How Do I File a Bankruptcy?

“I have noticed a disturbing trend among debtors and their counsel to treat the schedules and statement of affairs as “working papers” which can be freely amended as circumstances warrant and need not contain the exact, whole truth. Notwithstanding execution under penalty of perjury, debtors and their counsel seem to think that they are free to argue facts and values not contained in the schedules or even directly contrary to the schedules. Some debtors have felt justified signing a statement that they have only a few, or even a single creditor, in order to file an emergency petition, knowing full well that the statement is false. Whatever your attitude is toward the schedules, you should know that as far as I am concerned they are the sacred text of any bankruptcy filing. There is no excuse for them not being 100% accurate and complete. Disclosure must be made to a fault. The filing of false schedules is a federal felony, and I do not hesitate to recommend prosecution of anyone who knowingly files a false schedule. I have no idea where anyone got the idea that amendments can cure false schedules. The debtor has an obligation to correct schedules he or she knows are false, but amendment in no way cures a false filing. Any court may properly disregard subsequent sworn statements at odds with previous sworn statements. I give no weight at all to amendments filed after an issue has been raised. As a practical matter, where false statements or omissions have come to light due to investigation by a creditor or trustee, it is virtually impossible for the debtor to demonstrate good faith in a Chapter 13 case or entitlement to a discharge in a Chapter 7 case. I strongly recommend that any of you harboring a cavalier attitude toward the schedules replace it with a good healthy dose of paranoia. “

Bankruptcy Fraud: Without exception you must disclose all your assets and liabilities (never listen to someone who tells you otherwise – even if they seem to know what they are doing).  The United States Trustee’s Office is very aggressive about uncovering bankruptcy fraud.  If the debtor knowingly and fraudulently conceal an asset from the Court they will have committed a felony and can be fined up to $250,000, imprisoned for up to five years, or both. In addition, the Court can also deny the debtor’s discharge, or dismiss or convert the bankruptcy proceeding and order that the debtor’s assets are liquidated.  This will mean the debtor has lost their property and does not have the protection from the creditors.  I have never had a client end up with this situation.

THIS IS A REQUIRED MEETING!!!

46140268 – business, people and teamwork concept – smiling business team with papers meeting in office

Normally it will just be with the trustee, you and Diane. For consumers it is rare for creditors to be at this meeting.

Prior to the meeting with the trustee

Prior to this meeting the trustee will ask for copies of documents, such as tax returns, bank statements, insurance policies, etc. If you are working with our office you will have already been prepared for this request. It is extremely important to comply with all the reasonable requests of the trustee. If the trustee is becoming unreasonable then our office will address the matter with the court. Remember that the trustee is not the judge. The trustee is just one player in the bankruptcy process.

The trustee will ask a series of simple, but very important questions.

At a creditor’s meeting (it is very rare for any creditors to attend a consumer bankruptcy) you will be asked to testify that you have reviewed all the documents filed with the Court and that they are true and accurate.

If there are assets in a chapter 7 case which are not exempt, the Trustee takes control of those assets and usually, sells them at a public auction.

You and/or your family/friends have a right to bid at that auction. From the sale of assets or the recovery of certain transfers or payments (called avoidance powers), the Trustee pays the expenses related to your case, and then distributes the remaining funds to creditors who have filed proofs of claims. In a chapter 7 case all wages you earn after the case belong to you. But, monies that were owed to you before your case was filed belong to your creditors, such as tax refunds, inheritances, accounts receivable, and money from any lawsuits. Generally, the only responsibilities you have after the 341 meeting is to cooperate with the Trustee in providing any information requested and assist your attorney in addressing any assets that you want to keep, but that are secured by a creditor.