A Chapter 13 bankruptcy case involved the trustee reviewing the debtors income and expenses. This review includes an analysis of the debtors house hold size. Where the IRS may allow a person to claim an adult child as a dependant often times trustees are not so generous. The concept that I've heard the trustees office explain to many different debtors is that there's no legal obligation to take care of a child once they reach the age of 18. There's no economical requirement and there's also no legal obligation. It can sound like a harsh concept in this country where many parents are still helping out their adult children with school expenses while living within the debtors home rent free. But, the trustees are charged with making sure that the debtors are making their best efforts in their proposed re payment plans. Essentially, I've heard an appointed trustee say,

"creditors should not be paying for an adult child to go to school"

The concept there is if the debtor is allocating $500 dollars for a 19 year old to go to school, that $500 dollars is not going then to go to pay down creditors. Depending on the overall review of the trustees office for the income and expenses there may not be a large adjustment required if you have an child adult living at home. However the trustee can request that a contribution from an adult child come into the household to pay for such things as utilities that are going to be increased because they're living there such as their food and clothing expenses.

The Brighter Side of Chapter 13 Bankruptcy

Remember the big picture with Chapter 13 cases, while you may not be able to pay for your 21 year old school expenses -- while it appears to hurt that your 21 year old has to help you pay for some utilities, food expenses and their share of rent the relief of a chapter 13 case can be monumental. Typically, there are no lawsuits being filed during a Chapter 13 case, there's no creditor phone calls, and potentially your only paying back a small portion of a debt stretched over 5 years and you're only paying back what you have disposable at the end of the month.

The first meeting with a bankruptcy lawyer can be a very nerve-racking time in an applicant’s life. The applicant may have many question, may not know what questions to ask, or may not understand the bankruptcy process. The first meeting is when a client is informed about the bankruptcy process and which chapter he or she is eligible to file under but this meeting can also turn into a waste of time and money if a lack of preparation is tossed into the mix. It is important to be prepared for the first meeting because if a client is not, it will take even more time and money for the bankruptcy lawyer to get caught up with the case.

Assets and Debts

The first thing a bankruptcy lawyer may ask of is a complete and detailed list of assets and debts. What a bankruptcy lawyer will want to talk about is the numbers. The meeting will mostly focus on the applicant’s income, the applicant’s total amount of debt, the applicant’s total number of creditors, and the applicant’s estimated assets. The bankruptcy lawyer may ask little about the client’s personal life because he or she needs to focus on eligibility requirements and check for potential problems with a bankruptcy case. This focus allows the bankruptcy lawyer to be comfortable with the fact that the applicant has given the attorney authority to speak in court on behalf of the applicant. For applicants involved in a business, it is especially important for the bankruptcy attorney to understand the business relationship. It would be beneficial for the bankruptcy applicant to write down his or her relationship and position in the business beforehand so it can be readily available to the bankruptcy lawyer.

It is important to inform the bankruptcy attorney of the applicant’s financial information. Something that seems petty, such as paying back the applicant’s brother $800 last month, can be extremely important. Failing to disclose information when the paperwork is being prepared can have harsh consequences such as landing the client with a fraud accusation or possibly a later discharge date. Generally the attorney’s office will give the applicant a packet to fill out. It is important that the applicant diligently fill out this packet and let the attorney’s office know if there are any questions.

The most important action a bankruptcy applicant can take is to be prepared as much as he or she can and be ready to disclose all information to the bankruptcy lawyer. Failure to do so can lead to more trips to the lawyer’s office and to court, which may waste more time, energy and money.

The Process of Filing Chapter 7 Bankruptcy

Chapter 7 bankruptcy is by far one of the most popular chapters of bankruptcies filed everyday. For most people, the process from filing the petition to the time of discharge can last anywhere between four to five months. These four to five months can be one of the toughest times in your life, which is where the bankruptcy attorney enters the picture in order to provide invaluable guidance through an otherwise stressful process.

The first step for those who are interested in filing for Chapter 7 bankruptcy is to take part in the mandatory credit counseling. The mandatory credit counseling requires the client to obtain a certificate through an approved credit counseling agency before the case can be filed with the bankruptcy court. The counseling session must be completed within 180 days before filing the bankruptcy petition. Once the bankruptcy petition is prepared the credit counseling certificate will be included in this paperwork and filed with the court. Once the paperwork is filed, a case number and trustee will be assigned to the case.

A mandatory meeting with the trustee is also required where the applicant must personally appear and bring proper identification and his or her social security card. This meeting is known as the 341(a) Meeting of Creditors. Depending on which bankruptcy cour the paperwork has been filed in, the meeting may take place within three to seven weeks after the filing of the case. The trustee in the applicant’s case must agree to liquidate any non-exempt assets, distribute the funds to creditors, and help monitor the case and report fraud cases to the F.B.I. before the process can move forward. The step allows creditors and trustees to object to the discharge of the applicant’s debt. After the first meeting, creditors have 60 days to file a complaint with the trustee whereas trustees have 30 days to file complaints. When filing a complaint, there must be some evidence of fraud, false statements on credit card applications, fraud while acting in a fiduciary capacity, and/or willful or malicious harm and injury to a person or property present.

Financial Management Course

Completing a financial management course is the next requirement in the Chapter 7 bankruptcy process. The second round of credit counseling lasts for about two hours. Along with the certificate, the applicant must prepare and sign Form B23 and have these documents filed with the court before a discharge can be entered. The applicant must file these documents with the court within 45 days after the date for the first meeting with the Trustee has been set. If any clients fail to do this step within the time period, a court may not allow a discharge. So, time is of the essence!

If the Creditors don't object to your Chapter 7 Bankruptcy Filing

If all goes well and nobody objects to the discharge of the applicant’s debts within the 60 days and all of the requirements have been completed, the applicant will receive a Notice of Discharge in the mail within four to five months after the case has been filed. The Notice of Discharge states that the client is officially discharged from all of the dischargeable debts. Although the notice applies to all dischargeable debts, it generally excludes cases involving child support, alimony, and student loans. The dischargeable debts in this case would apply only to the debts that were filed in the bankruptcy papers and notice.

Many applicants seeking bankruptcy relief have a common misconception that filing for Chapter 7 bankruptcy will be a long and winding path. In actuality, it the documents are properly prepared and there are no objections, the process can run quite smoothly. The bankruptcy attorney’s goal is primarily to manage a timely, smooth, and thorough bankruptcy process, whereby the applicant walks away with some or most of their stressful debts discharged. The bankruptcy attorney can also inform the applicant of potential problems and help to protect the applicant’s assets throughout the bankruptcy process.