Tag: 341(a)

Remote 341(a) meeting of creditors

Remote 341(a) Meeting & Zoom: What to Expect, post-COVID (2023)

Remote 341(a) Meeting of Creditors by Zoom: What to Expect in 2023

Los Angeles Bankruptcy lawyer explains remote 341(a) meetings post-COVID

Post-COVID, a remote 341(a) Meeting of Creditors in bankruptcy is becoming the standard, instead of in-person. Here’s what to expect. They can be terrifying, nerve-wracking, and unpredictable. As someone who has attended thousands of these in person (after coaching my clients with my list of prefiling do’s and don’ts), I answer your 341(a) questions and share with you what to expect at your 341(a) meeting in a post-COVID pandemic world where Zoom 341(a) meetings are more common.

What is the 341(a) Meeting of Creditors?

The 341a Meeting of Creditors is a requirement in every bankruptcy where the debtor (you) gets put under oath and is required to answer questions truthfully about your assets and financial condition. It’s a gathering, like a conference call. While it’s called a 341(a) meeting, it’s not really a meeting, but more like a polite, professional, semi-aggressive grilling.

Who attends the 341a Meeting?

You, the debtor, must attend the 341a meeting. Also, there will be a bankruptcy trustee. And of course, all of your creditors will get notified about it. Let’s break it down.

First, of course you must show up at your 341 meeting, which post-pandemic will likely be a remote 341(a) meeting. Again, this is done by telephone, Zoom, or some other technology. This choice is at the discretion of your Chapter 7 trustee. It varies trustee to trustee, so that’s why this is general; there is no one uniform set way how a trustee runs his or her 341(a) meeting.

Second, the Chapter 7 trustee will attend. It’s their show, and they will aggressively pursue assets you have or used to have, within the boundaries of the law. They run the meeting, which is more or less like a court deposition, with 20-40 other people able to hear or watch you on the phone or Skype.

bankruptcy 341(a) meeting of creditors sign
Bankruptcy 341(a) Meeting of Creditors sign back in the old days pre-2020 when 341a meetings were held in person instead of remote 341(a) by Zoom

Third, creditors can attend. These are the people to whom you owe money, and they have every right to show up, dial in or call and grill you under oath.

Fourth, the United States Trustee may call in or attend your remote 341(a) meeting of creditors. The Office of the US Trustee (UST or OUST) is the arm of the Department of Justice responsible for administering bankruptcies fairly and justly. They work with the FBI in the DOJ to investigate bankruptcy crimes, like hiding assets. The goal of the UST is to ensure that justice is being done, and everyone seeking relief is the “honest but unfortunate debtor.” If the US Trustee shows up at your Zoom 341(a), there’s a suspicion of mischief, such as moving your stuff around, making false statements in your papers, lying about income, or some other thing where maybe you’re not entitled to a Chapter 7 bankruptcy discharge… or worse, like prison time.

Fifth, other debtors will be waiting their turn for their remote 341(a) meetings. There will be about 30 people or so, all listening in, waiting their turn, trying to learn the standard 341(a) questions.

Finally, your bankruptcy attorney (and a bunch of other bankruptcy lawyers) will be there. This is probably (hopefully!) the only time in your life where you’ll be testifying under oath, with penalty of perjury. You can wing it and hope for the best, but you really want a lawyer who’s personally handled thousands of 341(a) meetings to be with you.

Do my creditors actually show up at the 341(a) Meeting?

Generally, your creditors won’t attend. This is because they know the bankruptcy trustee is representing their interests, and will ask you all the questions they would have asked. But they might. They know about the meeting because you have an obligation to list in your bankruptcy petitions or schedules (the bankruptcy papers) every debt you owe, or even might owe. You listed their addresses. When you filed the bankruptcy papers, the court clerk sent them all a notice. It’s each one’s choice if they want to show up and ask you questions under penalty of perjury.

So, who is the bankruptcy trustee who will be asking me questions?

In Chapter 7 bankruptcy, the trustee is an attorney, accountant, or other professional who is appointed by the Department of Justice to seek assets of yours they can take for the benefit of your creditors. They are bound by duty to follow the US Trustee handbooks and reference materials.

Wait, they can take my stuff?

You bet. That’s the trustee’s primary goal, and what Chapter 7 bankruptcy is all about. You read about “Liquidation bankruptcy” on boring websites, but that’s the whole idea. They can liquidate (fancy word for “sell”) your assets (fancy word for “stuff”), if those assets are beyond the exemptions in your state.

Then I’ll just give away or sell that thing to a good friend or relative.

You don’t want to do that. Transfers before a bankruptcy are often fraudulent transfers, and can end up causing a lawsuit for your friend or family, and you’ll lose the thing anyway.

Where is the 341(a) Meeting of Creditors?

Ever since the 2020 pandemic, you can usually attend your 341(a) meeting remotely by phone or Zoom.

So this could be just a phone call. This is super easy.

Don’t let the format deceive you. The remote 341(a) meeting should be treated like a formal court hearing, as if you’re under oath standing in front of a federal judge. Because if things go wrong, you very well might be.

How do they even know it’s me?

The bankruptcy trustee verifies your identity with two forms of identification. When 341(a) meetings were done in person, you would physically hand the trustee or their administrator your unexpired original photo ID and a Social Security card. Now that the hearings are done remotely, you or your bankruptcy attorney will have to provide a copy of these documents (picture ID and proof of SSN) to the trustee. When you go on Zoom, they’ll ask you or your bankruptcy attorney if these are really your documents.

What do I have to do before a 341(a) meeting?

Because the meetings are now done remotely, it’s not so simple anymore as just handing over documents. You now have to get the papers and identification to the bankruptcy trustee beforehand. They’ll typically email your bankruptcy attorney how and where to upload the documents. If you gambled and filed bankruptcy without a lawyer, you’ll likely get something in the U.S. mail. Most Chapter 7 trustees use an online portal where documents are uploaded, though it’s possible some will accept them by email.

What documents do I have to provide to the bankruptcy trustee?

You already know you need to get proof of your identity to the bankruptcy trustee, one with a picture of your face, and another that verifies your Social Security number. Most bankruptcy trustees have a bankruptcy debtor’s questionnaire. Back when the 341(a) meetings were done in person, you’d fill it out while sitting and waiting your turn. Now that we have remote 341a meeting of creditors, you’ll need to complete this in advance, and return it to the trustee. You also must provide your tax return for the last year filed. Many Chapter 7 trustees want to see your bank statements for all accounts for the months prior to filing. It’s possible the bankruptcy trustee will ask you for more documents like mortgage or car loan statements, property deeds, closing statements from refinances or sales you did years ago, etc. so be prepared for some homework.

What happens at the 341(a) Meeting?

On the day of the 341(a) hearing, you’ll connect to the Zoom 341(a) meeting of creditors, or phone in. You’ll mute your line so it’s not chaos and noisy. They call your name, they swear you in, the trustee then questions you like at a deposition, then invites your creditors who attended if they wish to examine you under oath. They often conclude your meeting, but sometimes continue it to a different date so that the trustee can get more documents or information as he or she does due diligence. Oh, and just in case you forgot already: mute your line until your name is called.

What does a US Trustee 341(a) Meeting Room look like?

The US Trustee 341(a) Meeting room is a room with chairs facing forward with this Department of Justice seal prominently in the room. This should impress upon you the seriousness and solemnity of the event. Because you’re attending the 341(a) meeting in your pajamas in the comfort of your own home you may be led to believe this is a very casual process. It is not. Look at the seal below. Now, imagine getting a formal letter from the Department of Justice with this picture at the top of it mailed to your house, with a deadline, because of something you said at the 341(a) meeting or put in (or left out) of your bankruptcy papers. This is a serious formal proceeding. Tell the truth about everything.

DOJ seal for bankruptcy 341(a) meeting rooms
DOJ seal displayed at bankruptcy 341(a) meeting rooms

What are the questions they ask at a 341(a) Meeting of Creditors?

There are questions every person must answer at a remote or Zoom 341(a) Meeting, and often the questions are custom-tailored to you and your situation. When it’s your turn, they call your name. You then and only then unmute yourself. First, they’ll tell you to raise your right hand and then ask, “Do you solemnly swear or affirm to tell the truth, the whole truth, and nothing but the truth?”

The bankruptcy trustee will then ask some of the following questions. This is not intended to be a complete list, but just to give you an idea of what you may be asked.

“State your name. Is the address on the petition your current address?”

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?

“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?”

“Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?”

“Have you previously filed bankruptcy?

“What is the address of your current employer?”

“Is the copy of the tax return you provided a true copy of the most recent tax return you filed?”

“Do you have a domestic support obligation, and to whom?”

Have you read the Bankruptcy Information Sheet provided by the United States Trustee?

Do you own or have any interest whatsoever in any real estate?

“Have you made any transfers of any property or given any property away within the last four years?”

“Have you been engaged in any business during the last six years?”

Note that business can be as small as that side gig you have selling things on Ebay or Etsy, or driving for Lyft. If you do have a business or business income, that opens up other questions. You’ll also get other questions if you own a car, own real estate, bitcoin, life insurance proceeds, claims against anyone, and so on.

Always tell the truth, and again, even if you think you have nothing to hide, you really want to have an attorney representing you when you’re put under oath, and in any legal proceeding such as bankruptcy.

How do I prepare for a Meeting of Creditors?

You already know the bankruptcy petition, schedules, and statement of affairs, as it’s all about you, your life, and your financial condition. And of course, it’s all truthful and complete, listing all your assets, debts, and income. Because of that, there’s nothing to memorize.

You’ll want to get a good night’s sleep, and get to bed early so you’re well-rested. Before you go to bed, have the Zoom meeting number and password (or phone number and pin pass code) the chapter 7 trustee provided you ready so you’re not scrambling in the morning.

Also, read the bankruptcy information sheet. It’s often called the green brochure, green sheet, or green pamphlet, since back in the days of covered wagons when we were in person, that’s what it looks like.

Do I have to tell the truth at the 341(a) meeting?

I know what you’re thinking.

What?

You’re wondering about maybe telling a couple of little white lies and not disclosing assets or income or that one debt to see if you can beat the system.

Maybe.

That’s not going to work. You’re under oath in a federal legal proceeding. Tell the truth, and the full truth.

Yeah but how will they know if I don’t?

The bankruptcy trustee has government resources, databases, and records, and the UST and Dept of Justice have a budget and resources far greater than yours.

Also, FBI agents like this investigate bankruptcy crimes.

FBI agents investigating bankruptcy crimes, maybe.
FBI agents busy investigating a bankruptcy crime, maybe.

I was just kidding anyway.

Just tell the truth, about everything. Do you want to go to jail for bankruptcy crimes like Boris Becker?

No.

Then there’s your answer.

What about Chapter 13 Bankruptcy 341(a) Meeting of Creditors?

The Chapter 13 bankruptcy 341(a) Meeting of Creditors is similar, but there’s an entirely different focus than the Chapter 7 kind described above. This is because Chapter 13 bankruptcy is different. A Chapter 13 is administered by a (you guessed it) Chapter 13 trustee. Since the purpose of this chapter is to repay debts in a sort of federally-run debt consolidation program, there’s an emphasis on your cash flow, your budget, and your ability to repay. The 341a questions will be similar, but much of it will focus on your paystubs, number of people in your household, employment, and monthly spending. You will almost certainly get a to-do list when the meeting is complete. This punchlist must be completed if your case will get through to confirmation.

Is a bankruptcy trustee the same as the bankruptcy judge?

No, they serve different roles. A bankruptcy trustee is an administrator of sorts, and much more closely aligned with your creditors and debts. They are not your attorney, nor advocating for you. Your attorney is of course zealously fighting for you and your rights, and to help you get the best result with the facts presented to them. The bankruptcy judge — and each case is assigned to a bankruptcy judge — is a neutral person whose job is to decide disputes between your attorney and the trustee (or creditors).

I read that I don’t need an attorney for bankruptcy.

This is true. Just because you can file bankruptcy without an attorney, it doesn’t mean that you should. Same goes for self-surgery. Please strongly consider retaining one to help you with every step of this process. At the very least, arrange a consultation with an experienced bankruptcy lawyer.

Summing up 341(a) Meetings

Remote 341(a) Meeting of Creditors are new, and have their own sets of traps, especially in that it appears so casual and deceptively easy. With these tips and pointers, I hope this helps you navigate the terrain a little bit better.

And if you already have filed your case, relax, answer the Zoom 341(a) meeting questions honestly, and I hope the process works out for you and that you get the bankruptcy discharge you deserve.

Thank you for reading.

bankruptcy dos and don'ts

12 Crucial Tips Before Filing Bankruptcy

12 Crucial Tips to Do (and Avoid) Before Filing Bankruptcy

Los Angeles Bankruptcy lawyer explains what to do and don’t before seeking a fresh start

If you’re thinking about filing bankruptcy, what you do you beforehand has more of a bearing on the success of your case than how well the papers are completed. As a longtime Los Angeles bankruptcy attorney, I must make the best of the circumstances that are presented to me. Sometimes these situations are, shall we say, less than ideal.

What follows, in no particular order, are just some of the things I wish the people I meet with had done, or avoided doing, before we met for the consultation.

Do disclose all your income, asset, and debts

Just before we meet, in the brief questionnaire I send you, disclose to me all the various income streams you have, all the things you own, and all the people and companies you owe. All means all. Tell me about that small online business. Share me with me that 1967 classic car in showroom condition. Inform me about that embarrassing gambling debt. This way, I can give you the best advice. This prevents before us both being surprised when the vast investigative power of the government finds it and brings it to our attention at your 341(a) Meeting of Creditors. Then it’s too late (ask Boris Becker). Tell me now so I can help you strategize and navigate, honestly and ethically.

Dos and Don'ts

Don’t repay loans to your family

Look, we all get it. You don’t want to hurt your loved ones, and bankruptcy will wipe out that debt to your Aunt Gertrude. But taking care of family and not repaying your other debts sure seems a lot like playing favorites. Which it is. And the Bankruptcy Code has a fancy word for that: insider. When you repay the debt owed to a relative in the months before you file bankruptcy, it creates a situation where the Chapter 7 trustee can go after the money and spread it out more fairly.

File all your tax returns

If you’re going to benefit from bankruptcy, you need to show you’ve been satisfying your obligations to the federal government, including reporting your income. It’s understandable that you’ve been falling behind on filing your tax returns each year. Maybe you’re a year behind. Maybe you’re four. It’s easy to get into avoidance, and then you feel guilty, because you know if you submit your 1040s it’ll just say you have even more debt you can’t pay. But file them. All the returns. If you owe, you don’t need to send a check in with the return. But let’s find out what you owe. And this also prevents the very bad situation of the IRS filing a return for you (called a substitute for return or SFR). Just do it, let’s find out what you owe, and craft a strategy.

No spending sprees

This one is simple: don’t run up your credit cards. The fact that you still have thousands of dollars left under your credit limit is irrelevant. Just say no. Avoid large purchases. Stop luxury spending. No cash advances. You don’t get a spending spree. In fact, using your credit cards prior to filing bankruptcy is evidence of fraud, particularly if the credit card files a lawsuit in the bankruptcy. Fraud doesn’t go away with the Chapter 7 bankruptcy discharge; it remains your debt after the case is closed. So, don’t use your credit cards before you file bankruptcy.

Read my Ultimate Chapter 7 Bankruptcy Guide.

Don’t give away, sell, or transfer anything to anyone

Fraudulent transfer sounds pretty scary — and it is — and it doesn’t even require fraud or bad intent. Because most bankruptcy cases focus on assets, making an asset go away in the months and years prior to filing bankruptcy gets a lot of scrutiny. The trustee has the power to go after the person you gave or sold the thing to and take it away and sell it for your debts. The sad irony is in many cases, the asset could’ve been protected had it stayed in your name. In short, don’t try to game the system: the system has been around for centuries, most trustees for decades, and they have the investigative power of the government behind them. Tell me about the asset, don’t move anything around before filing, and let’s see if I can use a bankruptcy exemption to protect it.

Stay away from Zelle, Venmo, and cash apps

Here in the 2020s, cash apps like Venmo and Zelle are common. They’re convenient, and make it super easy to transfer money to and from your bank accounts. That’s also the downside: all that money flowing in and out and being exchanged with your friends and relatives at the very least looks like extra income & unnecessary expenses, and at worst, like transfers. And what did we just learn about transfers in the last paragraph? That’s right, they’re bad. You don’t want to explain each and every transfer on your bank statements to your lawyer, and then, to the trustee. You’re better off using your debit card to pay for things, or even a personal check like a primitive cave-dweller.

Think twice about buying a car before you file bankruptcy

A car debt is different from the spending spree tip, in a few ways. It’s just one purchase, though it’s a big one. Also, it’s a secured debt attached to a collateral (the vehicle). And, in bankruptcy, you don’t get a free car, or house. If you want to keep the thing, you need to stay current on the payments. However, some courts or trustees may look at a brand new car payment from a contract entered into on the eve of bankruptcy with a suspicious eye. It lowers the amount you have available to repay your debt. The Supreme Court in Milavetz weighed this very issue (examining 526a4). You’re at a bankruptcy website, so you’re clearly thinking about filing. So, before getting a vehicle loan, you probably should meet with a bankruptcy attorney.

Don’t make the big chunk of money disappear

Few things can complicate a bankruptcy more than a massive sum of cash you had two years ago being completely spent. It could be that pandemic relief PPP or SBA loan. Maybe you cashed out a home refinance, or a 401k or other retirement account. Or perhaps you sold a house and put the proceeds in the bank. Or got a recovery from a car accident. The issue is that you didn’t use this money to repay debt, but instead, funded a luxurious lifestyle and now you want to wipe out debt you chose not to repay. When asked where the cash sum went, the guaranteed answer: “it’s all gone.” The Office of the United States Trustee (OUST) will be very interested where the all-gone money went, and you should be prepared to provide a line-item analysis showing how every dollar was spent, using bank statements as supporting evidence.

Documents: get your ducks in a row

In bankruptcy, you’ll be testifying under oath. However, documents can be used as evidence. So, you should have ready (or be prepared to get ready), a year’s worth of bank statements, a Zillow printout to see if your home is over the median home price, a credit report (they can be obtained for free), at least two years of tax returns, and at least six months of pay stubs for the means test. Sure, we can sit down at your consultation and rip open all your untouched credit card statements you bring to us in a crumpled paper bag in one big cathartic unsealing ceremony. But the more efficient option is to have all these documents downloaded or saved as PDF files.

Scan documents or use a free phone scanning app

Speaking of which, your bankruptcy lawyer will love you if you can scan documents in PDF format to email to them as attachments. This is not the same thing as taking a picture of each page of your tax return. This also does not mean a screenshot of your bank balance. And, for the love of all things holy, don’t use the cell phone to take a picture of the computer monitor showing the credit report. Instead, either invest in a scanner, or, more affordably, a free PDF scanning app for your Android or Apple device. With these free PDF scanning programs, you can use the camera to capture pages of a document, and then make it a PDF for your bankruptcy attorney. A little bit of effort here will make you your bankruptcy attorney’s favorite client.

Don’t bank where you owe, and avoid Wells Fargo

Don’t have a checking or savings bank account at the same bank where you have a debt. Why? Because you have already or will soon start missing credit card payments to that bank’s credit card. When that happens, they likely have the right or authorization to take your money from the bank account to pay the debt in a bank setoff. You don’t necessarily need to close the account, but just don’t keep money in there you’d be upset about if they took it.

Also, do you know what bankruptcy attorneys talk about when we socialize? Our agreed-upon and utter dislike for Wells Fargo Bank. Why do some of us bankruptcy lawyers hate Wells Fargo with the fire of a thousand suns? Because they’re one of the very few banks that will freeze our clients’ money, even if there’s no WF credit card with them. They don’t take it, only freeze it. But that distinction is unimportant when you need to pay rent or buy food and you can’t get at your own money because Wells Fargo has has a policy which amounts to punishing you for filing bankruptcy. Wells Fargo and bankruptcy don’t mix.

Do meet with an experienced bankruptcy attorney

Get a consultation from a skilled bankruptcy lawyer. Most will charge a reduced rate to meet with you, and it’s worth every penny given the hazards you face if you don’t. It’s true you can file your own bankruptcy, and do not need to retain counsel. However, given all the risks and dangers you face, the time spent completing a bankruptcy attorney’s intake questionnaire and then answering their questions while they advise you is worth 1,000 times what you give. They’ll tell you if a Chapter 13 bankruptcy is a better option, what you could lose in a 7, or if waiting is best. You’re not under any obligation to hire that lawyer, but when you feel the relief and peace of mind, I’m pretty confident you just might want to. If you’re in the greater Los Angeles area, give me a call or send me a message; I’ll be happy to help.

    chapter 7 bankruptcy los angeles

    The Ultimate Guide to Chapter 7 Bankruptcy, Explained

    Chapter 7 Bankruptcy – The Ultimate Guide

    What is Chapter 7 bankruptcy: someone who files Chapter 7 bankruptcy doesn’t need to pay debts, because they can’t. However, not everyone qualifies for this out of the different chapters of bankruptcy, and even if you did, you could lose assets. There’s always some element of risk in Chapter 7 bankruptcy.

    Chapter 7 bankruptcy is where you don’t pay back your debts because you can’t, but the bankruptcy trustee may be able to go after some of your stuff.

    This guide was written in an attempt to be an ultimate Chapter 7 bankruptcy guide. There are a few on the internet, but this one was written by Los Angeles bankruptcy attorney Hale Antico.

    I try to use plain language and not talk over your head. I prefer to take something complicated like bankruptcy law and explain it in simple terms. And that’s what I try to do here.

    Easy-to-Understand

    I would describe Chapter 7 bankruptcy as being like a bulldozer of debt. One that shoves all your credit cards and other unsecured debt into a garbage dump.

    chapter 7 bankruptcy bulldozer of debt
    The Chapter 7 bankruptcy bulldozer of debt

    Or I may try to explain Chapter 7 as a car wash. You know the kind: a car wash where you drive your car through it. It gets rid of most if not all the common dirt like credit card debt. Once you come out the other side, it’s pretty clean, much of the dirt is gone. But there’s always that road tar on or near the bottom of the car that’s still there. The gunk that the car wash can’t get rid of. In my analogy, usually bankruptcy doesn’t clean off the student loan debt, tax debt, and credit card fraud like recent usage. That’s the gunk. But for someone with a lot of common dirt they’ll never be able to wash off (or pay back), the car wash can be very effective and efficient.

    Compare this Chapter 7 bankruptcy guide with other lawyer websites. Most use the same jargon words and really don’t tell you anything. What they tell you is that the bankruptcy lawyers didn’t write it, the website creator did. And whichever one did write it just used someone else’s generic Chapter 7 description. They copy-paste each other and it’s all the same boring drab, none of it that makes sense, all of it boring and confusing.

    Which is why you see lots of definitions like:

    Chapter 7 bankruptcy involves liquidation of unexempted assets of an insolvent debtor by discharging unsecured nonpriority debts if debtor qualifies by passing the post-BAPCPA means test and is administered by the bankruptcy trustee for the benefit of the creditors before discharge.

    There. What did you learn from that? You learned that the lawyer can’t really explain things to you, doesn’t want to bother speaking to you in terms you understand, or just farmed out the website content to a kid at the website creation company.

    Now, I’ll take the same concept and put in terms that make more sense:

    Chapter 7 bankruptcy is for someone who owes debt with no collateral but can’t afford to pay any of it back so can get rid of it all, but also can lose stuff beyond what’s allowed to be protected.

    Isn’t that much better? That’s why, given the choice, you’ll want to retain the services of the bankruptcy attorney who wrote this Chapter 7 bankruptcy guide and everything on this website. Just fill out a contact form.

    Comprehensive

    The Chapter 7 bankruptcy guide also tries to be comprehensive. Which is why you’ll want to bookmark it and link to it. It can’t list every possible thing that happens or could ever happen in a Chapter 7 bankruptcy case. But it does list most things that one should consider before making the serious (and hopefully once-in-a-lifetime) decision to declare bankruptcy. And don’t forget to read my list of 12 crucial things to do (and avoid doing) before filing bankruptcy.

    Do I Qualify for Chapter 7 Bankruptcy

    fresh start chapter 7 bankruptcy
    Chapter 7 bankruptcy is a fresh start.

    Chapter 7 bankruptcy stops all collections and is for people who really don’t have any way to make any payments on their debts. To level the playing field, they made it so you can’t earn a lot of money and just say you spend it all on household needs.

    One rule to qualify for Chapter 7 is to earn under the median income in your state. In California after 2020, the median income is over $60,000 annually for a one-person household. So Californians earning less money than that a year will have an easier time to file Chapter 7 bankruptcy.

    The Bankruptcy Means Test to file Chapter 7

    However, Congress added a long complicated form to be the guard dog for who gets into Chapter 7. This is called the Means Test. Think of a 15-page tax return, and you have a pretty good idea what it’s like to fill out. The general gist of it is this: if you don’t earn less than the median income, only certain household expenses are “allowable.”

    If you spend things for things not on the form, it’s presumed unreasonable and you probably could have extra money for repaying your debt. Consequently, this form is a combination of what you really spend money on and “allowances” and standard deductions.

    Learn more about the Means Test.

    Alternative to the Means Test

    Even if you don’t qualify for Chapter 7, you can still likely doChapter 13 bankruptcy, where interest is frozen, no one can sue you, and you make payments on your debt.

    Will I Ever Get Credit Again?

    Bankruptcy hurts your credit. It’ll appear on your credit report for up to ten years after you file. Credit agencies report credit histories accurately, good or bad, for seven years. Bankruptcy is different; Experian , Equifax and Trans Union report them for a longer duration.

    However, according to former clients, this is usually not as big a problem as most people think. Credit lending agencies know you won’t be able to file another bankruptcy for at least 8 years, and therefore, they don’t have that risk to bear.

    You will not get as high a credit limit as you once had, or be able to borrow a large sum of money. But getting some credit (such as a secured credit card) shouldn’t be that difficult. You can then rebuild your credit over time. What you will likely face is higher interest rates, required higher down payments, more points, etc.

    Some people do have difficulty rebuilding their credit, but it is usually due to other factors besides bankruptcy, such as their employment record, other credit problems, etc. In any event, we can provide you with excellent materials for helping you rebuild your credit should you so desire.

    Learn more about credit after bankruptcy.

    Chapter 7 bankruptcy is all about the budget

    People are often surprised when we sit down to go over their finances sometimes that I’m more interested in their budget than their debts. Yes, the creditor information is important, and we will get into that a little later. However, once I get a feel for the household budget, I can get a sense in which direction our conversation will go.

    Consequently, I’m going to try to understand whether you can afford all your basics each month. Forget the debt… can you keep the lights on, put food on the table, and pay the rent? Because let’s face it: if you’re struggling just to make ends meet, then the debt isn’t the problem, but a symptom. The true problem is negative cash flow.

    Not enough to income to cover basic expenses

    chapter 7 bankruptcy
    Chapter 7 bankruptcy is where you don’t pay debts, but can lose assets

    Because there’s not enough money to pay the rent, borrowing helps keeps things afloat.

    That’s why it’s the symptom, pointing to the real root cause: budget shortfall. Even if the credit cards were torn up tomorrow all the debt forgiven, next month, there’s still going to be not enough money.

    The solution here isn’t to file bankruptcy, though that may not be a bad idea. The fix is to increase income or to cut expenses. First, to increase income, get a second job, a roommate to pay rent, etc will increase income.

    To reduce expenses, consider cutting back on satellite or cable, cell phone plans, gym or storage rent, etc. Sometimes the solution is as obvious as getting rid of that monthly vehicle payment on the thing you really don’t need, despite your emotional attachment to it.

    Covering the bills, but not the debts

    Secondly, maybe you’re able to pay your monthly expenses and all the typical bills. It’s just the darn credit card debts you can’t get to. That is, you have like nothing to give them at all, it all goes to keeping the lights on. If that’s the case, and your income is low enough to pass the means test, then maybe a good solution for you to consider is Chapter 7 bankruptcy.

    Because then you can keep your household expenses covered, and an experienced Chapter 7 attorney can get rid of the credit card debt.

    A Budget Surplus!

    Finally, maybe you can pay all the monthly bills, and you have some money left, but you just don’t have enough to pay all the credit card minimum payments. Or maybe you can, but you’ll be paying interest forever. But either way, you have some money left for a debt repayment, and have even thought about debt consolidation. Chances are, this is not a Chapter 7 bankruptcy situation.

    So, you can see, by asking about the budget, it really helps a Los Angeles bankruptcy lawyer get a feel for what kind of pressures you’re feeling, sort of walk in your shoes for a moment. But in addition, it helps focus the conversation on if Chapter 7 bankruptcy will help you, or if you should consider other options.

    The Chapter 7 Bankruptcy Trustee’s Role

    The Chapter 7 trustee has one job: to find stuff of yours he or she can take to sell off for the creditors to pay some of your debts. Ok, there’s a second job too, which is to make sure you belong in Chapter 7 bankruptcy.

    But really, it’s more about seeing if they can get their hands on your stuff. The Chapter 7 trustee is just doing a job, some more delicately than others, but yes, that’s their job.

    Losing Stuff in Chapter 7 Bankruptcy

    One major concern of many people is whether they have to give back any of their possessions if they file bankruptcy. The answer is that it depends on how much “stuff” you have. However, if you’re like many people, you don’t own much, have no real estate or other major things.

    But this is where good planning and completing the proper exemptions comes in. It’s quite possible that harassing creditors won’t be able to get their hands on your stereo, your CD collection or, since you’re viewing this on the web, your computer. We can likely make it so you give nothing back. You’ll probably keep all your assets.

    Note: if you transferred or gave away anything valuable in the last four years (or possibly longer!) for less than it was worth, you may have a fraudulent transfer problem.

    California Bankruptcy Exemptions and Exempting Property

    Maybe you’ve already asked yourself, should I file bankruptcy, and after reading that article, think you want to. You’ve read up on Chapter 7 bankruptcy here, and next will want a skilled experienced Los Angeles bankruptcy attorney to run the bankruptcy means test. But before we go that far, can you lose things in bankruptcy? The answer is, “yes.” Will you? It depends.

    Grossly oversimplifying for a moment, there are two systems you can choose from for the California bankruptcy exemptions. It’s like a Chinese restaurant, you can order off the Emperor Meal or the Dragon Dinner. You can’t mix or match. You are ordering off of either one or the other menu. The sign behind the cash register says, “NO SUBSTITUTIONS!”

    Pick a Menu

    One California bankruptcy exemption menu might have goodies like “protecting lots of cash and paid-off cars.” (2022 update: it’s now more). The other menu has delicacies like maybe “protecting a lot of home equity with the California homestead exemption.” (but beware of the new 1215-day rule)

    You tell your Chapter 7 bankruptcy trustee you’d like to have both please. They point to the sign behind the register. This is how people lose their tax refund in a Chapter 7 bankruptcy when they also have home equity.

    This is just one example of many that comes up again and again. And we didn’t even get into which state’s exemptions to use if the debtor moved or is moving states. You’ll want to sit down and talk to a Los Angeles bankruptcy lawyer. If a paralegal or anyone else without a license answers your California bankruptcy exemption question, they’re practicing law without a license, and you should run away.

    I Qualify for Chapter 7 Bankruptcy, but Should I File

    Maybe you’ve read this far, and you’ve concluded that you are eligible for Chapter 7 bankruptcy, but should you file Chapter 7? That’s a whole different question. And probably one beyond the scope of a website. For shouldquestions, you probably want to talk to an experienced Los Angeles bankruptcy attorney.

    To determine whether you should file, a skilled counselor will look at your whole financial picture. That’s why our bankruptcy questionnaires are often so detailed. “Why do you need to know so much; just tell me what I should do!”

    Yes, but to tell you which is your best option, a good bankruptcy lawyer will want to know about your budget, your job prospects, income-earning potential. Your assets, and equity you have. Any money out there you can collect, or people trying to collect against you with court cases. There’s a lot that needs to be considered before a licensed professional tells someone what they should do.

    Should I Get my Appendix Removed? And What’s the Cost

    People call asking “should I file bankruptcy” and “what’s a bankruptcy cost” and I want to help them but sometimes a responsible bankruptcy attorney just doesn’t have an answer without fully understanding the situation. It’s like calling a doctor and saying on the phone, “I have a stomach ache should I get cut open and have my appendix taken out?”

    What would you say to a medical professional that answered that question on the phone? That they’re probably an unqualified quack. They’d want you to come in to the office, examine you, have you fill out paperwork to learn your medical history, and ask questions about things more recent. And you’d probably happily go along with all that because you’ll be getting help.

    That’s the same approach that helps an attorney understand what you should do. Because instead of appendicitis, it’s possible you just ate some bad pizza and don’t need surgery but a mild antacid.

    How Much Does it Cost to File Bankruptcy

    No One-Size-Fits-All

    Cost is a similar question. “How much does it cost to file bankruptcy?” Heck if I know. Another analogy. Call up a carpet cleaner, and ask them on the phone what does it cost to shampoo a house, without any other questions. If they gave you a price, they’re either dumb or dishonest.

    They’re dumb if they didn’t think you might have a huge mansion and they quoted you for a small bedroom because they didn’t ask. They’re dishonest if they know you might have a mansion, but gave you the low price anyway figuring they’ll just jack it up once it’s too late.

    No smart or honest business owner quotes their services unless they know how big (or small) the job is. Someone that does is either dumb or dishonest, and do you really want either one to be your bankruptcy attorney?

    So, how much does it cost to file bankruptcy? A responsible Los Angeles bankruptcy lawyer will want information, to ask questions, to understand what the entire situation is. Then, they’ll give you a price that is flat, set and doesn’t go up.

    You want an honest attorney who tries to learn and understand you, and your unique circumstances. Not a shifty carpet cleaner bait-and-switch. Contact us and let’s have a conversation. We’ll be honest with you.

    What about Discrimination by my Employer or the Government?

    You are protected against your job firing you or the federal government not giving you a student loan, etc. Your rights are all spelled out in11 USC 525. But beware: just because you can get more debt after bankruptcy doesn’t mean you should.

    Is there a debt limit to Chapter 7?

    One question people ask this bankruptcy lawyer is, “How much do you have to be in debt to file Chapter 7.” There is no debt limit to Chapter 7 bankruptcy. It just becomes a matter of practicality. For example, you wouldn’t file bankruptcy for a debt of $100. What about $1,000? $10,000? $100,000? At some point, filing bankruptcy just makes sense. And for each person, that line is drawn differently.

    There seems to be an upper limit that will get you on the trustee’s radar, though it’s not sure exactly what that number is. Good faith and fraud can be factors with a lot of debt. Generally, unlike Chapter 13 bankruptcy, there’s no limit to how much debt you can have in Chapter 7. if it’s reasonable it should work, though your mileage may vary.

    Reaffirmation Agreement in Chapter 7

    If you file bankruptcy Chapter 7, a creditor may try to stick you with debt that lasts after the bankruptcy is over. This obviously goes against the purpose of bankruptcy, and is, of course, bad. The hitch is: sometimes you need to sign them. This is a Chapter 7 reaffirmation agreement, and you’ll want to read up on them before signing. Why? Because it can have consequences years after the bankruptcy. 2022 update: With the new Calif SB1099 law, it looks like ride-through in California bankruptcy is back.

    Do I Need a Lawyer for a “Simple” Bankruptcy?

    Legally, you can file bankruptcy without an attorney. It’s just forms, right? Dozens and dozens of pages to fill out, with decisions on each one. Only a lawyer can give you legal advice, and only an attorney can practice law. Paralegals can’t take your papers to court for you, or more importantly, show up at court with you. No one but lawyers can fight a creditor if they contend any part of your case.

    Hidden Costs and Dangers of Bankruptcy Paralegals

    You may save a few hundred dollars on a bankruptcy paralegal, but they can’t do any of the above. You do everything else…alone. Because paralegals aren’t licensed and have no oversight, their mistakes can cost you thousands of dollars.

    We’ve seen things like overlooked equity in your car where you’re forced to sell it — there is nothing you can do. Or they charge you hundreds of dollars more to try to fix it. By the time all the fixes are in, you’ve paid more than for a good bankruptcy attorney, and gotten far worse quality.

    This literally happened with someone who got taken by a paralegal for a “cheap bankruptcy.” By the time the client had to pay for all the amendments and fixes, it was more than bankruptcy attorneys would’ve charged. Don’t take a chance and cut corners with a legal process as important as this one which impacts your financial affairs, your money, car and future. You get what you pay for.

    A Chapter 7 Bankruptcy Can Get You a Fresh Start

    You’ll want a skilled bankruptcy attorney to help you with this, particularly if you’re in California. The Chapter 7 California bankruptcy exemptions in California are different than most states, and good Los Angeles bankruptcy lawyers can help protect most (if not all) of your assets for you.

    So remember, the difference between this and Chapter 13 is that you don’t make payments on your debt. Discharging your debt with nothing to your creditors is the essence of a Chapter 7 bankruptcy.

    The 341(a) Meeting of Creditors

    A big part of a Chapter 7 bankruptcy is the 341(a) Meeting of Creditors. Note that after the pandemic, these are very frequently remote 341(a) meetings, and read that to understand what to expect at Zoom or phone hearings. But regardless, yes, 341a. That’s more jargon, but that’s what it’s called. The 341 is from the section of the bankruptcy code. The Meeting of Creditors is really a bad name for it. Why?

    What it’s not.

    341a meeting of creditors
    Your meeting will not look like this.

    Firstly, it’s not a meeting. There’s not a boardroom where you sit down under a portrait of the founder of Chase Bank. Meetings involve two-way conversations and aren’t under oath. it’s an interrogation. But more on that later.

    Secondly, it’s likely not going to involve a bunch of creditors in attendance. Creditors don’t often attend the 341(a) Meeting because they don’t have to. Sending a bankruptcy lawyer to court costs money, and even creditors have a budget.

    If a creditor does have a problem with your bankruptcy case, they’ll draft a document from the comforts of their office. Then they’ll file it with the court. There are many reasons a creditor would challenge your bankruptcy, but one common challenge is because you used the credit cards recently, which would be fraud.

    Who will be there is a bankruptcy trustee, and you’ll be under oath. And signs from the FBI. And a recording device. This is where you don’t want to be alone (and a paralegal can’t sit with you). This is definitely where you want to have a skilled Chapter 7 bankruptcy lawyer with you.

    Thirdly, the Meeting of Creditors should be called Interrogation by the Trustee, but that sounds less friendly. The trustee will swear you in under oath, verify your identity, establish that you actually signed these documents and understand what they all say. And last chance: are there any errors, omissions, or changes you want to bring to my attention at this time? No? Ok. And then the actual questions start.

    Don’t testify alone

    In the Central District of California, where Los Angeles bankruptcy cases are filed, if you have a bankruptcy attorney help you with your case, a bankruptcy lawyer has to attend the Meeting of Creditors with you. Most send a stranger you’ve never met. This Los Angeles bankruptcy attorney personally attends most if not all his clients’ 341a meetings. And you’ll be prepared for it.

    Contact Us – We’re qualified, and affordable

    We’ve successfully helped thousands of Los Angeles bankruptcy seekers file Chapter 7 bankruptcy. We have a flexible payment plan. We actually strive to have good customer service, which is why I typed all this bankruptcy information to help people. And we’re affordable.

    Drop a line and let’s have a no-pressure consultation, and start getting some peace of mind, some hope, and let’s start working on your fresh start.

    Let a skilled Los Angeles bankruptcy lawyer be your guide on your Chapter 7.