What Happens When You File Bankruptcy

hgghhhhYou are in financial distress. You are going insane. You NEED some peace of mind. You are thinking about filing bankruptcy but the whole idea makes you uncomfortable and you don’t know where to start. No worries. This is what you do and what happens when you file bankruptcy. First, you interview an attorney. This is probably the most important part of the whole process. The interview is called an initial consultation and you should not have to pay for it. Do not hire anyone who wants you to pay for the initial consultation. The initial consultation is the meeting in which you determine your comfort level with the attorney and vice versa. First and foremost, you need to be comfortable with your attorney. He or she will be the pilot of a big part of your life and you do not want a slacker or someone who thinks they are doing you a favor to listen to you.

You as a potential paying client are (or should be thought of) as a valuable commodity. You should be treated with the utmost respect and handled with sensitivity because you are going through a very tough period. It is natural for a potential bankruptcy client to be afraid, vulnerable and questioning their decision to file bankruptcy. A good lawyer is a good listener and sensitive to the needs and feelings of their clients. So pay a great deal of attention to the attorney’s and the office staff’s attitude toward you.

A good attorney welcomes questions. Question their experience and how many bankruptcies they do a year. If the attorney does not do at least one per month I would be concerned. The practice of bankruptcy has become highly specialized. It’s not really something you can do once in awhile and maintain a competent skill level. Fees and costs should be quoted up front in an understandable fashion. You should understand exactly what is covered in the fee and what, if any, added charges might arise.

You should meet with an attorney for the initial consultation. You should not meet with a paralegal or legal assistant for the initial consultation. The information gathering process at the first meeting is profound and needs to be gathered by the professional so that any potential problem is identified early. Most importantly, go with your gut. If you are not comfortable with the attorney, the office staff or the office environment you should not hire that firm.

When you come to the initial consultation bring a month of current pay stubs. If you do not have a month of pay stubs bring your most recent pay stub. If you are not employed or self employed bring account statements or the records you keep of the income you are receiving. Have an idea who you owe money too. Bring any lawsuit, garnishment, repossession, utility shut off, license suspension or foreclosure court papers. If you do not have anything- do not worry. Just bring yourself and the attorney will help you get what is needed.

In our office, we give the client a worksheet to take home and fill in his/her creditors and other relevant information. Then the client comes back and we go over it with them to help them complete it. If the client decides to hire us she/he puts a portion of the fee down and is put on an affordable payment plan. Once they put the initial payment down (as little as $300.00 for our firm) we start taking all of their creditor calls. We stop the creditors from calling them. It usually takes about a week until all of the calls stop. The creditors are not allowed to call the client anymore once a bankruptcy attorney has been retained. We do not wait until we are paid in full to stop the creditor calls. The client needs peace of mind which cannot be obtained until all the creditors are backed off from calling. We focus on taking all of the financially related stress out of the client’s life so they can focus on getting back on their feet.

Once the case is paid in full, we will have a final meeting to go over the client’s worksheets. We then enter it into our computer and create what is called a petition and schedules. The client is called in to review and sign it and then we file it electronically from our office. In about a week the attorney and the client will receive a notice of a meeting of creditors which usually is held approximately four to six weeks from the filing date. The meeting of creditors will be in Cleveland, Akron, Jefferson or Youngstown depending upon where the client resides.

The client will have to attend the meeting of creditors with the attorney. It takes between ten and thirty minutes depending upon the issues in the case. The client will be asked questions by a person called a bankruptcy trustee. The questions are basically about what the client owns and how much money she/he makes. We meet with our clients early and thoroughly prepare them for this hearing so that everything goes smooth. It is rare for creditors to attend even though it is called a “meeting of creditors.” Any problems or issues will be disclosed at the meeting of creditors. Clients usually are required to attend only one meeting of creditors.

After the meeting of creditors, for all practical purposes, the process is over for the client. A creditor has sixty days from the meeting of creditors to object to the client’s discharge. Unanticipated objections seldom occur and if they do we resolve them so the client can receive their discharge. The “discharge” is the court order that forgives all of the client’s debt. This is called “a fresh start.” The client receives the discharge which is a piece of paper in the mail. She/he needs to keep the discharge paper in a safe place because that is the paper they will send a creditor if that creditor claims the debt is still owed.

Then the client uses their fresh start to rebuild his or her life and credit rating and lives happily ever after (hopefully). That is what happens when you file a basic chapter 7 bankruptcy.

Robert C. Biales

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