Do I have to go to court if I file bankruptcy?

courthouse 4The answer generally is no you don’t have to go to court for most bankruptcies, especially the chapter 7.  In a chapter 7 bankruptcy you go to a 341 hearing with a bankruptcy trustee presiding but you don’t have to go to court usually.

These hearings are much more informal than a court proceeding and they usually last for only a few minutes.  The trustee will ask you about your assets, your income, and any other questions he or she has about your bankruptcy schedules.

If the trustee sees anything wrong he will call for a continuance of the 341 hearing and ask for clarification or more documentation.  If there is nothing wrong then he will conclude the hearing and you will be done.  With a chapter 7 you will then wait for your discharge and closing of your case.

If the trustee finds something wrong with the case then you could end up in court.  The trustee could file some challenge to your case as could a creditor that does not want his debt discharged.  These challenges are somewhat rare though especially if a competent bankruptcy attorney files your case and thoroughly investigates all aspects of you financial situation beforehand.

These challenges to your case would be addressed by the trustee or the creditor filing an adversary proceeding.  If an adversary proceeding is filed in your case then you probably will appear in court.  These are somewhat rare though and most bankruptcies sail through the 341 hearing and never go near a courtroom.

Another example of a situation that could land you before a bankruptcy judge is the reaffirmation hearing.  A reaffirmation hearing is when you reaffirm a debt for which your personal liability has been discharged in the bankruptcy.

This most often happens in a case where you financed your car.  A car company wants you to in effect sign back up for the debt or they may elect to repossess the car after the bankruptcy stay lifts.  This is especially true if your income is less than your expenses on schedules I and J which is common for chapter 7 debtors who file bankruptcy.

If the trustee wants to object to your discharge then the same could happen and if he wants to take property then he could file an adversary proceeding that could land you in court ut this is very rare.

These things are not all that common though and a good bankruptcy attorney should be able to guide you through the process and advise you on the possibilities of going to court.  Usually though you should only see the 341 hearing room and the bankruptcy trustee for you chapter 7 bankruptcy.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Courthouse photo courtesy of w.marsh.

Advertisements

Do I need an attorney to file for bankruptcy?

The short answer is yes!  Don’t try to file a bankruptcy without one!

Your attorney will know the law first and foremost.  The attorney will know if you have too much property or income for instance as he will do a means test calculation for you as is required by the law.  I recently came in on a bankruptcy case where a bankruptcy filer should never have filed a case because this person had non-exempt income or assets.

The trustee just claimed all of those assets for the creditors as they will do when there are assets available to seize.  If an experienced bankruptcy attorney would have been consulted in the beginning then they could have advised the client not to file for bankruptcy at all in that case.

The client could have saved the filing fee, attorney’s fees, administrative fees and they could have worked out a deal to pay the debts back.  As it turned out the client had to surrender assets necessary to pay all of these costs and he had to pay the debts back in full.  It would have been much cheaper not to file bankruptcy in the first place and to make matters worse the clients assets were tied up for over a year.

Secondly you need an attorney because the attorney will know the bankruptcy procedures.  Filing for bankruptcy requires many procedural steps which are difficult for the novice to comply with.  An attorney will file the case electronically with special bankruptcy software that automatically complies with the procedural requirements of the court.  I have seen many filers in 341 hearings who didn’t know what they were doing so they made serious errors.  These errors usually result in delays and continuances and sometimes in dismissals of the bankruptcy case.

If the case is dismissed then the debts come back into play and the whole reason for filing is negated.  Now you have lost the filing fee and you will suffer other penalties like losing the automatic stay for a year.

Thirdly you need an attorney because if you hire one you should get an expert who knows the law,and  the procedure but also someone who knows the trustees.  Each bankruptcy trustee is a little different and each has slightly different requirements.  An experienced attorney will know what each one needs and what each one likes to receive in terms of supporting documentation.  This will inevitably help you through the process in the smoothest and quickest fashion.

Lastly with an attorney you get someone to accompany you through the process.  I accompany all of my clients to the 341 meeting of creditors and I am available for any questions that they might have about the process at any time.  This helps people to have fewer fears and worries about something that people naturally are very scared about.

So there are many reasons to hire an experienced bankruptcy attorney to help with your bankruptcy.  Remember too that the attorney is the only one that can represent you in court in the unlikely event that things go badly.  So if you are considering bankruptcy then hire an attorney and don’t do it yourself!

I practice bankruptcy law in San Diego California.  Please visit my website for more information on filing bankruptcy at: www.farquharlaw.com.

Do I need a chapter 7 bankruptcy attorney to do my bankruptcy or can I do it alone?

I believe that you do need a chapter 7 bankruptcy attorney to file your bankruptcy for you.  Bankruptcy filing is a difficult process and it impacts many areas of your life.  Filing a bankruptcy is far too complicated to do alone and I believe that you would be much better off with an attorney to assist you for the following reasons:

1) Property– A chapter 7 bankruptcy attorney can help you list, exempt, and save your personal property and your real estate.  He or she can determine if you transferred any property recently out of your estate or if any property was transferred to you recently.  This makes a big difference for your case.  You want to be aware of the fraudulent transfer laws and avoid losing any property in the bankruptcy.  In California the trustees can look back four years to determine if they are going to reverse any property transfers (and possibly take your property from you).  A chapter 7 bankruptcy attorney can help you to protect your property so it is not taken by the bankruptcy trustee.

2) 341 hearing– A chapter 7 bankruptcy attorney will accompany you to the 341 meeting of the creditors.  The creditors rarely show up but the trustee always does.  The attorney can prepare you in advance for the hearing and then deal with any issues that arise with the trustee.  Also a chapter 7 bankruptcy attorney will invariably have attended many such hearings (if he or she has experience doing bankruptcies) and he or she will know what to expect there.

3) Software and electronic filing- Bankruptcy attorneys that do chapter 7s probably file the cases electronically which is a much easier way to file than the old “over the counter” way.  The software that is used by a chapter 7 bankruptcy attorney to do this is far too expensive for you to buy just for you to do your bankruptcy.  With the software a chapter 7 bankruptcy attorney can efficiently and correctly complete your case and file it with the court.

4) Deciding which set of exemptions to use- Deciding which set of exemptions to use in a chapter 7 case may require a bankruptcy attorney to analyze your situation.  There are many issues relating to whether you should choose the “703” set of exemption with the “wild card” or the “704” set if you have a house with equity in it that you need to homestead.  You must choose between the two and a chapter 7 bankruptcy attorney can advise you of the issues you face as you choose.

5) Download credit reports-Most bankruptcy filing software programs have the ability to download your credit reports into the bankruptcy case.  It is a tremendous advantage to have credit reports from all three major credit reporting agencies directly put into your case so there are no mistakes.  These credit reports will accurately reflect what these agencies say you owe and the reports will come complete with the dates that you made the various charges to your credit cards.  These dates will tell the trustee when you were incurred your debts so there will be no mystery as to how old they are.

You can get these reports yourself and enter the information manually but it is a great advantage to have this direct and efficient system to do it for you.  The chapter 7 bankruptcy attorney can then compare that information with your creditor’s bills to make sure that your creditor information is listed in your bankruptcy as accurately and completely as possible.

6) Assistance with the means test– The means test is very difficult to fill out by yourself.  It was added to chapter 7 bankruptcies in 2005 to force debtors who earned too much income into a chapter 13.  The rational behind the test was that if they had enough extra income then they had the “means” to pay their debts back.

A chapter 7 bankruptcy attorney will use the same bankruptcy filing software to help him or her complete your means test and an experienced bankruptcy attorney will undoubtably have worked on many means tests for a number of clients.  After examining your situation the attorney can determine if you pass the test and he or she can look to see if there is anything you can do to pass in the future.  Also the attorney can make sure that you get the full use of all of your deductions to the means test so you can pass.

6) Representation in court– If something goes wrong with your bankruptcy case or if you need to defend against a challenge to the dischargeability of a debt then you will need a chapter 7 bankruptcy attorney to represent you in court.  Only an attorney can represent you in court and a chapter 7 bankruptcy attorney should be familiar enough with the issues to do so.   Having an attorney on the case already is a big advantage if things do go wrong and you wind up before a judge.

7) Reaffirmation agreements– You may need to reaffirm your car debt in the bankruptcy if you want assurance that the creditor will not repossess it.  In California, according to the Dumont case (decided in the 9th circuit), an auto finance company can repossess you car after a bankruptcy even if you are current on the payments. Many of my clients don’t like this uncertainty and they demand a reaffirmation agreement even if I advise against it.

I have often ended up before a judge in bankruptcy court with these cases and the judges seem to not like these reaffirmation agreements.  If you have a chapter 7 bankruptcy attorney then you will have someone who can argue for your reaffirmation agreement in court and this gives you a better chance of getting it approved.

There are other reasons but these are some of the main reasons why you should use a chapter 7 bankruptcy attorney to file your bankruptcy case.  They will facilitate and expedite the process and be by your side when you need them.  If he or she is experienced then a chapter 7 bankruptcy attorney can be invaluable to you for filing your bankruptcy.

I have seen debtors with no chapter 7 bankruptcy attorney show up at 341 hearings.  The often get continuances for not filling out their schedules and means test correctly.  Some draw a representative from the U.S. Trustee’s office who also looks over their case and some even get their cases dismissed.

Don’t let this happen to you.

For more info. check out my websites at:   www.farquharlaw.com or www.freshstartsandiego.com.

I am a bankruptcy lawyer in San Diego.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.