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What Happens At Bankruptcy Court?
If you are facing bankruptcy in the future, you are probably a little nervous and frightened. You want to know what to expect, and you probably wonder how bad it will really be. Knowing a little about the process and what it can and cannot do for you will help calm your nerves.
You will have to go to court. This is not a typical court case where you stand before a judge to receive a sentence. Rather, this hearing gives your creditors a chance to try to get some of the money that you owe. You will be asked questions under oath by your trustee. These questions are about your assets, and the goal is to determine if you have been truthful when listing your assets, while showing that you do not have enough money to repay your debts. You will probably find that your creditors do not come to the meeting, but they can, and they can ask you questions.
If you have never been to Court before, you may be very uncomfortable with the idea of going to a federal courthouse to discuss your personal financial problems with some unknown official, and this is very understandable. The good news is that you are not alone - thousands of hardworking, honest people just like you have made the difficult decision to file a bankruptcy. Because of the large number of cases filed, your case will likely not attract any particular attention.
Wear nice clothes - avoid blue jeans and T-shirts if possible.
Avoid bringing children if possible - if you have no choice, bring someone else to watch the kids when you are called to testify.
What If I Miss My Hearing?
You MUST attend your hearing. Failure to appear at even one hearing, technically, is grounds for dismissal of your case.
What to Bring to the Hearing
YOU MUST HAVE A GOVERNMENT ISSUED PHOTO IDENTIFICATION AND PROOF OF YOUR SOCIAL SECURITY NUMBER. THE TRUSTEE IS NOT ALLOWED TO HOLD THE FIRST MEETING OF CREDITORS WITHOUT THESE IMPORTANT DOCUMENTS. THIS IS HOW IDENTITY THEFT AND BANKRUPTCY FRAUD ARE PREVENTED.
Your government issued photo ID such as a driver’s license or passport.
Your social security card .
If you own a house, a copy of the deed to your house and your mortgage statement if you own a house.
A copy of any paper showing the balance due on your cars if you have car loans.
In Chapter 13 cases, please bring proof of your income and your most recent federal and state tax returns. You must satisfy the trustee your taxes have been filed or will be by the time the case is confirmed by the bankruptcy judge.
What Not to Bring
Do Not Bring A Cell Phone Into The Courthouse. The guards will not let you past the metal detector if you do.
DO NOT BRING ANYTHING ILLEGAL SUCH AS WEAPONS, POCKET KNIVES, MACE OR PEPPER SPRAY
How to be Prepared
There will be 20 or 30 cases at a time for each hour. The trustee caseload is usually heavy but it moves quickly. Try to be a few minutes early. No one will be allowed to badger, harass or humiliate you. You will be treated with dignity and respect at all times.
My office will attend the first meeting of creditors with you. My office will sit next to you while you are speaking with the trustee. Your file will be available to you to look at.
You should relax and not stress yourself out. It is not a test. Be sure to tell your lawyer about anything that is worrying you. Be sure you are completely truthful and respond to the trustee’s questions to the best of your ability. Your lawyer can assist you but cannot testify for you. The trustees appreciate you having your photo identification and social security card or other proof of your social security number ready for them to look at as soon as your case is called. This saves everyone time.
Who Will Be At My Hearing?
The bankruptcy trustee (not a judge) will conduct the hearing, and an attorney from my firm will be sitting right beside you at all times. In Chapter 7 cases, your creditors usually do not appear.
In Chapter 13 cases, sometimes creditors do appear, but any questions they ask are for informational purposes and are non-adversarial in nature.
Who Is the Trustee and What is Their Job?
In a Chapter 7 case, the Trustee is the court appointed official who has two primary roles. First, he is to verify that you are eligible for Chapter 7 and that the schedules you signed under oath and filed with the court are accurate.
Second, if the trustee locates any assets that are not protected by state or federal exemptions, he is to sell them and distribute the proceeds of that sale to your creditors. In most cases, there are no assets to liquidate, so do not be concerned. If the trustee does identify assets, we probably have already advised you about this possibility.
In a Chapter 13 case, the trustee is the court appointed official who is responsible for reviewing your proposed repayment plan, making recommendations to the court regarding the feasibility of that plan, and distributing the payments to your creditors under the terms of the plan.
What Does the Trustee Want to Ask Me?
What will you be asked? The trustee is looking to find assets above the value of your exemptions that can be turned into money to be paid to your creditors. Anything below the amount of the exemptions you get to keep under almost all circumstances. The questions below are some but not all of the questions that may be asked of you. You do not need to memorize your lines.
The trustee will want you to identify your signature on the petition filed for you. You will be asked for any corrections or changes.
Do the petition and schedules accurately and completely list all of your debts and all of your assets? (If you have left anything out tell the trustee about this so it can be corrected).
Does anyone owe you any money?
Do you have the right to sue anyone?
Have you owned any real estate within the last six years?
Are you expecting to inherit anything from any one?
Does any one hold anything that belongs to you?
Do you have anything that belongs to some one else?
What got you into financial trouble?
Has your lawyer explained to you what a Bankruptcy discharge is?
When the trustee is done, if any of your creditors have appeared they get to ask questions briefly. In Chapter 13 cases, the trustee will recalculate the plan payments. Your lawyer may be asked to amend the plan by increasing the payment amount or the length of the plan or to make some other adjustment.
After the Meeting
The trustee may ask for more information from you to be sent to his or her office. Please provide this to your lawyer quickly. This lets the trustee handle and close your case quickly and efficiently. You have a legal obligation to give the trustee all information requested of you.
After 60 days has gone by from the day of the first meeting of creditors , the bankruptcy court clerk’s office will check to see if anyone has filed a lawsuit called an adversary proceeding against you to object to your bankruptcy discharge or to the discharge of any specific debt. If no complaint has been filed commencing an adversary proceeding against you (these are rare), you should expect to get a Notice of Discharge in the mail about 75 days after the first meeting of creditors. Except for your duty to tell the trustee if you inherit anything during the 180 days after the bankruptcy case is filed, the case is over at this point.
Keep the discharge in a safe place where you can find it. It is a valuable document. With certain exceptions, it means you no long owe the debts listed on your bankruptcy petition.
Why Is My Discharge Order Important?
First, the discharge order is the official document relieving you of your pre-bankruptcy obligations. This is proof of your "fresh start."
After your bankruptcy case is completed, you may want to begin re-establishing your credit. Part of getting back on your feet is taking on new debt and managing your debt responsibly. Any time you apply for credit, the lender is likely to request a copy of the discharge order. So, keep your discharge order in a safe place where you will always know where to find it.
If you have any further questions, please feel free to contact me personally at RJaffe@lcjLawFirm.com.
Richard S. Jaffe, Esq.
Law Office of Cohen & Jaffe, LLP