How States Differ on Bankruptcy

August 7, 2012 - 20:12 by bankruptcylawyer

Ready to file bankruptcy? You should be aware that the state you live in might have an affect on certain aspects of your case. Although the various types of bankruptcy are all filed in the federal courts and governed by federal law, there are specific Chapter 7 and Chapter 13 bankruptcy rules that are specific to each state. When you are searching for bankruptcy help you will want to make sure that whatever attorney you choose is familiar with your particular state bankruptcy rules.  So how does bankruptcy work from state to state? The specific state bankruptcy rules are called “exemptions” and they differ from state to state due to a number of variables.

Exemptions are essentially rules that give the value of certain items that the state will allow a person filing bankruptcy to protect. Commonly “exempted” items are equity in real estate and/or vehicles, household items, and personal items. For instance, in Illinois the state exemption for equity in real estate will protect $15K for a single filer, and $30K for a joint bankruptcy. Any equity that exceeds the exemption amount is ultimately unprotected and could be liquidated by the bankruptcy trustee. If you are worried about the equity in your home being a potential problem, do the math yourself by subtracting the current fair market value of your home from the balance you owe on your mortgage. If the difference is a positive number, then make sure to either ask a bankruptcy attorney, or do your own research to look closely at your state’s equity exemptions.

The state exemptions also differ due to the how the state and its residents generate revenue. For example, in Texas there is a state exemption for livestock and crops, but you would not find anything like this in Rhode Island or New York because farming is not a major source of revenue. In Hawaii there is a specific exemption for fishing boats and nets, but in a landlocked state like Arkansas that sort of an exemption is unnecessary. The exemptions were created this way to give the most bankruptcy help possible to the citizens of each state, having a general list of exemptions would not have done this.

Sometimes the state bankruptcy exemption amounts differ because of the cost of living and median income. In Maryland, where the median household income is well above $60K the bankruptcy exemptions protect up to $6K in personal property. This is a vast difference from a poorer state like Alabama where the median income is much lower so the exemption amount for personal property is only $3K. Again, because these state exemptions are so specific, it is absolutely vital that you find a bankruptcy attorney who not only understands the different types of bankruptcy, but also understands how the different exemptions work with each type.

State bankruptcy exemptions are all unique, but so is your bankruptcy case.; in fact, knowing more about your state’s exemptions should give you confidence that there is protection available for your property.

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Top 5 Causes of Bankruptcy

July 30, 2012 - 20:06 by bankruptcylawyer

Bankruptcy is not something that anyone longs to go through or even plans to take part in. In most cases it is unexpected and thought of as a last resort. Nevertheless, filing bankruptcy can sometimes be exactly what is needed to get a fresh financial start. Since the recession began several years ago in the United States the number of bankruptcies filed increased by the thousands, and many bankruptcy lawyers began hearing similar reasons of why people were filing. Below is a list (in no particular order) of the top 5 causes of bankruptcy today:

  1. Unexpected expenses: We have all experienced a situation where suddenly a large amount of money is needed because of some mishap that couldn’t have been avoided. Whether it be a new roof, new tires for your vehicle or natural disasters like floods, fires, and hurricanes; without the proper insurance those disasters can rapidly change your financial situation.
  2. Divorce: Similar to bankruptcy, divorce is something that no one plans, but it happens nonetheless. Depending on the outcome written in the divorce decree some spouses are left with more debt than others, which makes the decision to file bankruptcy necessary. The bankruptcy code is clear that what is written in a divorce decree will essentially “trump” typical bankruptcy rules so it is very important to discuss the decree with your bankruptcy lawyer
  3. Abuse of Credit: Using a credit card is so simple, yet in some cases so destructive. Just a few swipes of the card and you can find yourself with several maxed out credit cards and minimum payments that you barely afford. Chapter 7 bankruptcy rules allow for unsecured credit card debt to be wiped away or “discharged.” Credit Card debt is the main type of debt involved in Chapter 7 bankruptcy because it is so commonly abused and quickly overwhelming.
  4. Job Loss: The economy has been treacherous for the past several years and layoffs are far too prevalent. Men and women that have held the same job for decades are suddenly unemployed and wondering where to go next. Although sometimes layoffs provide time to prepare yourself mentally and emotionally, they do not always provide adequate time to prepare yourself financially. Without a steady income typical monthly bills become late and debt continues to grow, making bankruptcy a viable option.
  5. Medical Expenses: Our health is not something to be neglected, and when broken bones, trips in the ambulance, or doctors visits happen they cost quite a bit of money. Unfortunately sudden medical expenses can costs thousands of dollars and can take even the most frugal person into financial peril. Chapter 13 bankruptcy rules allow medical debt to be consolidated and paid off over the course of 3-5 years and Chapter 7 bankruptcy rules allow unsecured medical debt to be completely eliminated.

The causes of bankruptcy range well beyond this list, but the key is to remember that filing bankruptcy can be a wonderful option to take advantage of if some sudden debt has come up.                         

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What to Tell Your Bankruptcy Lawyer

July 21, 2012 - 21:04 by bankruptcylawyer

The relationship between the bankruptcy lawyer and the debtor is just as, if not more, unique as any other attorney-client relationship that the law creates. This is because the legal process of personal bankruptcy is unlike any other field. Instead of litigation, juries, and plea bargains, bankruptcies consist of Chapter 7 and Chapter 13 bankruptcy forms, equations, and detailed financial history of each client. Due to the complexities that bankruptcy brings with it, it is vital to understand how to effectively communicate with your bankruptcy attorney to ensure a successful case. Here are a few items to make sure to tell your bankruptcy lawyer:

  1. All About Your Finances: During your initial consultation with your bankruptcy lawyer you will most likely be answering quite a few questions about your financial situation, and you should be completely forthright with your responses. There is no need to feel shame from your situation. Remember that keeping financial information from your bankruptcy attorney can be, in some cases, detrimental to the outcome of your case. 
  2. About Any and All Property: Sometimes debtors get intimidated when they hear that all property and/or debt will need to be listed in the official bankruptcy paperwork so they choose not to tell their attorney about certain property. The truth is, there isn’t much to be scared of. In fact, if you are upfront with your attorney about the property that you own, he/she will be able to tell you immediately what bankruptcies can and cannot protect. If you choose to omit certain information about property that you own, the bankruptcy court will find out about it and fraud charges could arise.
  3. About Any Prior Businesses: Although you might assume that your bankruptcy attorney will ask you all necessary questions, it shouldn't stop you from voicing anything in your financial history that might be easy to miss like prior business ownership. In many cases prior ownership in a business means nothing on Chapter 13 or Chapter 7 bankruptcy forms but in some cases it does. Just to be safe, be sure and make your bankruptcy attorney aware.
  4. About Expected Post-Bankruptcy Income: Many clients think that once their bankruptcy is over the courts will stop caring what happens to them financially. That is unfortunately not true. For this reason you should tell your attorney about any expected settlement, inheritance, or other large sum of money you expect to receive during or soon after your bankruptcy.

Ultimately the communication you have with your bankruptcy attorney is crucial to the success of your case. Accurately filling out the Chapter 7 bankruptcy forms and the Chapter 13 bankruptcy forms is the job of your attorney, but the job of being completely open about your situation is your responsibility entirely. Purposely neglecting to tell your bankruptcy attorney something about your finances is not viewed well in the court, and in some cases can lead to the overall dismissal of your case if the court feels that you committed fraud. Just remember that your bankruptcy attorney is on your side, and wants to allow bankruptcy to serve its purpose to help you achieve a fresh financial start.

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Can I File Bankruptcy More Than Once?

July 11, 2012 - 02:29 by bankruptcylawyer

There are all sorts of rumors floating around that concern those who are considering the possibility of filing personal bankruptcy. One of those many concerns is whether or not it is possible for a debtor to go bankrupt more than once. The answer is yes! The bankruptcy code allows for an individual to file bankruptcy more than once as long as a certain number of years have passed in between filings.

In 2005, Congress enacted the "Bankruptcy Abuse Prevention and Consumer Protection Act" which extended the time between filing Chapter 7 bankruptcy to what it is today: 8 years. Prior to that the time was 6 years. Chapter 7 bankruptcy is the most common type of personal bankruptcy filed today and it is typically beneficial for debtors with large amounts of unsecured debt and very little assets. Unsecured debts can be items such as credit cards, medical bills, or payday loans. If an individual qualifies for Chapter 7 bankruptcy then the process can be as simple as filing the necessary paperwork with the court, paying the filing fee, and attending the required "meeting of creditors" to be seen by the trustee. After the hearing the debtor will receive discharge papers in the mail notifying them that their bankruptcy was completed and successful.

The time between filing Chapter 13 bankruptcy is only 2 years, but to understand why it is so much shorter you should understand what all comes with filing Chapter 13. A Chapter 13 bankruptcy involves a 3-5 years repayment plan where a debtor is allowed to pay back a percentage of their overall debts with no interest. The amount that the debtor pays back is based upon their disposable income, which is ultimately how much money is left at the end of the month after all the necessary bills are paid. The Chapter 13 payment plan can last up to 60 months (5 years), but no longer. The hope for a debtor who files Chapter 13 is that by the end of their payment plan they will be debt free and caught up on all secured payments like vehicles and mortgage.

Ultimately the bankruptcy law does not hinder anyone from filing multiple times in a lifetime, but the 2005 changes were an effort to prevent abuse to the system. Filing bankruptcy is a constitutional right each of us are given in order to handle unexpected financial difficulty, but each time an individual goes bankrupt it should with the hope that a fresh financial future lies ahead. Bankruptcy should not be thought of as a quick fix you can use every 8 years to wipe away all of the credit cards you’ve recently maxed out. On the other hand the bankruptcy court understands that financial struggle can strike at any time, and it is never anything that is asked for. This is a great reason to find an affordable bankruptcy attorney and make sure to ask all of your bankruptcy questions and answers before filing so you can truly be prepared to take this risk.

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What is the Bankruptcy Code?

July 4, 2012 - 02:29 by bankruptcylawyer

When faced with any life altering decision it is best to know as much information as possible about all of your options. The decision to file bankruptcy is no different. The encouraging part is that with the wealth of bankruptcy advice found on the internet and the help of a cheap bankruptcy lawyer, you can be well equipped with little trouble at all. When you begin your search into bankruptcy information don’t be afraid to ask the big questions first like “what is the bankruptcy code?"

Put simply, the “bankruptcy code" is the set of bankruptcy rules that outline everything there is to know about how bankruptcy works. But they haven’t been around forever. The “Bankruptcy Act of 1898" was the first permanent federal bankruptcy legislation and it has changed quite a bit over the years. In fact, there have been several major amendments and reforms. The largest of all these changes was the “Bankruptcy Reform Act of 1978" which replaced the law that had been in effect since the end of the nineteenth century. This reform act is what became known as the “bankruptcy code" and a version of it still exists today.

Since 1978 there have been 4 major changes to the “bankruptcy code." The first was the “Bankruptcy Amendments and Federal Judgeship Act of 1984," also known as BAFJA. This set of amendments dealt primarily with bankruptcy judges and whether or not their jurisdiction should be comprehensive. Two years later Congress passed another major bankruptcy bill called the “Bankruptcy Act of 1986." It created Chapter 12 bankruptcy that was specifically designed for family farmers. That chapter of bankruptcy was temporary and no longer exists. In 1994 Congress passed the “Bankruptcy Reform Act of 1994" which was the first time that a large number of amendments were made to the code all at once since its conception in 1978. Finally, in 2005 the latest overhaul to the bankruptcy code was passed, known as the “Bankruptcy Abuse and Consumer Protection Act" or BACPA. This amendment changed several key items in the bankruptcy code including the number of years between filing, and what can and cannot be included in a bankruptcy. The BACPA was created to prevent abuse to the bankruptcy process by making it a bit more difficult to qualify for bankruptcy.

Overall the bankruptcy code lays out the most important rules for all chapters of bankruptcy. Obviously the Chapter 7 bankruptcy rules will differ from Chapter 13 bankruptcy rules, but they are both necessary in order for things to run smoothly once the cases are filed. The bankruptcy code can even be used when you are faced with the Chapter 7 vs. Chapter 13 question that so many encounter. When looking for bankruptcy advice, utilize every resource you can. Many cheap bankruptcy lawyers offer free initial consultations so you can discuss your financial situation without feeling pressured to hire anyone. Filing bankruptcy is a huge decision, and feeling prepared with information will give you confidence throughout the process.

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How to Handle Creditors During Bankruptcy

June 28, 2012 - 02:29 by bankruptcylawyer

With all the preparation that comes with going bankrupt, it can be easy to forget a step or two. That’s a great reason to hire a bankruptcy lawyer to help you along they way if you happen to get frazzled and forget what to do. When you find the best bankruptcy lawyer for you be sure to keep their office number handy throughout the entire process. In most cases even if they cannot speak with you directly, a legal assistant or paralegal can answer questions about your case. While I was working as a bankruptcy paralegal one of the most common questions that clients called in to ask was “what do I tell my creditors that keep calling me?"

The answer is ultimately two-fold, depending on the type of creditor that is contacting you. Typically creditors fall into two categories: original and third party. An original creditor is one that your debt originally started with such as the credit card company or a hospital. Unfortunately, original creditors have a right to contact you by until the day your personal bankruptcy is officially filed with the court, and even the best bankruptcy lawyer can’t stop that. When and if they do contact you, it is typically beneficial to inform them that you have hired a bankruptcy lawyer and are in the process of going bankrupt. Don’t be surprised if they ask for the name and phone/fax number of your attorney to verify the information.

Sometimes original creditors feel that your account has gone too far without any payment and will choose to sell your account to another company to continue the collection process. These companies are known as third party creditors or collection agencies, and are a cause of stress before and during the personal bankruptcy process. In fact, some have said that the incessant calls from collection agencies are what finally made them decide to go bankrupt. The good news is that you, as a debtor, have certain rights that protect you from third party creditor harassment. The “Fair Debt Collection Practices Act" or FDCPA is a United States statute that was created to prevent abusive collection attempts. The FDCPA states that as soon as your hire an attorney in the pursuit of filing personal bankruptcy, collection agencies lose the right to contact you. If they continue to do so contact your bankruptcy attorney immediately to see if possible sanctions can be filed against them for violating your rights.

If you are currently experiencing multiple creditor phone calls a day, be sure to note who is calling and whether they are an original creditor or a collection agency; No matter which type of creditor it is, going bankrupt can help. Once you have found the best bankruptcy lawyer for your case be sure to tell them about the calls you are receiving so they can evaluate whether or not your FDCPA rights are being violated. Remember, you have rights as a debtor and you should never feel bullied by your creditors.

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How Long Does a Bankruptcy Take?

June 14, 2012 - 00:03 by bankruptcylawyer

Apparently, patience is a virtue, but let’s be honest, we live in an instant gratification society where no one likes to wait on anything. From job applications, to phone calls, we all get a bit antsy when something starts to take too long. If you are looking into the various types of bankruptcies it is a great idea to take a look at what kind of timeline you are getting yourself into. So how long does a bankruptcy take? The two main types of personal bankruptcy, Chapter 7 and 13, have very different timelines due to the way each chapter is handled.

Chapter 7 bankruptcy is the quickest and most common type of personal bankrupcty. The whole process, from start to finish, can take anywhere from 4-10 months. The process officially begins when the bankruptcy paperwork (petition) is filed with the court, but unofficially the clock starts when you decide to file bankruptcy. In the initial stage you will spend time finding and hiring a cheap bankruptcy lawyer, paying the attorney’s fees, and collecting the necessary documents. At that point your bankruptcy lawyer will compile your financial documents into a petition and get ready to officially file bankruptcy. Usually 30 days after your petition has been filed you and your bankrtupcy attorney will attend at “meeting of creditors” where the bankruptcy trustee will ask you simple questions about your paperwork. 60-90 days after your court appearance you should receive discharge papers in the mail stating that your bankrtupcy case was both completed and successful.

The timeline for Chapter 13 bankruptcy is longer and more complex, but it is an extremely effective course of action if you are trying to save your home or vehicle. The initial stages of the timeline mimic that of the Chapter 7: hiring an cheap bankruptcy lawyer, gathering paperwork, and paying fees. In fact, the main changes in the 2 timelines begin after the meeting of creditors which, again, happens around 30 days after the bankruptcy is officially filed with the court. There will be a second court appearance called a “confirmation hearing” that you may or may not be required to atttend, depending on your attorney. This hearing is used to present the potential 3-5 year payment plan to the chapter 13 trustee. At this point the trustee can choose to accept the plan as is, or to request revisions. Once the plan has been accepted the timeline depends upon the length of the plan itself which can range from 3-5 years. At the end of the payment plan the court will issue discharge papers to the debtor showing that their Chapter 13 bankruptcy was completed and successful.

Because bankruptcy is a legal process there is never an exact timeline for any chapter. Everyone’s financial situation is different and various issues and questions may arise at any point during the filing process. Just remember that even if you feel like the process is taking forever, there is a light at the end of the tunnel: bankruptcies help people acheive a financial fresh start!

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Credit Card Bankruptcy

June 3, 2012 - 23:55 by bankruptcylawyer

It is not hard to believe that credit card debt is the most common type of debt that Americans face today. Credit cards have been a standard in our society for decades and if used correctly they can be truly helpful; but sometimes, despite the best of intentions, credit cards may lead to a slippery slope of overwhelming debt. For that reason credit cards are one of the main reasons individuals in American choose to go bankrupt, even though there is not technically a type of bankruptcy called a "credit card bankruptcy." The staggering interest rates, minimum payments, and high credit lines are, in some cases, a recipe for financial disaster. Declaring bankruptcy can typically eliminate unsecured debt like credit cards in slightly different ways depending on whether a chapter 7 vs. chapter 13 is filed.

Chapter 7 bankruptcy is commonly used to wipe away unsecured debt. Credit card debt is classified as unsecured because ultimately there is no collateral against the items purchased on the credit card. In other words, the credit card debt is not tied to a single item like a vehicle or a home, but to the various purchases made with the credit card. When an individual files Chapter 7 bankruptcy they will list all of their creditors on the bankruptcy paperwork, or petition, in order for the creditors to be notified of their decision. Then, if the bankruptcy court decides to approve the Chapter 7 bankruptcy, a discharge notice will be sent to those same creditors stating that the debt has been eliminated by the debtor filing bankruptcy. Because bankruptcy is governed by federal law, the discharge is not something that credit card companies can just ignore.

Chapter 13 bankruptcy takes care of credit card debt in a different way, but achieves the same overall goal: finding financial freedom through becoming debt free. Chapter 13 bankruptcy utilizes a repayment plan where qualified debtors are allowed to pay back a portion of their overall unsecured debt over the course of 3-5 years. The payment plan is based on the debtor's income, total debt, and other variables depending on their specific situation. Bankruptcy lawyers work closely with both the debtor and the Chapter 13 bankruptcy trustee to find a monthly payment amount that will work for everyone involved. By the end of the 3-5 year Chapter
13 payment plan the debtor will typically be debt free and caught up on all secured monthly payments like vehicles and home.

Since the bankruptcy laws were revamped in 2005 there is no such thing as only filing on 1 or 2 credit cards. In most cases any debt listed on the debtor’s credit report is listed on the bankruptcy paperwork to be potentially eliminated. Credit card debt can go from manageable to overwhelming in a matter of days, so taking control of the situation quickly is crucial. Filing bankruptcy isn’t the answer for everyone, but if you are facing an amount of credit card debt that you cannot see yourself coming out of in the next few years then looking into bankruptcy may be something to look into.

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What Do I Need to Bring to Bankruptcy Court?

April 16, 2012 - 04:07 by bankruptcylawyer

The vast majority of bankruptcy petitioners have never had previous cause to set foot in a courtroom, and the experience of discussing one’s debt with an unknown official in a federal court is extremely stressful for those involved.  If your bankruptcy hearing is causing you anxiety, take a tip from boy scouts and girl scouts everywhere: be prepared.  When you’re prepared and know what to expect from bankruptcy court, you will be more relaxed and confident.  The key to achieving an affordable bankruptcy is to recognize that bankruptcy help is there in the form of federal and state laws that protect honest debtors like you.

Section 341 Meeting of Creditors Hearing:

Under Chapter 7 bankruptcy rules and Chapter 13 bankruptcy rules of the U.S. Bankruptcy Code, a 341 hearing is scheduled for every case that is filed.  The code requires all chapter 7 and chapter 13 bankruptcy petitioners to meet with a court appointed Trustee.

The goal of the Section 341 Meeting of Creditors Hearing is to give the Trustee an opportunity to review the bankruptcy forms and financial documents that you or your bankruptcy attorney submitted.  The Trustee will use this meeting as an opportunity to ask you questions about your debts and financial circumstances in order to inform their decision to allow or object to your bankruptcy case.  Attorneys representing your creditors may also be present at this hearing and may pose additional questions to you regarding your financial state of affairs.

Chapter 13 Confirmation Hearing:

Within 45 days following your initial meeting of creditors, the bankruptcy judge will hold a confirmation hearing to determine whether the proposed Chapter 13 reorganization or payment plan is feasible and satisfies the standards for confirmation under U.S. Bankruptcy Code.  Creditors may object to the debtor’s plan on the basis that the plan proposes to pay back less than the creditors would receive if the debtor’s assets were liquidated, or the plan doesn’t account for most of the debtor’s disposable income for the three or five year commitment period.

If the court confirms the plan, the Chapter 13 Trustee will distribute funds received under the plan to priority creditors.  If the court declines the plan, the debtor may file a modified plan or convert the case to a liquidation case under Chapter 7 bankruptcy rules.

You will need to bring the following with you to your bankruptcy hearing:

  • Government issued photo ID such as a driver’s license or passport;
  • Social security card or several pay stubs with your social security number on them;
  • A list of all creditors and the amount and nature of their claims;
  • The source, amount, and frequency of the debtor's income;
  • Most recent federal and state tax returns;
  • A list of all of the debtor's property;
  • Homeowners must bring a copy of the deed, mortgage statement and proof of insurance;
  • Car owners must bring paperwork demonstrating ownership or the balance due on loans and proof of insurance;
  • A detailed list of the debtor's monthly living expenses including, food, clothing, shelter, utilities, taxes, transportation and medication; and
  • If your taxes are not current, you must demonstrate that your back taxes have been filed or will be by the time the case is confirmed by the bankruptcy judge.

Chapter 7 Bankruptcy Rules:

To establish whether a presumption of abuse exists, all individual debtors who file a Chapter 7 bankruptcy petition must complete Official Bankruptcy Form B22A, entitled "Statement of Current Monthly Income and Means Test Calculation - For Use in Chapter 7." The Official Forms may be downloaded from the U.S. Courts website.

Chapter 13 Bankruptcy Rules:

Filing the bankruptcy petition under Chapter 13 "automatically stays" most collection actions against the debtor, co-debtors or the debtor's property. For homeowners, the automatic stay stops a foreclosure proceeding as soon as the debtor petitions for Chapter 13 bankruptcy protection. During the period the stay is in effect, creditors may not proceed with lawsuits, wage garnishments, or contact the debtor for the purpose of demanding repayment. The bankruptcy clerk notifies the debtor’s creditors of the bankruptcy filing.  Through a Chapter 13 reorganization plan, the debtor may satisfy past-due payments over a reasonable period of time.

Bankruptcy Court Prep:

Now that you know what to expect from your bankruptcy hearings, here are a few remaining tips:

  • Double-check that you have everything you need.  Be prepared and print off the checklist of documents you need to bring with you to your bankruptcy hearing.  If you haven’t already handed them over to your bankruptcy lawyer, make sure to bring them with you.
  • Dress to impress.  A shirt and tie for men, if you have it. A blouse and dress pants or skirt for women, if you have it.  To show respect for the court process and the people who have shown up to review your case and circumstances, do not wear jeans and a t-shirt.
  • Arrive early.  If you need directions to the courthouse or are unclear about where your hearing will be located in the building, call the your lawyer or contact the courthouse the day before your hearing.  Arrive 30 minutes to an hour early.
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What is a Bankruptcy Trustee?

April 9, 2012 - 04:03 by bankruptcylawyer

A U.S. Bankruptcy Trustee, also known as a Trustee in Bankruptcy, is an individual or an entity who is appointed by the U.S. Department of Justice to administer a bankruptcy case.  Chapter 7 and 13 trustees are typically professional accountants or attorneys.

Depending on the nature of your bankruptcy proceedings, you may have limited interaction or numerous exchanges with the bankruptcy trustee assigned to your case.  For example, if you are filing Chapter 13 bankruptcy, you can expect to have more frequent involvement with your trustee than if you are filing Chapter 7 bankruptcy. 

The bankruptcy trustee’s objective is to protect the interests of the creditors involved in the case, not those of the debtor.  Individuals and couples filing Chapter 13 or filing Chapter 7 bankruptcies should be prepared to protect their interests, assets and property before meeting with a bankruptcy trustee.  Hiring an experienced bankruptcy attorney to negotiate and communicate with the trustee on your behalf is a wise investment.

Chapter 13 Trustee

A bankruptcy trustee plays a larger role in Chapter 13 cases than in Chapter 7 cases.  Individuals or couples filing chapter 13 will note the trustee plays a dual role. The trustee’s main function is to ensure that the creditors’ receive fair and timely repayment of outstanding debts.  In order to achieve this, the bankruptcy trustee will work with the petitioner to reorganize debts and schedule a repayment plan.  Once the reorganization, payment plan and schedule are approved, the bankruptcy trustee assumes responsibility for receiving the debtor’s monthly payments and distributing them to creditors. 

A certain amount of negotiation and a thorough understanding of bankruptcy law are required of the bankruptcy trustee so that they may endeavor that both the creditors’ and debtor’s interests are upheld in accordance with the laws of the U.S. Bankruptcy Code.  The only way for a petitioner to guarantee their best interests are being represented is to retain the counsel of a bankruptcy attorney.

Chapter 7 Trustee

In Chapter 7 bankruptcy cases, the bankruptcy trustee plays a minimal role in the proceedings.  Individuals and couples filing Chapter 7 liquidation will first encounter their Chapter 7 Trustee at the Section 341 Creditors’ Meeting.  At this meeting, the trustee will review all creditor lists, financial documents, assets and exemptions that you and/or your lawyer submitted when filing Chapter 7 bankruptcy. 

Just as the trustee’s role in Chapter 13 cases is to protect the interests of the creditors, the same is true for Chapter 7 Trustees in Bankruptcy.  The Chapter 7 bankruptcy trustee must aim to satisfy the creditors’ claims through the liquidation of the debtor’s non-exempt property or assets.  The trustee oversees the sale of non-exempt property and assets, and distributes the proceeds to pay the balance owed to priority creditors.  Most individuals and couples filing Chapter 7 bankruptcy petitions are classified by trustees as “no asset” cases, and therefore no property is lost.

Bankruptcy questions and answers

Above all else, remember the Bankruptcy Trustee represents the interests of the creditors in both Chapter 7 and Chapter 13 bankruptcy cases.  A bankruptcy attorney can answer most of your bankruptcy questions and answers, and is in the best position to address concerns you may have about dealing with a bankruptcy trustee.  If you choose to enter bankruptcy proceedings without the assistance of bankruptcy lawyers to oversee your case, you may still benefit from contacting a legal professional to answer basic bankruptcy questions and answers prior to filing Chapter 7 or filing Chapter 13 bankruptcy.

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