Brad Perri is a Minnesota bankruptcy lawyer who will be guest blogging at Caveat Emptor from September 29th through October 10th.
Yesterday, I talked about the part of the bankruptcy process you encounter through filing the actual petition for bankruptcy. What happens next?
Imagine a bucket and we will call it “the bankruptcy estate.” Into this “bankruptcy estate,” we will pour everything you own or could own or have a right to receive (like an inheritance, a lottery payment, a settlement payment from a court case, etc.). Your bankruptcy estate is administered by a person called a “trustee.”
The trustee is trying to find ways to pay your creditors out of the value of whatever it is you have in your bankruptcy estate. Some things do not go into the bankruptcy estate (“exempt” items), but that is a very detailed and complex area that your attorney will explain to you.
Your attorney will then prepare you for what we call a “341″ meeting. Other than this 341 meeting, in usual cases, you will not need to ever show up again in front of anybody for your bankruptcy.
Though you’ll hear it called a “meeting with the creditors,” the creditors very very rarely ever show up. It will normally be just you, your attorney, and a “trustee” meeting in a room at a federal court building
At the 341 meeting, the creditor will ask you the same questions they ask everyone. These questions concern whether you are familiar with the information in your bankruptcy petition, some questions concerning the information on recent transactions you have had, and whether you have anything else to add. Sometimes, issues may be raised that could require you to “amend” your petition (i.e., add some additional information).
The 341 meeting can take as little as 15 minutes. It is at the 341 meeting that you will probably become thankful for your attorney’s thoroughness in preparing your case for you. If you had not fully disclosed any number of things to your attorney or attempted to hide assets, the trustee can deny you your discharge in its entirety.
Your discharge, of course, is your major goal. The discharge is a permanent injunction against all creditors attempting to collect against you. The fact that discharge is a type of injunction, however, means that the injunction can be lifted if the creditor can demonstrate (or the trustee determines on their own) that you have been dishonest or less than forthcoming in stating your financial affairs.
Do not take this risk. Believe it or not, it is better to lose the family wedding ring than to lose your discharge. Additionally, if you are found to have lied to the trustee, you will also have perjured yourself. You do not need that kind of grief following you around for the rest of your life.
Another item that can screw up your discharge is the famous “well, I’m declaring bankruptcy, so I might as well run up my credit cards” theory of bankruptcy. DO NOT DO IT!! The court sees right through that, declares it an attempt to defraud your creditors, denies you your discharge, and now you are really really buried under debt and in big trouble.
Bankruptcy is an excellent time to start a new habit: stop using your credit cards.
Beware as well after you get your discharge. To your surprise, you may find that your credit rating has greatly improved. Often, credit card companies will start sending you new credit cards! This is the time to go to your library again and check out a book on how to manage your finances. Often, these books will have a special section on dealing with credit debt and building a good credit rating after bankruptcy.
Other than that, be careful, because you cannot declare bankruptcy again for many, many years.
And enjoy your newfound financial independence!
Tomorrow, I will provide just a few closing thoughts.
To find a consumer or bankruptcy lawyer, use the Caveat Emptor Consumer & Bankruptcy Lawyer Directory.
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What good is the “Discharge Order” if debt collectors skate all over it? The very laws that are in place to protect consumers got to be a joke,at least the creditors think so.Debt collectors especially pofessional debt collectors such as Attorneys(Barrett Burke Wilson Castle Daffin&Frappier).These guys have displayed a remarkable disrespect for bankruptcy laws.Why are the laws left unattented?The discharge oder is not worth the paper it’s written on,and the debt collectors know it.I was injured as a letter carrier at work in 90,my husband was injured in 95,we filed B.R. in Dece 95.2000 we was issued a discharge after never missing a payment of $1800.In 2001 Cenlar Federal Savings Bank sold the debt to Aurora Loan Services,2005 it was re-sold to Midland Mortgage to present 2008. Each one re-aged the discharged debt and reported on our perfect credit as late as 2006. We have been chasing the debt for almost 10 yrs.BBWCDF who represent Midland stand by the fact that we owe the discharge debt,even sent a letter to the house in Feb 2008 stating that the debt is ours inspite of the order.We have written all over the country FTC,Thrift Supervision,Attorney General,BBB,U.S.Trustee’s Office, nothing has worked.When there is Millions being made and there is little being done about it,I guess we will see more of this type of thing,unless it happens to our new president Barack Obama,it would stop then.I feel for those like us with a dicharge order,but the debt refuse to die!!!