they can review the documents, one more time, for accuracy and then sign them once they are corrected and in final form.  The documents are then electronically filed with the U.S. Bankruptcy Court, at the client’s direction. A case number is assigned to the matter and a Trustee is appointed.  I then advise the client of such filing and instruct them to take a secondary course in personal financial management, through the same accredited credit counseling agency they initially used, so that their bankruptcy discharge can be issued.   I then file the issued certificate showing this was completed, as soon as it is received.

At the same time as a Trustee is appointed, a creditors meeting is scheduled and notice thereof is sent out to all creditors, so that they can attend should they so choose.  Once I am aware of the duly appointed Trustee, I send him/her a number of documents (vehicle titles, pay stubs, recorded deeds and mortgages, tax returns, bank statements, etc.).  The  creditors meeting generally takes place about a month or so after the case is filed. The debtor has to attend this meeting and bring with them 2 forms of identification (driver’s license and social security card).  I attend the meeting as well.  While creditors can attend and ask questions, in most cases it is only the Trustee who appears and quizzes the debtor on their assets, liabilities, income and expenses, and transfers of property, entitlement to income tax refunds, an inheritance, insurance proceeds, claims for injuries, etc.

After the meeting is concluded, there may be a few additional documents the Trustee has requested that I have to send on to them.  Otherwise, while the debtor has a continuing obligation to cooperate with the Trustee in regard to the administration of their bankruptcy estate, this is typically the last time they will encounter the Trustee, and no court appearance is usually necessary.  Sometimes, a debtor wants to keep a piece of secured property in a Chapter 7 case, in which instance a Reaffirmation Agreement with the secured creditor is negotiated and filed with the Court. This agreement will allow the debtor to keep the motor vehicle or house, as long as they keep making the monthly payments and keep the collateral insured.

About 5 months or so after the case is filed the debtor, in a Chapter 7 proceeding, receives notice of their discharge.  This is a valuable document and should be retained in case a creditor later on attempts to collect on a discharged debt.   (Note that if a creditor is not listed, their debt may not be wiped out).  After this is issued, the case is generally closed.

In a Chapter 13 proceeding, there is also the need to draft and file a Chapter 13 Plan, which describes how creditors’ claims will be treated and the payments the debtor is expecting to make toward satisfying such claims over the next 3-5 years. (If you are above the “mean” income-wise in your county of residence, you will have to run your plan 5 years; if below the mean the plan only has to run 3 years).  A plan confirmation hearing is then scheduled sometime after the creditors meeting and I would attend such hearing to assure the plan is confirmed.  Once confirmed, the debtor simply has to keep making the required monthly payments and must also generally turn over to the Trustee any bonuses received and income tax refunds they might be entitled to.  They also must supply the Chapter 13 Trustee with all post-petition tax returns and update their budget annually.   Once all required plan payments have been made, the debtor receives his/her discharge and the case is closed.

If you have encountered financial difficulties and believe you are in need of bankruptcy relief, please contact the knowledgeable professionals at Damon, Ver Merris, Boyko & Witte, PLC.  We can guide you through the process and help you obtain the type of relief to which you are eligible.  – Larry A. Ver Merris / December 26, 2017

While this posting originates from a law office, none of the contents should, in any way, be considered legal advice. If you have not signed a retention letter describing the legal services to be provided and the amount to be paid for such services, you are not a client of this firm