How Do I File a Bankruptcy?

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MANAGING ALL THE PAPERWORK AND CONTACTS WITH YOUR CREDITORS & THE BANKRUPTCY TRUSTEE

This process requires hard work on your part.

Once you retain our office it becomes your responsibility to do the work and our responsibility to guide you through the bankruptcy process, including all of the paperwork. You may also refer any creditors to our office. You receive a copy of every document this office receives relating to your case. You are welcome to call our office at any time to get clarification of the status.

In a chapter 13 there are many other issues and documents that must be filed, such as a plan of reorganization. This plan is sent to your creditors, reviewed, revised and refiled. The chapter 13 trustee assigned to your case will review the plan and have certain recommendations. These recommendations must be address, as do any secured creditor issues that arise. This process takes at least 6-12 months to finalize the plan. During that time and for the life of the plan you must make payments to the trustee and secured creditors as directed by Ms. Drain. This process continues throughout the life of your Plan – three to five years. See Chapter 13 Questions

WHAT IS INVOLVED IN FILING A BANKRUPTCY?

There is a lot of information that must be disclosed when filing a bankruptcy.

In order to file a bankruptcy you must complete a series of documents that list all items that you own, all debts that you owe and all rights that you have. This also includes your income and expenses. If a business is filing, then there are a series of questions related to business issues. Everything you own or owe must be listed. This does not mean you cannot keep most, if not all, of those items that you list; this just means that you must be thorough in your listing all your debts and assets.

Exempt Property

Assuming that you have lived in Arizona for the last full 2 years, then the basic living items are exempt under Arizona law. I will review all these rules with you when we meet. Once the documents are completed they are signed and electronically filed with the Bankruptcy Court.

If you are filing a chapter 13:

If you are filing a chapter 13 you must also file a Plan of Reorganization, with other documents related to the Plan. In order to have a successful chapter 13 plan there must be in-depth analysis of income, expenses, arrears and fair market value of assets; along with certain transactions that you may have made before filing.

WHY IS IT IMPORTANT THAT ALL INFORMATION ON MY BANKRUPTCY DOCUMENTS IS ABSOLUTELY ACCURATE?

Bankruptcy Judge’s open letter to Debtors and their Attorneys: Hon. Alan Jaroslovsky U.S. Bankruptcy Judge, Northern District of California, Santa Rosa Division:

“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.

WHAT ARE THE COURSES REQUIRED IN ORDER TO FILE BANKRUPTCY?

These courses are on-line, by phone and are required for consumers.

Every consumer who files Chapter 7 or 13 bankruptcy will have to take a credit counseling “briefing” within 180 days PRIOR to filing their bankruptcy and file a certificate of compliance. There is a provision for emergency situations, but they still must prove that they tried to obtain the class within the last 5 days of filing, but they must take the class and file a certificate of compliance within 30 days after filing their bankruptcy Petition. There is also a financial management course that must be taken within 45 days after filing your bankruptcy. Failure to do so will result in additional fees and costs in order to get your discharge in your bankruptcy. There will be fees charged for those classes, unless you cannot afford to pay such fees. Diane and Jay will explain the process.

Warning – About all these Credit Counseling Companies

Their information regarding bankruptcy is often not accurate. You must talk to a bankruptcy attorney in your State. People may try to sell you this second class before filing, do not take this offer. We will provide you with information about some great providers.

Important Note: no matter who you chose to provide these classes – make sure to confirm that they are approved by the US Trustee’s Office – Credit Counseling and Debtor Education.

ATTEND THE “MEETING OF CREDITORS“

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.

DISCHARGE

The discharge is not the end of the bankruptcy. The Trustee and the court have their responsibilities before your case is closed.

Depending on your situation there may be more work for you.

GREAT JOB!!!

The Discharge is the magic document that every debtor waits for. In a chapter 7 the discharge usually comes from the Court approximately 4 months after your documents were filed starting your bankruptcy. In a chapter 13 you will not receive a discharge until after your entire Plan has been completed (3 to 5 years).

A chapter 7 business bankruptcy does not receive a discharge.