Questions you'll be asked in bankruptcy
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When you file for bankruptcy, a Trustee will be assigned to your case. Your Trustee will be at any formal hearings you must attend for your bankruptcy. With a Chapter 7 case, this is the 341 Meeting of Creditors. With Chapter 13, there is the 341 Meeting of Creditors plus the Confirmation Hearing to approve your bankruptcy repayment plan. The Trustee is the one that ultimately decides whether your bankruptcy case will be a success, so it’s important that when the Trustee asks you questions, you answer accurately and completely. Here’s a look at some of the questions you can expect from the Trustee.
#1 Do you understand the information that was included in your bankruptcy petition?
This is a check to make sure that you know what financial information is included in your bankruptcy filing. You should get it since you were the one that provided the documents to your attorney who then used that information to complete your petition.
#2 Did you review the bankruptcy petition and supporting schedules before they were filed?
You should have thoroughly reviewed the documents prior to signing to make sure the numbers align to what you provided to your attorney. If you aren’t clear on something, ask your lawyer prior to signing. If you have residual questions, ask for any clarification you need before the hearing.
#3 Did you list all of your assets and property in the bankruptcy petition?
It’s critical that you never try to shield any assets or property, transfer them to friends or family before the filing, or do anything else to sidestep bankruptcy law. North Carolina bankruptcy exemptions are generous and allow a reasonable amount of assets to be protected during the case.
#4 What is your income?
Pay attention to whether the Trustee asks for gross or net income. Usually, they will ask for your gross income – this is your salary before deductions. If you earn $45k but only bring home $30k after taxes, insurance and other payroll deductions, it’s the $45k number you must state if you are asked for gross income. Net income would be the $30k.
#5 Did you list all of your creditors and debts in the petition?
It’s illegal to try and leave off any debts when you file bankruptcy. Some people may try to hold back a credit card or try and leave out a personal debt to a relative (like if your parents loaned you money). It’s a bad idea to leave any off. Be honest with your lawyer so you can answer yes to this question.
#6 Do you have child support or alimony obligations?
These should already be listed in your petition, but the Trustee will ask to confirm the accuracy of your statements. In addition to asking if you have family court obligations, you may be asked to state the amount and whether you are current on these obligations.
#7 Have you filed all of your income tax returns?
If you neglected to file any past tax returns, this is something you should do prior to filing bankruptcy, even if you can’t afford to pay the taxes owed. Also, if you have unpaid taxes that have been due two years or more, these may be dischargeable in bankruptcy, so definitely don’t leave them out.
#8 Do you owe Homeowner’s Association fees and how much are they?
If you live in a neighborhood or condo where there is an HOA, the Trustee may ask if you have past-due HOA fees and how much your annual or monthly obligation is to the HOA. Again, this is something you should already have told your attorney about, so it should be a simple answer.
#9 Have you given away any property or assets in the last two years?
If you sold a car or other asset for fair value a while back, it should not be an issue. If, however, you sold an asset for less than market value recently, this may be a concern to the court, particularly if the sale was to a related party (such asa friend or family member). If you did dispose of assets, tell the truth.
#10 Have you paid any creditors within the last year?
You may have made payments on credit cards or medical bills until you no longer could afford to, but this is not usually the concern. What the Trustee is looking for is to see if you prioritized one creditor – such as paying off a loan to a family member. This is called a preferential payment and is not okay.
#11 Have there been any omissions or changes that you would like made to your petition?
If anything has changed between the filing date and hearing date, be sure to update your attorney prior to the hearing in case they need to request a modification to your case file. Your attorney may not be able to make any changes prior to the hearing but will tell you to answer yes and explain.
Talk to your attorney and ask questions prior to the hearing
If you are unsure what a question means, you can consult your bankruptcy attorney during the Meeting of Creditors. Your attorney will be there with you while the Trustee asks you questions about the case. Also, if any information has changed or you have other questions, call your attorney prior to the hearing or talk to them at the courthouse before you go into the meeting. Your attorney works for you and is your advocate during the bankruptcy case, so be 100% honest with them to get the best results.
To find out more about how North Carolina bankruptcy can help you, contact the Law Offices of John T. Orcutt for a free consultation. Call +1-919-646-2654 to schedule a free appointment at one of our offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington. Ask about zero-down bankruptcy.