Blogs

By: Marshall G. Reissman Bankruptcy Attorney in St. Petersburg, Florida at The Reissman Law Group, P.A.
Many clients want to know what happens at the Meeting of Creditors. Clients find this situation to be very stressful, basically because the client has no idea what the trustee will ask, what the meeting will be like, or how long the meeting will last. I will describe a basic Meeting of Creditors and then post questions directly from the Chapter 7 Trustee Handbook issued by the United States Department of Justice, which oversees the U.S. Trustee program.
A typical Meeting of Creditors will generally last around 10 minutes. The trustee will inquire about the debtor’s assets, income and expenses. The meeting, at least in Tampa, are held in one of three large rooms. The trustee will call debtors up individually, place them under oath, and record their statements. The trustee will ask questions about the information contained in the bankruptcy petition the debtor filed. A debtor should be aware that if there are any irregularities in the petition, the meeting can take much longer. If the trustee does not believe a debtor is being forthright, the trustee may have the debtor return for further inquiry. However, this is usually the exception, not the rule.
I am listing questions directly from the Handbook for Chapter 7 Trustees published by the U.S. Department of Justice, Executive Office for United States Trustees. While these questions are expansive, they are not meant to be exhaustive. The questions are provided for informational purposes only and to provide prospective debtors and debtors who have not attended a meeting of creditors an idea of what the Trustee might ask.
Required Statements/Questions
1. State your name and current address for the record.
2. Please provide your picture ID and social security number card for review.
a. If the documents are in agreement with the § 341(a) meeting notice, a suggested
statement for the record is:
“I have viewed the original state of ________ drivers license (or
other type of original photo ID) and original social security card
(or other original document used for proof) and they match the
name and social security number on the § 341 (a) meeting notice.”
b. If the documents are not in agreement with the 341(a) meeting notice, a suggested
statement for the record is:
“I have viewed the original social security card (or other original
document used for proof) and the number does not match the
number on the § 341(a) meeting notice. I have instructed the
debtor (or debtor’s counsel) to submit to the court an amended
verified statement by [date], with notice of the correct number to
all creditors, the United States Trustee, and the trustee, and to file
with the court a redacted copy of the notice, showing only the last
four digits of the social security number, and a certificate of
service.”
c. When the documents do not match the petition, the trustee shall attempt to
ascertain why, and shall report the matter to the United States Trustee.
d. If the debtor did not bring proof of identity and social security number, the trustee
shall determine why.
3. Did you sign the petition, schedules, statements, and related documents and is the
signature your own? Did you read the petition, schedules, statements, and related
documents before you signed them?
4. Are you personally familiar with the information contained in the petition, schedules,
statements and related documents? To the best of your knowledge, is the information
contained in the petition, schedules, statements, and related documents true and correct?
Are there any errors or omissions to bring to my attention at this time?
5. Are all of your assets identified on the schedules? Have you listed all of your creditors
on the schedules?
6. Have you previously filed bankruptcy? (If so, the trustee must obtain the case number
and the discharge information to determine the debtor(s) discharge eligibility.)
7. What is the address of your current employer?
8. Is the copy of the tax return you provided a true copy of the most recent tax return you
filed?
9. Do you have a domestic support obligation? To whom? Please provide to me the
claimant’s address and telephone number, but do not state it on the record.
10. Have you read the Bankruptcy Information Sheet provided by the United States
Trustee?
SAMPLE GENERAL QUESTIONS
(To be asked when deemed appropriate.)
1. Do you own or have any interest whatsoever in any real estate?
If owned: When did you purchase the property? How much did the property cost?
What are the mortgages encumbering it? What do you estimate the present value of the
property to be? Is that the whole value or your share? How did you arrive at that
value?
If renting: Have you ever owned the property in which you live and/or is its owner in
any way related to you?
2. Have you made any transfers of any property or given any property away within the last
one year period (or such longer period as applicable under state law)?
If yes: What did you transfer? To whom was it transferred? What did you receive in
exchange? What did you do with the funds?
3. Does anyone hold property belonging to you?
If yes: Who holds the property and what is it? What is its value?
4. Do you have a claim against anyone or any business?
If there are large medical debts, are the medical bills from injury?
Are you the plaintiff in any lawsuit?
What is the status of each case and who is representing you?
5. Are you entitled to life insurance proceeds or an inheritance as a result of someone’s
death?
If yes: Please explain the details.
If you become a beneficiary of anyone’s estate within six months of the date your
bankruptcy petition was filed, the trustee must be advised within ten days through your
counsel of the nature and extent of the property you will receive.
6. Does anyone owe you money?
If yes: Is the money collectible? Why haven’t you collected it? Who owes the money
and where are they?
7. Have you made any large payments, over $600, to anyone in the past year?
8. Were federal income tax returns filed on a timely basis? When was the last return
filed?
Do you have copies of the federal income tax returns? At the time of the filing of your
petition, were you entitled to a tax refund from the federal or state government ?
If yes: Inquire as to amounts.
9. Do you have a bank account, either checking or savings?
If yes: In what banks and what were the balances as of the date you filed your petition?
10. When you filed your petition, did you have:
a. any cash on hand?
b. any U.S. Savings Bonds?
c. any other stocks or bonds?
d. any Certificates of Deposit?
e. a safe deposit box in your name or in anyone else’s name?
11. Do you own an automobile?
If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?
12. Are you the owner of any cash value life insurance policies?
If yes: State the name of the company, face amount of the policy, cash surrender value,
if any, and the beneficiaries.
13. Do you have any winning lottery tickets?
14. Do you anticipate that you might realize any property, cash or otherwise, as a result of a
divorce or separation proceeding?
15. Regarding any consumer debts secured by your property, have you filed the required
Statement of Intention with respect to the exemption, retention, or surrender of that
secured property? Please provide a copy of the statement to the trustee. Have you
performed that intention?
16. Have you been engaged in any business during the last six years?
If yes: Where and when? What happened to the assets of the business?
In cases where debtors are engaged in business, the following questions should be considered:
1. Who was responsible for maintaining financial records?
2. Which of the following records were maintained?
a. Cash receipts journal
b. Cash disbursements journal
c. General journal
d. Accounts receivable ledger
e. Accounts payable ledger
f. Payroll ledger
g. Fixed asset ledger
h. Inventory ledger
i. General ledger
j. Balance sheet, income statement, and cash flow statements
3. Where are each of the foregoing records now located?
4. Who was responsible for preparing financial statements?
5. How often were financial statements prepared?
6. For what periods are financial statements available?
7. Where are such financial statements now located?
8. Was the business on a calendar year or a fiscal year?
9. Were federal income tax returns filed on a timely basis? When was the last return
filed?
10. Do you have copies of the federal income tax returns? Who does have the copies?
11. What outside accountants were employed within the last three years?
12. Do you have copies of the reports of such accountants? Who does have copies?
13. What bank accounts were maintained within the last three years?
14. Where are the bank statements and canceled checks now located?
15. What insurance policies were in effect within the last year? What kind, and why?
16. From whom can copies of such insurance policies be obtained?
17. If the business is incorporated, where are the corporate minutes?
18. Is the debtor owed any outstanding accounts receivable? From whom? Are they
collectible?
19. Is there any inventory, property, or equipment remaining?

 I read a blog today, as well as the written opinion of the Court, concerning what is called a "fee-only Chapter 13 plan". While I agree with the ruling of the Court I completely disagree with the blog and was shocked that a lawyer would take such an action as a matter of course. A summary of the facts are:
 A potential client approached a bankruptcy lawyer about filing a Chapter 7 which the client clearly qualified for however, the client did not have the funds to pay the Chapter 7 fee. It is not clear whether the potential client had any money or simply did not have enough money to pay the lawyer in full. It is also not clear what the legal fees were qoted for the Chapter 7 bankruptcy. Finally it is not clear what other facts, if any, existed that would have made the filing reasonable, which is why the case was reversed.
I'll make the assumption that the Chapter 7 fee was between $800 to $1,500 plus filing fees. Inasmuch as the client did not have the funds the lawyer suggested that the client file a Chapter 13 bankruptcy. The fee for a Chapter 13 case was $2,900 plus filing fees. The legal fees would be deferred and paid in installments by the Chapter 13 Trustee. The Chapter 13 payment would be roughly $100 a month for 36 months.  A chapter 7 bankruptcy is over in approximately four (4) months while this Chapter 13 case will take three (3) years. The result was the lawyer got paid, the Chapter 13 Trustee received his commission and there was nothing paid to creditors. The Bankruptcy Court and the Federal District Court threw the case out as having been filed in bad faith and the case was appealed to the Federal Circuit Court. The Circuit Court reversed the lower Court's ruling that the bankruptcy court could not, out of hand, dismiss the case without first examining the facts. The bottom line to the ruling is that the Bankruptcy Court must review the facts before concluding whether or not a case was filed in bad faith. I want to make clear this case did not occur in Texas where I practice.
 Very few lawyers want to extend credit to a client filing Chapter 7 because the legal fees still owed on the Chapter 7 filing date are discharged and any payment made by the client to the attorney post-filing is strictly voluntary. I believe that I am one of the few lawyers that will allow a client to make payments, get the case started, but not file the case until the case has been paid in full. In almost all cases allowing a client to make weekly or monthly payments usually, but not always, fixes the above problem. Barring some type of situation that required a case to be filed immediately there is no reason for the above fact pattern to take place. If the client could make $100 a month payments to the Chapter 13 Trustee, the client could have made those payments to the lawyer. The result would have been accomplished in for a lot less money and in a lot less time.
 What the Appeals Court said, in my opinion, was that merely filing a Chapter 13 case so a lawyer can get paid is not going to fly unless there exists facts of a compelling nature that would have required the attorney to advise his client to file a chapter 13. For example, if the client’s wages were being garnished by a creditor holding a significant claim might well justify the filing of a Chapter 13 immediately. Therefore, the Bankruptcy Court was required to look at the facts before concluding a case was filed in bad faith, rather than summarily dismissing a case. From my point of view the ruling is standard text book law and there is nothing remarkable in this ruling. The case certainly does not stand for the principal that a fee only chapter 13 case is acceptable.  In fact the course was very clear when it said fee only plans should only be used in exceptional circumstances, noting that they may be "vulnerable to abuse by attorneys seeking to advance their own interests without due regard for the interests their clients".
 On a more personal note, I have a hard time justifying this practice except in very limited circumstances. In fact I never have attempted to accomplish such a thing. Not everything about the practice of law is about money. On numerous occasions I have cut my fees when I concluded that it was appropriate.
 

Without question just the thought of having to file bankruptcy, Chapter 7, Chapter 13 or a Chapter 11 is very stressful.  It is an emotional roller coaster ride before you actually make a decision.  When anyone is facing the unknown, coupled with the hearsay gossip about bankruptcy that is almost invariably wrong, it is no small wonder that your stress mounts. During financial hardship the pressure grows from the demands of creditors in the form of harassing phone calls, demand letters, pending lawsuits as well as the strain to keep a roof over your head, the utilities on and enough food on the table to feed your family.
 Financial hardship can also increase the strain on a marriage, partnership or with your significant other.   This type of situation can and often does lead to divorce, separation or the end of the relationship.  There are several things a person needs to both consider and understand when faced with these foregoing challenges.  First and foremost what is more important – protecting your family or worrying about how you are going to get your creditors paid.  Secondly, bankruptcy does not cause divorce, the blame and shame of financial pressure does.  Bankruptcy can remove financial strain that causes the emotional day to day turmoil on you and your family.  In order to understand your options clearly it's important to seek the advice of a competent consumer bankruptcy lawyer.    

Now, I certainly don’t blame you for wanting to get rid of these offers. It is amazing how many we get each week. I used to think that I was something special to get so many credit card companies wanted me to enroll. I’ve learned the error of my thinking the hard way and I definitely should have removed the temptation long time ago.
But, fortunately, it’s actually pretty easy to stop receiving these offers. You have two choices. You can opt out of receiving them for five years or you can opt out of receiving them permanently.
To opt out for five years call 1- 888-5–opt-out or visit www.optoutprescreeen.com.
To opt-out permanently, you have to go online to www.optoutprescreeen.com and you will have to mail back a signed permanent opt out election form. They actually make it harder to get rid of them permanently.
When you call or visit the website, you have to provide information such as home telephone number, name, social security number, and date of birth. If you don’t want to call or go online, you can also send letters electing to opt-out permanently to the major consumer reporting companies, Experian, TransUnion, Equifax, Innovis Consumer Assistance in Pittsburgh.
Also, don’t forget that the government has set up a national do not call registry as a way to reduce telemarketing calls to your house. Go to www.donotcall.gov to or call 888-382-1222.