Q: Once I file my bankruptcy, am I required to actually go to court?
Yes, every debtor is required to attend at least one court hearing, generally referred to as a 341 Hearing, Meeting of the Creditors. This hearing normally lasts no longer than 5 minutes and your attorney will be there to represent you. The hearing is held in front of your assigned bankruptcy trustee, not a judge, and is informal in nature. You are required to answer several yes/no and short answer questions, under oath. While the hearing is called the “Meeting of Creditors”, one’s creditors rarely, if ever, attend the hearing. However, if a creditor does appear, that creditor has the ability to question you in regards to your financial situation and the specific debt(s) in question.

Q: If I have non-exempt assets which would be lost in a bankruptcy, can I simply transfer/sell those assets prior to filing?
The short answer to that question is it depends, but transferring/selling assets prior to filing a bankruptcy is generally not a smart idea. First, remember that the assets you own prior to filing a bankruptcy is your property, and you have the ability to freely transfer/sell/dispose of the property as you see fit. However, once you file a bankruptcy, the assets you currently own are considered property of the bankruptcy estate. You may protect certain assets that are considered exempt, but any asset that is considered non-exempt is subject to immediate turnover to your bankruptcy trustee. The trustee will liquidate the asset and apply the proceeds towards the debts you owe your creditors.

However, you cannot turnover an asset to your trustee if you transferred/sold your non-exempt asset prior to filing your bankruptcy. The bankruptcy code allows your trustee to investigate all transfers/sales of assets prior to filing your bankruptcy. A debtor should not have to worry about any potential issues arising during the bankruptcy if he or she sold the asset for fair market value, and then spent the proceeds of the sale before your bankruptcy filing, in order to pay for necessary living expenses. However, assuming you sold the asset because you knew you would lose it in your bankruptcy and/or to defraud your creditors poses a huge issue and could result in serious repercussions with your bankruptcy. You will need to speak to an experienced bankruptcy attorney as soon as you can to discuss these potential problems. Do not wait, call my office today.

Q: Who is the bankruptcy trustee?
Generally, the bankruptcy trustee’s job is to administer your bankruptcy. The bankruptcy trustee will also conduct your 341 hearing. More specifically in both chapter 7 and chapter 13 bankruptcy cases, the bankruptcy trustee is responsible for accounting for property received, investigating the financial affairs of the debtor, examining and objecting to proofs of claim, opposing the debtor’s discharge if appropriate, sending required notices related to domestic support obligations, if applicable, furnishing information to parties in interest and reporting on the administration of the case. The trustee asks several questions at a debtors’ 341 hearing. The trustee first investigates the assets of the estate, which typically includes holding the 341 hearing and questioning the debtor at that meeting. If there are assets of the estate that are neither exempt nor abandoned, the trustee must:

1. Collect that property from the debtor or any other entity holding the property
2. Convert it into cash, usually by sale of the property
3. Be accountable for that property

Q: What if I used my credit card right before I file?
The law says that if you used your credit card within the last few months before you filed, anything that you charged can be consider a fraudulent charge and not discharged in bankruptcy.  This sounds threatening because they use the word fraudulent, but let’s look at the actual risk before making any conclusion.  Only the charges you made within that time period can be considered fraudulent.  In almost every circumstance, absent some malice or intentional fraud, only those charges can be considered as fraudulent and not discharged in your bankruptcy.  All of the other charges and the entire rest of the balance on the card is still discharged.  You will only have to repay the amount that you charged in the last few months.  Additionally, the only way you will be forced to repay this amount is if the credit card company files a federal lawsuit called an Adversary in the bankruptcy court to determine if the debt is able to be discharged.  This costs money and none of that money can be recovered through the suit.  Therefore, unless it is a large sum, you will likely not have to pay it back regardless of when you used your card.  If the usage was small usage amount many cards, it is even less likely that it will be worth the creditors’ time to chase you.

If you are concerned about a fraudulent transfer, you should seek legal advice.  There are many ways to classify a debt or transfer that your attorney will understand and be able to help you with.  Any fraud can result in a denial of your discharge.  If you have any activity that you are concerned with, consult an attorney.

Q: I am planning on getting married/divorced soon, how will that impact my bankruptcy?
I will discuss marriage first. When you are single, you will only be able to file bankruptcy as an individual debtor. You should file your bankruptcy first, if at all possible, in order to make sure that the bankruptcy will not affect your future spouse, or possibly even impact your bankruptcy. Potential problems arise when a debtor marries prior to filing a bankruptcy. By marrying, the debtor will now have to account for his or her spouse’s income/assets for the months of the marriage. This could pose problems with qualifying for a ch. 7 or with a repayment amount in a ch. 13. Other issues could arise as well, so you should contact an experienced bankruptcy attorney to discuss these ramifications.

As for divorce, there may be several issues with the separation of assets/liabilities upon filing the bankruptcy. You should also file your bankruptcy first, if at all possible, in order to liquidate your joint debts and obligations fully through the bankruptcy. This will then help streamline the impending divorce, as you will no longer find the need to worry and or bicker over the “splitting” of the marital debts. Other issues could arise as well, so do not wait and contact my office immediately so we can formulate a plan and timeline for your bankruptcy and future divorce.