How to avoid Objections to a Bankruptcy Petition.

A significant majority of Chapter 7 Bankruptcy filings are completed without any significant problems to the Debtor or objection by Creditors, provided the Debtor (and their counsel) properly and accurately discloses all necessary information required by the bankruptcy laws. However, the bankruptcy laws provide the grounds for creditors to object to the discharge of debts (meaning you will still owe the debt, even after filing bankruptcy) under certain circumstances.

If a creditor objects to the discharge of any of the debts listed in your petition or schedules, such objection must be raised within 60 days after the first scheduled §341(a) Meeting of Creditors. Alternatively, the trustee must move to dismiss your case within the 60-day period following the §341(a) Meeting of Creditors if he or she finds that the granting of relief would be an abuse of the provisions of Chapter 7.

So, what are traps to avoid objections to my petition?

Trap 1: New Debts Immediately Prior to Filing

If you incurred new debt of $500.00 or more for "luxury goods or services" within the 90-day period before your bankruptcy, or if you obtained a cash advance from a credit card or other loan in the amount of $750.00 or more within the 70-day period before your bankruptcy filing, that debt is presumed to be non-dischargeable, absent the debtor's showing to the contrary.

Trap 2: Debtor Dishonesty in Obtaining Debt

A creditor may object to your request to discharge a debt if the debt was obtained or incurred as a result of fraud, embezzlement or larceny, or any willful or malicious injuries you have caused others. If the Creditor establishes by a preponderance of the evidence that the debt was obtained by any of the above means, the debt will be deemed non-dischargeable.

Trap 3: Debtor Dishonesty in Filing for Bankruptcy

Creditors may object to the discharge of certain debts if you have concealed or destroyed any property or financial records; made any false statements in connection with incurring a debt or other financial obligation; withheld financial or other material information; failed to explain losses; failed to respond to material questions permitted under the Federal Rules of Bankruptcy Procedure; or if you were granted a discharge with respect to that debtor in a prior bankruptcy case filed within the last 6 years.

So, in conclusion, the best advice to consider if you are considering bankruptcy is to stop spending, or at least stop incurring new debt, and ensure you understand and completely disclose your financial history. As in the rest of life, honesty is the best policy.

Why Bring an Attorney to the 341 Meeting?

Each petition under Chapter 7 and Chapter 13 of the United States Bankruptcy Code will have a meeting of creditors, commonly referred to as the "341 Meeting". If you are represented by an attorney at your 341 Meeting, your attorney will sit next to you when your case is called by the trustee. Usually, your attorney will not be required to speak much, as the trustee will ask you questions directly. Although the lion's share of the work that your attorney will put into your case will be prior to your 341 Meeting, there are certainly advantages of your attorney being with you.

Having your attorney there gives you certain advantages over going alone. First and foremost, you are benefiting from the attorney's experience and knowledge as to the intricacies of a complex field of law. Your attorney will know how to treat each of your assets and debts, and what the trustee is looking for, as well as how to fill out your schedules.

Second, an attorney will know how to explain areas where your case might be interpreted against your interests if not properly and carefully explained to the trustee.

Third, your attorney is another set of eyes that can refresh your memory if you forget anything on your schedules. The trustee has the ability to ask about anything that you have filed, and having another person familiar with your case sitting next to you can help if your memory fails you.

To speak with Attorney Matthew Trask about bankruptcy call 508.655.5980 or email us.

FAQ #14: Do I have to go to court?

Whether you will need to go in front of a Judge largely depends on how complex your case is. In every bankruptcy case, though, you must attend the Meeting of Your Creditors (often referred to as a §341(a) Creditor's Meeting, in reference to the section of the Bankruptcy Code requiring such a meeting) about 30 to 45 days after your bankruptcy petition is filed.

The court-appointed Chapter 7 trustee will preside over this meeting. At the meeting, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most of your creditors will not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed.

If the trustee or your creditors file objections to your claimed exemptions, or other issues are raised by a creditor or interested party, a hearing will be held in front of the Bankruptcy Court Judge, and you may be required to attend.

What will happen at your Section 341 Creditor's Meeting?

After a bankruptcy petition is filed under Chapter 7 or 13, each "petitioner" must sit through their section 341 meeting of creditors, usually scheduled approximately 30 days after the filing date. Many of our bankruptcy clients feel anxious leading up to their 341 meeting as they are unsure as to what to expect, but if you are prepared there is nothing to worry about.

The majority of 341 meetings only last five to ten minutes. You are required to bring your social security card and driver's license for identification. The trustee will review your identification, swear you in and ask you a few basic questions after reviewing your petition, for example your current living arrangements, whether you own any businesses, and whether you are the beneficiary of any trusts. If anything on your petition sticks out to the trustee, he or she might ask a few follow-up questions. Usually, if there is something that will stick out to the trustee, your attorney will have already asked you the same questions that the trustee will ask.

Generally, creditors do not attend the 341 meeting, although they have the right to be there and may be given the opportunity to ask you some basic questions. If you owe the IRS taxes, they will often attend the creditors meeting and ask questions relating to the petition. Again, your attorney should prepare you for the potential questions that might be asked if a creditor does decide to attend the meeting.

If you would like more information about how to prepare for your creditor's meeting, contact Attorney Matthew Trask or call 508.655.5980 to schedule a one-hour consultation.