Q: So, I heard the laws changed and you can't file bankruptcy anymore. Is it even an option?
A: Yes, bankruptcy is still an option. Bankruptcy laws changed in 2005, and many people have taken advantage of bankruptcy relief since that time. Most people can file bankruptcy if they need to do so. That said, it may be that bankruptcy is not your best option — not everyone should file. Every case is different. The only way to find out for sure is to come in and let's figure it out.
A: I know you want a clear, straight answer, but the only answer to that question is it depends. It depends on a number of things — what your property is worth, what you owe on it, how long ago you bought it, and what kind of bankruptcy you want to file—even how long you’ve lived in South Carolina can impact that question. In order to tell you what will happen to your stuff when you file bankruptcy, I have to ask you a lot of questions. Once I know what your situation is, we can find a way to address the issues that are important to you. And we can usually give you an idea of what will happen if you do file bankruptcy, and what may happen if you don't.
A: Sorry, but again, it depends. Fees are based on the amount of time that I estimate it will take to complete your case, and that depends on what kind of bankruptcy we decide on, and how complex your finances are. But there is usually no charge for an initial visit, and I can usually tell you at that time what the fees will be and discuss payment arrangements with you. We can also work with you to help determine what you should continue to pay, and how to budget to cover the costs of bankruptcy.
Preparing for Your Initial Consultation
A: When you file bankruptcy, notice of your bankruptcy is sent to your creditors—the people you owe. If you haven’t borrowed money from family members or friends (or had them co-sign loans for you) there is no reason to expect that they will be notified. Similarly, there is no reason for your employer to be notified. Bankruptcy filings are a matter of public record, just like tax liens and civil judgments, but the records are not as easy to access as many records. While many people (if not most) go through bankruptcy without it becoming public knowledge, we can’t guarantee that your bankruptcy will remain private, or that no one will find out. I can tell you that many people who are responsible, respected and successful have been forced to face financial trouble, including filing bankruptcy, and would be sympathetic to your situation if they did find out.
When you set up an appointment to come in for an initial consultation with us, we will send you a brief questionnaire and a form to list your debts. We ask you to provide some basic information and answer a few questions, and provide a list of all you debts. We need a listing of all your debts, including those you intend to continue to pay, in order to get a true picture. We ask that you provide a list rather than bring in copies of your bills because we don’t usually have enough time to go through a stack of bills. In addition, it is a useful exercise to get a handle on exactly how much you owe.
We also ask that you bring in some information about your income. We ask for six months of pay stubs, but if you don’t have all of that, a printout from your employer will be fine. At a bare minimum, a few of your most recent paystubs may give me enough information to advise you of your options. If you live on a fixed income (like disability or retirement) one month’s information will be fine. If you are self-employed, we would like to have your most recent profit and loss statement if you have one, or your most recent month’s income and expenses.
We also ask that you bring in a photo identification card and your social security card. Anytime we file a bankruptcy case, we have to have that information, and it’s a good time to get that out of the way.What you need to know about the process of filing bankruptcy
That’s it—now you’re ready to come in and talk. If you’ve been served with a lawsuit, it’s a good idea to bring that in. If you have copies of tax returns handy, bringing those won’t hurt. At our initial consultation, we won’t have time to go through much more paperwork than that; I will, however, generally ask you for a great deal more information if you decide to go forward with a bankruptcy filing.
I often hear from clients "I don't know anything about this." Of course not. There's no reason you should. The vast majority of people who file for bankruptcy protection never envisioned having anything to do with bankruptcy, and certainly don't intend to do it more than once. So for most people, the entire process is mysterious, filled with uncertainty, and therefore stressful. I understand what that is like, since I find any new situation a bit stressful. I look at maps before visiting a new place, and I love to look at pictures of a place before I visit for the first time. The more I know, the more comfortable I am. So that's what I want to do here. I want to give you as much information as I can about the process, what to expect, and how to prepare, in the hopes that you, like me, will be more comfortable and less stressed as a result.
Beginning the process
I firmly believe that bankruptcy is a very serious step and that it should not be taken lightly. But the plain fact of the matter is that most people wait too long to file bankruptcy. They wait until they have lost assets, like houses or cars, until their health has suffered, until their relationships have suffered, and until they have very little left to protect or to use to start over. Alternatively, they may engage in informal estate or bankruptcy planning, based on what they have heard from friends or read on the internet, and that may complicate things or eliminate options that might otherwise be available. Many people don’t inquire about bankruptcy because they are afraid that they don't "qualify" or that they don't have enough debt, or that they have too much income or too much property. The only qualification for bankruptcy is that you act in good faith and don't try to defraud your creditors. If you think there is chance at all that you may need to file bankruptcy, even if you're not sure, it's a good idea to consult an attorney. I can tell you what your options are, whether things may change if you wait to file bankruptcy, or if you do nothing at all. I may tell that you don't need bankruptcy at all, or that you should wait, or try another possible solution first. I'm not out to sell you on a bankruptcy, but I can tell you whether (and when) I think it's appropriate to file bankruptcy. But I can't tell you anything if you don't come to see me. There is a lot of information out there about bankruptcy, some of it wildly inaccurate, or out of date. Some of it may be accurate, as far as it goes. The problem with researching bankruptcy, or relying on the advice of a friend or family member who has filed bankruptcy, is that everyone's situation is different, and every bankruptcy case is different. Unless you have exactly the same property, exactly the same debts, exactly the same income and exactly the same expenses as the next guy, your case is going to be different. In theory, all those things could be the same, but if you and the next guy were different ages, or had different jobs, my recommendations for the two of you might be different. That's why I need some information from you and about your situation when you come in to see me for the first time. In my office, I ask you to fill out a short form, and provide some income information when you first come in.
When you set up an appointment we'll send you that information, and ask you to bring that in when you come. When you come in for that initial consultation, I'll collect still more information from you, by asking you a bunch of questions. The point of gathering all that information is to allow me to understand your situation, identify your particular goals and priorities, identify any particular problems, and make a recommendation as to whether you should file bankruptcy, and if so, what type of bankruptcy. I can usually then explain the steps you need to take and outline the process that you will go through. I also usually quote a fee at that point, and will discuss how to budget for that, and how to deal with creditors in the meantime.
Paperwork, paperwork, paperwork
The next steps in the process are largely up to you. I can tell you what you need to do, but you are the one that has to put the information together. I am sure some people who file bankruptcy think that their lawyers are just asking for random information, but we aren't. The paperwork related to filing a bankruptcy has always been significant, but has grown in the last few years. Whether you devote a weekend to filling out forms and gathering paperwork together, or work on it for half an hour a day, you'll get through the process more easily if you read everything first, and come up with a plan. One of the more frustrating aspects of preparing the paperwork necessary for a bankruptcy filing is to fill out the forms and gather most of the information, only to find that you're missing one piece of the puzzle, and while you track down that missing piece, the rest of the work you've done is going stale. You can end up chasing your tail if you’re not careful, but if you know what you need, you can start on the parts that may take more time--let's say, for example, that you need to request a copy of your most recent tax return from your accountant or the IRS--and work on the other components later. If there is some information that you’re having trouble getting, let us know. While we can help you figure out the paperwork, and suggest ways to get information you may be missing, we can't do the paperwork for you. One obvious reason for that is that we don't know all the details of your finances. Another very important reason is that ultimately you will be affirming that the information you have provided is complete, accurate and truthful, under penalty of perjury. You can't do that if you don't know where the information came from. So, as boring and frustrating as the process can be, it is essential, and it ultimately protects you--not just from a perjury charge, but because the advice I give you is only as good as the information I get from you.
Once you have put together all the information that we need to provide to the Bankruptcy Court and the trustee, we will prepare the necessary documents and then give them to you to review. Again, you’re the one who will be certifying the accuracy and completeness of the documents, so you’ll need to set aside some time to review them thoroughly. We’ll then arrange for you to come in and sign everything. We’ll even have you update some of the information as of the day you sign. Then your case will be filed with the Court.
The Meeting of Creditors
In every bankruptcy case the court schedules a Meeting of Creditors. We often refer to that as a "hearing," although it is presided over by a trustee, not a judge. The Meeting of Creditors will be scheduled 30 to 45 days after your case is filed with the Court. If you file bankruptcy you will be required to attend that hearing. In many cases, that is the only hearing that you will be required to attend. Meetings of creditors are generally scheduled to last only a few minutes, and are typically brief, administrative hearings, without a lot of excitement. The purpose of the hearing is to allow the trustee that has been appointed in your case ask you questions, under oath. It is called the Meeting of Creditors because creditors are invited to attend, but rarely do any of your creditors attend that hearing, or spend the money to hire an attorney to attend for them.
Many of the questions are routine, and are asked in every case—you will hear the trustee ask everyone the same series of questions. The trustee may also ask you some questions that only you can answer, such as your opinion of the value of your property, or whether you’ve borrowed from your 401k plan, for example. One of the reasons we ask so many questions and collect so much paperwork for you is so that we can, to the extent possible, anticipate those questions and help you feel more at ease about the Meeting of Creditors.
Depending on the kind of case you file, and the issues that arise in your particular case, you may be required to attend one or more additional hearings, including real hearings with a judge. You may also be required to attend a separate deposition, or answer written questions or provide additional documentation. All of that is dictated by the complexity of your financial situation, and your prior dealings with creditors. The majority of people going through bankruptcy attend one or two hearings at most. Often debtors are relieved at the brief, cut-and-dried nature of those hearings.
As already noted, every case is different, but once we know a bit more about your situation we can make a better prediction of how things will progress, and how long your case is likely to last.What you need to know about bankruptcy laws
Bankruptcy laws are federal laws, and bankruptcy courts are federal courts. However, bankruptcy law "adopts" state law to determine some issues (like what makes a debt enforceable) and allows state laws to control other issues (like what property you are entitled to keep as exempt from creditors’ claims). So even though bankruptcy laws are federal laws, and bankruptcy courts are federal courts, the way bankruptcy affects you and your property can vary from state to state, because of those state law provisions. And of course, different judges may disagree on particular issues. And of course, procedures can also differ from court to court, judge to judge, or even trustee to trustee. That is one of the many reasons that each bankruptcy case is different.
Everything from the extremely important question of what property you get to keep, down to whether you need copies of one or two or even three years’ tax returns can differ depending on where you live, and even which judge or trustee is appointed in your case. And while you can expect uniform application of the law, especially on big, important issues, procedural matters, minor questions, or new issues may be handled differently from place to place and time to time. Once we know more about your situation—your income, your assets, and your debts—we can better advise you how bankruptcy will affect you. And, we can better advise you what will, and won’t, happen if you don’t take any action.