What Do Bankruptcy Lawyers Do?

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What Do Bankruptcy Lawyers Do?

ab1More than 1.2 million bankruptcy petitions were filed with the federal bankruptcy courts in 2012. Due to the complicated nature of bankruptcy filings, most are completed by bankruptcy lawyers.

The Bankruptcy Consultation

Before beginning work on a bankruptcy petition, the first thing a bankruptcy lawyer does is meet with a potential client to:

  • Review the debtor’s income, debts and assets
  • Determine if bankruptcy is a good course of action
  • Determine which chapter of bankruptcy to file
  • Decide on a filing date
  • Enter into a contract with the client

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The Bankruptcy Petition

The bankruptcy lawyer prepares the petition in 3 steps:

1

Collects information from the client, which includes:

  • Tax returns
  • Paycheck stubs
  • Creditor information and account numbers
  • Credit reports
  • questionnaire detailing assets and obligations
  • Bank statements
  • certificate from a credit counseling agency (the debtor must take an online credit counseling course prior to filing).
2

Enters information into a bankruptcy software program

3

On the appropriate date, files the petition electronically with the court. The date of filing is important because:

  • Any money the debtor has in his bank account on the day of filing may be garnished by the bankruptcy trustee. Most debtors file immediately prior to payday, or right after paying rent, utilities, etc. so that their accounts are depleted.
  • Debtors may only file bankruptcies in certain time increments. If a debtor completed a Chapter 7 bankruptcy 7 years and 11 months ago, he will have to wait until exactly 8 years to file another.

The Bankruptcy Meeting of Creditors

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After the petition is filed, the Court sets a date for a 341 hearing, also called the Meeting of Creditors. The attorney is present, along with the debtor, for that meeting. In the 341 hearing:

  • The bankruptcy trustee questions the debtor, under oath about all aspects of the bankruptcy.
  • Creditors have the opportunity to question the debtor.
  • The debtor’s attorney also provides information regarding the petition and paperwork.

Communication Throughout the Bankruptcy Process

Communication between the bankruptcy attorney, the trustee and the client is crucial during the process of filing bankruptcy and awaiting discharge. Five common issues that bankruptcy lawyers handle during this time include:

1

Requests for more information

The trustee may require the debtor to provide more information, such as additional tax returns or bank statement. Information is provided through the debtor’s bankruptcy attorney.

2

Objections for the bankruptcy trustee

The trustee may object to a debtor’s repayment plan, request for discharge, intent to reaffirm some debts, etc.

3

Motions to dismiss bankruptcy

Motions to dismiss may be made by the trustee when a debtor fails to provide information in a timely manner, or when the trustee finds or suspects fraud.

4

Objections made by creditors

Creditors may object to debts being discharged.

5

Cease and desist

Once bankruptcy is filed, all collection efforts are automatically stayed. If a creditor continues collection activities, the debtor’s attorney writes a “Cease and Desist” letter to the creditor; then asks the Court to enforce the stay if necessary.

Bankruptcy Discharge

The bankruptcy attorney keeps the client updated regarding the confirmation and discharge of the bankruptcy, and ensures that the client meets any obligations required by the bankruptcy trustee. The process between filing bankruptcy and discharge can be as short as a few months (in the case of a Chapter 7) and as long as five years (in the case of a Chapter 13).

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