The Chapter 7 bankruptcy procedure often causes a great amount of anxiety for individuals and couples going through it. While the process is complex and technical, it actually plays out similarly in almost every case. Most of the anxiety people experience during bankruptcy is dealing with the unknown, such as not knowing what is happening behind the scenes during the nerve-wracking 60-day wait period.
After you meet with the trustee for your trustee meeting (or 341 meeting) and the bankruptcy trustee signs off on the conclusion of the meeting, your bankruptcy will enter a 60-day waiting period. There is nothing you can do to decrease the length of this waiting period, although there are some instances in which it is prolonged. During this period, all of the parties involved in your bankruptcy are assigned tasks that need to be completed. This is also the time when any objections or motions regarding your bankruptcy case can be filed.
Here is what the parties involved should be doing during the 60-day wait period:
You, the debtor, will have some tasks to complete during this time. They are fairly simple tasks, but they must be accomplished during this time frame or your bankruptcy discharge could be jeopardized. Your lawyer should help you understand what needs to be completed during the 60-day wait period and help you file the pertinent paperwork with the court. Keep in mind, this is what happens in the common, no-asset Chapter 7 bankruptcy case.
Complete Credit Counseling Course
You should have already completed one credit counseling course and obtained a credit counseling certificate before you filed your Chapter 7 bankruptcy petition. You are required by law to complete a second credit counseling course during your 60-day wait period. This one is called the Financial Management Course or the Debtor Education Course and it will take you approximately the same amount of time to fulfill this course as the first course you completed. If you do not get this course done and file the certificate with the court, your bankruptcy case will be closed without the discharge you have already worked so hard to obtain.
Execute Reaffirmation Agreements
A reaffirmation agreement typically occurs between you and your mortgage company or the lender for your car loan. Usually, a debtor will enter into one of these agreements when they decide to keep their property and continue to make payments to the creditor. Most of the time, it is a car that the bankruptcy petitioner is attempting to keep, and other times, it is their home.
The agreement basically promises that you will not request that the debt be discharged in your bankruptcy petition. In exchange, the lender agrees to stick with the original terms of the loan, or sometimes, both will consent to a new, negotiated set of terms. If you do decide to execute a reaffirmation agreement, you will be able to keep your home or car, but understand that the debt will not be discharged in your bankruptcy. Additionally, if you default on any of your payments in the future, you could still be at risk of losing your home or car.
The decision to reaffirm any of your debts should be considered carefully. If you still owe a lot of money for your car, it might be a better idea to let that vehicle go and purchase a cheaper car. You should discuss these decisions with your attorney before signing any reaffirmation agreements because a default on your part on one of these agreements could jeopardize the new financial beginning your bankruptcy will give you.
If you owe a creditor and that creditor sues you in court for the debt, they can obtain a judgment against you. The creditor can then use the judgment to attach a lien to your property. Certain liens that creditors have placed on your property might be eliminated in your bankruptcy. During the 60-day wait period, you should do everything you can to avoid any more liens being placed on your property. Your attorney can assist you with this.
The Bankruptcy Trustee’s Tasks
The Chapter 7 trustee appointed to your case will spend their time analyzing your assets and determining if you have any assets worth liquidating. If the trustee’s analyzation reveals that you have assets that will make a profit, they will create an “asset report.” If there are not any assets worth selling, the report will be a “no-asset report.”
While this does not happen in all bankruptcy cases, the trustee has the discretion whether or not to take a more thorough look at your financial situation. Something in your disclosures at the trustee meeting - your conduct or answers, public record reviews, or creditor supplied information - might prompt an investigation. You may or may not receive a request for additional information. On rare occasions, the trustee might depose a debtor, but this is not typical. As long as you provided honest and accurate records to the trustee, you should have nothing to worry about.
Objection of Discharge
If fraud has been committed by the debtor, the trustee is obligated to refer your case to the U.S. Trustee and object to the discharge of your debts. This usually happens if a debtor tries to hide any assets or provides false disclosures in an attempt to conceal assets. Again, if you disclosed all of your assets, you have nothing to worry about.
Most creditors do not have any specific duties during the 60-day wait period. However, this is the time when they can and should perform certain tasks. For example, if the trustee files an asset report, creditors need to file claims for any potential payments from the sale of those assets. Creditors do have the right to file motions or objection to the discharge ability of a debt or the entire bankruptcy during the 60-day wait period. They can also conduct investigations into your financial situation, request documentation, or take depositions.
If you have an experienced attorney handling your bankruptcy, an of the issues that creditors bring up during the waiting period is often dealt with by your lawyer. Most of the time, there is still nothing for you to worry about.
The United States Trustee’s Duties
The United States Trustee (UST), a part of the U.S. Department of Justice, oversees private trustees appointed to Chapter 7 bankruptcy cases and the administration of your case. They will review your bankruptcy case for any potential fraud or abuse. According to the United States Trustee, they spend time reviewing every single bankruptcy case.
If your income landed above the median in the Means Test, the UST will scrutinize your case for proper income and expense calculations. Your case will also be evaluated for properly recorded income, possible inconsistencies in disclosures, the integrity of expenses, and your debts and how quickly they were accumulated, as well as other aspects relating to your financial circumstances.
The UST has the ability to investigate your financial situation further. Sometimes, depositions are conducted and other times, documents are requested. They can also submit an objection to the court regarding your bankruptcy discharge. If fraud was committed, the UST is the agency that would refer you to the U.S. Attorney for bankruptcy fraud and criminal prosecution.
Honest mistakes happen when creating bankruptcy schedules, so it is crucial to have an attorney skilled with the bankruptcy code and procedures on your side during this entire process. An experienced attorney can ensure that any potential setbacks are handled before delays occur and your 60-day wait period does not last any longer than necessary.Are You Considering Filing For Bankruptcy? If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.