When meeting with new clients, I make sure they are aware of the following information:
- You must list all assets. Failure to list any assets may result in federal prosecution.
- You must list all debts you owe, even if you choose to repay a particular creditor.
- You must receive a certificate of completion from a credit counseling course before you can file bankruptcy. After filing, you must also take a financial management course before you can receive your discharge.
- Any inheritance or insurance benefits resulting from someone’s death which you are entitled to receive within 6 months from the date of filing will be property of your bankruptcy estate.
- You must list all property interests of any type.
- If you do reaffirm a debt, it is mandatory that you remain current on your monthly installment payments. Failure to do so may result in the reaffirmation agreement being denied and the loss of any property securing the debt.
- Certain debts, including property taxes, income taxes, employee taxes, student loans, and debts owed to a former spouse are not dischargeable and must be paid timely. For Chapter 13 cases, the debtors are responsible for all post-filing taxes, including income and property taxes.
- Bankruptcy can adversely affect your credit rating. It can stay on your credit report for a period of up to 10 years. However, financial institutions or lending institutions will base their decisions on their individual lending policies.
Clients commonly ask about the costs of bankruptcy. The filing fee for a Chapter 7 is $335 and my flat- rate attorney’s fees range from $800 to $1200 depending on the debtor’s source of income; these fees cover everything that normally occurs in a Chapter 7 bankruptcy. The filing fee for a Chapter 13 is $310, and the attorney’s fees are set by the Bankruptcy Code at $3,600, a portion of which may be paid through the Chapter 13 plan.
I always discuss the differences between the various bankruptcy chapters, and guide the conversation depending on the particular client’s situation. I also ask about property owned by the debtor and probe possible liquidation problems. We discuss exemptions--the value of assets that can be protected from liquidation by the bankruptcy trustee. I tell debtors that they can surrender, reaffirm or redeem property that is encumbered by a security interest. I discuss the significance and importance of the discharge, telling the debtor that all claims are discharged except secured claims that are reaffirmed; certain nondischargeable debts; and claims that are successfully challenged by other parties, such as creditors or the trustee.
Finally, I tell debtors what they can expect at the Sec. 341 meeting of creditors, which takes place before the Trustee in an office conference room, approximately 30 days after the case is filed. This is the one meeting with the Trustee which every debtor must attend, but creditors seldom do.
If the consultation is by telephone and it appears from the initial discussion that bankruptcy may be appropriate, I send the client my intake package for review and completion. The intake package includes my Legal Services Agreement; Required Notices of the Bankruptcy Code Regarding Purposes, Benefits and Costs of Bankruptcy; and my Case Questionnaire. If it’s an office consultation I print out the intake package and review the REQUIRED NOTICES with the client.
When clients decide to proceed with bankruptcy, as soon as they sign and return the Legal Services Agreement they may refer all collection calls to me, telling the creditor that I now represent them for bankruptcy matters. From that point on, the creditor is legally prohibited from further contact with the debtor.
A fully completed Case Questionnaire provides me with all the information I need to complete the papers that must be filed with the Bankruptcy Court to start the bankruptcy. Once the filing fee and attorney’s fees are paid, and I have the completed questionnaire and Credit Counseling certificate, I can file the case within as little as 24 hours.