In a Chapter 7, the trustee has a meeting. They go through the bankruptcy. In most cases, it is perfunctory and well prepared. Although creditors can appear, I cannot remember the last time a creditor appeared at a meeting. The trustee is looking to see if you are hiding assets, but this very seldom happens. If a person is honest and forthright and if they have assets, they can be impeded in a Chapter 7, and could have to file a Chapter 13. However, every once in a while, people have assets that pop up, which we do not know about. Someone can tell them, but most Chapter 7 meetings take about ten minutes, and that is the end of it. A Chapter 13 can be a little more complicated.
A Chapter 13 trustee, in part, is protecting the interests of creditor’s, particularly unsecured creditors. Are you paying enough dividends to unsecured creditors in a Chapter 13? Are you using all of your disposable income? Therefore, you can have these problems with a Chapter 13, but a well-prepared Chapter 13 avoids almost all these problems.
IS THE 341 MEETING OF CREDITORS AN INTIMIDATING PROCESS?
A 341 meeting is usually very much less intimidating than people make it out to be. The attorney is always present. The people who get into trouble in Chapter 13 or Chapter 7 meetings are the people who do it on their own.
AT WHAT POINT IN THE BANKRUPTCY DOES THE 341 MEETING GENERALLY TAKE PLACE?
The law says twenty to forty days after the filing that this meeting takes place. I do not ever recall it happening before the twenty days though.
AT THAT POINT HAVE PEOPLE TAKEN ANY SPECIFIC COURSES REQUIRED FOR PRE OR POST BANKRUPTCY?
Yes, in order to file bankruptcy if your debts are consumer debts, you have to take a course of credit counseling. It costs about $10 and lasts for about thirty minutes. It is totally useless, a waste of time, and a waste of money, but it has to be done. After the case is filed, in order to get a discharge, you have to do what is called debtor education, which is also about $10. These are usually done online. This one takes an hour, I understand. It is also useless. If a person owns a restaurant and does not have a house, his business debts may exceed his consumer debts, he does not have to do it, but for most people they have to do it. You cannot file a case until you have the certificate, which we file with the case. If someone were to file the case without getting a credit-counseling certificate, the case would be dismissed almost immediately.
WHEN IS SOMEONE’S BANKRUPTCY ACTUALLY COMPLETE?
You have to go to the trustee’s meeting. Through the court processes, which is clerical, about four months from the date of the filing, but essentially once you go to the meetings that is it. You do not have to think about it anymore. You get an order of discharge, and it is filed along with your important papers. In a Chapter 13, it is after you have paid all the payments required by the Chapter 13 plan. Then after thirty days after the final payment, you get an order of discharge.
WHAT ARE SOME RED FLAGS I SHOULD LOOK OUT FOR WHEN RETAINING A BANKRUPTCY ATTORNEY?
I think you should avoid those bankruptcy mills. They do a tremendous amount of advertising, and they are under a great deal of pressure to sign everyone up as soon as they can. I have been told people should not file a bankruptcy. People come in who have full security, and I always advise them they do not have to do it, because creditors are not allowed to take any of their money. It is best to have someone who is experienced in consumer bankruptcy who knows the ins and outs, the tricks of the trade etc. We think we are better. We do not rush people.
When people see us, the first thing we do is try to list all their debts; we try to get their credit reports. After the case is filed, they are essentially assigned to an attorney who will pay per calls. You can always talk to a lawyer not a paralegal. You get to talk to the same person every time. Some of the larger firms, you call up one day, you talk to one person, you call them a week later, and there is someone else, it goes on like this every time. That is what I think our advantage is.
We feel we are far more personable towards our clients. More than most firms, we try to avoid a cookie cutter solution for everyone. We know that each client is unique, and their problems are too, we care about our clients.
WHAT ARE THE MOST IMPORTANT LESSONS THAT SOMEONE CAN LEARN FROM FILING BANKRUPTCY?
Just be careful. If you want to buy a car, try to buy a modest car. There is a lot of information on the internet about the value of cars. Always check out what the interest rate is. Surprisingly, people generally do not know what their interest rate is. Try to live within your means. I think people should try to make a payment to themselves every payday, and develop that as a habit, even if it is only $5 that you put in the bank every week. It is very important after the filing of the case that you not fall behind on your debts. I advise people to try to pay everything in cash.
If you pay in cash, you understand the process more than you do in a credit card. If you go to a grocery store, and you are using a credit card, you will buy more groceries, you will buy snacks, stuff you do not need. You should dig into your pockets to avoid that.
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