“S” Is For Section 341 Meeting Of The Creditors.

A section 341 meeting of the creditors is held at which the debtor must appear and answer questions after the bankruptcy petition is filed. In my district, the Eastern District of Michigan, the hearing is typically held about four to five weeks after the case is filed.  At that hearing, the debtor is questioned under oath by a  trustee. The trustee is not a judge.

The trustee is usually an attorney appointed in all chapter 7 and chapter 13 cases. The trustee’s responsibilities include reviewing the debtor’s petition and schedules and to recover or seize non-exempt assets. In a chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. The chapter 13 trustee is typically more interested in maximizing the monthly payment made by the debtor.

Typically in our district, before the meeting the attorney will have sent pay stubs, tax returns, deeds, titles, retirement statements, and bank account histories to the trustee for review. The trustee reviews the petition and financial disclosures before the hearing. The more information the trustee has in advance, the smoother the hearing will go and the less likely the trustee will be forced to adjourn the meeting to a new date for the debtor to produce supplemental information.

As this is the only court hearing most clients have, they are stressed out but it’s not as bad as they may think. Debtors are not scolded for being irresponsible and creditors don’t usually show up. Hearings are scheduled in 30 minute blocks of time. The debtors go into a common room and wait to have their case called. Once called, the debtor and their attorney sit at a table with the trustee. Sometimes the trustee has an assistant to help keep the case files organized. The debtor must present a state issued ID and a social security card. No card – no hearing – no questions. Better make sure you have it.

The trustee will ask you questions like:

  • Did you read, understand, and sign the bankruptcy petition and related schedules?
  • Did you read and understand the bankruptcy information sheet?
  • Did you list all of your assets, debts, and creditors?
  • Do you have any reason to sue anyone?
  • Does anyone owe you any money?
  • Do you expect an inheritance from anyone who has died?
  • Have you paid back any of your creditors in the 90 days before you filed your case?
  • Did you get your tax refund back? What did you do with it?
  • Did you pay back and friends or family before your case was filed?

It all takes about five minutes and before you know it, the hearing is over. There really isn’t anything to worry about. If you have a decent lawyer, you will be able to answer all of the questions without any problem.  About  two months after the hearing the order of discharge will come in the mail. It’s not as bad as you think but you won’t believe me until it’s over.

“S’ also stands for:

Chris McAvoy is a Taylor, Michigan attorney and consumer bankruptcy lawyer who helps people file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, click here for contact info. We help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, and the Downriver, Michigan area.

 

photo by: takomabibelot

“H” Is For Harassment By Creditors

HCreditor harassment, obnoxious phone calls to your house and job, lawsuits and garnishments overwhelm and stress people out. Ripping open your paycheck to see if there is a garnishment is not a good feeling.  Creditor harassment and debt collectors make ridiculous threats to get you to pay. Creditors say harassing things like they will have you arrested or they will take money from your bank account if you don’t start making payments.

Lies, goddamn lies, and creditors.

Here are some of my favorites:

The threat:

  1. You will be arrested if you don’t start making payments.
  2. They will take the money from your bank account immediately.
  3. Your check will be garnished this week.

The truth:

  1. Debtor’s prisons no longer exist. I assure you a cop is not going to arrest you because Visa said so.
  2. Your bank will only allow a creditor access if you give them permission.
  3. Garnishment will only happen after you have been sued and there is a judgment. Even then it will be a lawyer, and not a debt collector, doing the garnishing.

Having said all of that, threatening calls and letters is a symptom of a much bigger problem: You can’t afford to pay your debt. That’s the real problem. Whether it is because of job loss, wage reduction, overwhelming medical debt, the result is the same. There are only two ways I know of that are guaranteed to work to stop the collections. Either pay off the debt or file for bankruptcy protection.

Bankruptcy and the automatic stay.

Once you file for bankruptcy, the “automatic stay” kicks in. Your creditors are no longer allowed to contact you, write you, call you, sue you, garnish you, seize your property, etc. When you file your bankruptcy petition, all of your creditors are listed. The bankruptcy court mails notices to the creditors to inform them of the bankruptcy. If the contact continues, the creditor is in contempt of court and can be sanctioned for violating the automatic stay. In some cases, a debtor will be awarded damages and attorney fees for having to enforce the stay against the willful violator.

“H” also stands for:

Christopher McAvoy is a Taylor,  Michigan attorney and consumer bankruptcy lawyer who helps people in the  Downriver area  file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, click here for contact info.

“D” Is For Debtor

DA debtor is defined as a person or entity that owes an obligation or fixed amount. Most everyone understands what a debtor is because most everyone has debts. Mortgages, student loans, car payments, credit cards, medical bills… all debts. Being a debtor isn’t necessarily a bad thing. But in the context of bankruptcy, a debtor is a person that has filed for relief under the Bankruptcy Code.

The bankruptcy debtor’s obligations.

To file a bankruptcy, a petitioner must pay the filing fee and file a voluntary petition, statement of  social security number, names and addresses of all creditors, statement of current monthly income, schedules of all assets and debts, schedules of all income and expenses, and statement of your financial affairs for the past couple of years. The debtor has to give the trustee their most recent tax return and copies of the last 60 days of pay stubs and/or other proof of income.  Also, they need to have a pre-petition credit counseling certificate  before filing and  a debtor education certificate after filing to get your discharge.

 Even more obligations for Michigan bankruptcy debtors.

It gets even better. In Michigan, like most jurisdictions, we have local court rules which supplement the Bankruptcy Code and the debtor has to comply with these also. After the case is filed, every debtor goes to a meeting of the creditors where they will answer the trustee’s questions about their income, assets, and financial affairs. The debtor shall have available at the meeting of creditors, neatly arranged, all of the following for one year prepetition:
(a) Documents to support all entries on schedule I, other than previously provided payment advices and tax returns;
(b) Documents to support all entries on schedule J, including canceled checks, paid bills or other proof of expenses;
(c) Certificates of title (originals if available, otherwise copies) for currently owned titled assets, including vehicles, boats and mobile homes (regardless of when acquired);
(d) A current statement from each secured creditor stating the amount owed;
(e) Originals of bank books, check registers, other financial accounts, bonds, stock certificates, and bank, brokerage and credit card statements;
(f) Copies of leases, mortgages, deeds and land contracts (These documents shall be provided for the time period six years prepetition.);
(g) Copies of life insurance policies either owned by the debtor or insuring the debtor’s life;
(h) Current property tax statements;
(i) Asset appraisals;
(j) Keys to non-exempt buildings and vehicles;
(k) Divorce judgments and property settlement agreements;
(l) Casualty insurance policies;
(m) Documents establishing the scheduled amounts of joint debts, if the debtor claims an entireties exemption;(n) The name, address and telephone number of each holder of a Domestic Support Obligation; and
(o) Any other specific document requested by the trustee relating to the schedules or statement of
financial affairs, if requested in writing at least 7 days before the first meeting of creditors.

Wow. That’s a lot. My favorite part of the court rule is that the documents must be neatly arranged. That sounds funny until the people called before you bring in a grocery bag or shoe box with paper flying out and then you will appreciate it. While it is not mandatory to have an attorney help you through the process, it is generally advised to have a lawyer experienced in bankruptcy to help you get ready. A good lawyer will handle the requirements with ease and make you feel like it was more simple than it really was.

A bankruptcy debtor quiz just for you.

While no one wants to be a bankruptcy debtor, you may be in good company. Here is a quick quiz: Who of the following filed for bankruptcy: Walt Disney, Sam Walton, Abraham Lincoln,  P.T. Barnum or Stan Lee? Actually, all of them were debtors and they turned out just fine so don’t be so hard on yourself if you too are a bankruptcy debtor.

“D’ also stands for:

Christopher McAvoy is a Taylor,  Michigan attorney and consumer bankruptcy lawyer who helps people in the  Downriver area  file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, click here for contact info.

Creative Commons License photo credit: dumbledad

“C” Is For Chapter Of Relief

"C" is for chaptersOnce you determine that bankruptcy is a smart, financial tool to eliminate your debt and and reorganize your finances, you need to determine what Chapter to file.  There are six Chapters of relief to chose from. These Chapters are found in Title 11 of the United States Code. By the way, the reason why they are called Chapters is because they are literally the chapters in the bankruptcy code.

Chapter 1: It was the best of times, it was the worst of times…

The typical consumer debtor will files a Chapter 7. A Chapter 7 is also known as a straight bankruptcy. It takes about four months from beginning to end. While most may want to file a 7, you have to be eligible. The debtor must be under the median household income level for their family size. If the income is over the median, a means test must be “passed” in order to rebut the presumption of abuse. However, you will need sufficient exemptions to protect all your property. If not, the property will be turned over to the bankruptcy trustee for sale with the proceeds going to the creditors. Since the Federal exemptions are fairly generous, most filers keep all their stuff but it’s still a consideration to keep in mind.

But I want to file a Chapter 7, not a Chapter 13.

Chapter 13 is for wage earners with a regular source of income that are able to pay something back to their creditors. The person that files Chapter 13 either makes too much money a Chapter 7 or has to file a Chapter 13 to force a creditor to take payments over an extended period, e.g., to save a house from foreclosure. The payment plan is typically three to five years.

So tell me again why I should file a 13.

While debtors usually want to file a Chapter 7 there are some benefits to filing a Chapter 13 that are not available in a Chapter 7. In a 13, you can strip your second mortgage or home equity line. You could tax care of back taxes or catch up on support arrears. Chapter 13s can discharge divorce property settlements and judgments. Also, since you are paying back something to your creditors, non-exempt property that would otherwise be lost in a 7 can be kept. That’s not too shabby.

Chapter 7s and 13s account for a great majority of all filings but, just if you really want to know the other four, read on. Chapter 9 is for municipalities or cities. Chapter 11 is for businesses or individuals with high assets or income. Chapter 12 is for family farmers and fisherman. Chapter 15 is for international bankruptcies or foreign debtors.  These are very specialized areas and your typical bankruptcy attorney doesn’t handle these.

“B” also stands for:

Christopher McAvoy is a Taylor,  Michigan attorney and consumer bankruptcy lawyer who helps people in the  Downriver area  file Chapter 7 and Chapter 13 Bankruptcy. To find out more about bankruptcy, read The Bankruptcy Book.

Creative Commons License photo credit: loop_oh