DO'S and DON'TS FOR PERSONS FILING BANKRUPTCY
This is a straightforward list of what you should and should not do if you're contemplating Bankruptcy. It will help answer your questions and enable you to get the most out of the process.
BEFORE HIRING A LAWYERDON'T use a non-attorney Bankruptcy preparer. Non-attorneys are prohibited by law from giving legal advise, which is exactly what all Bankruptcy Debtors sorely need. Because they have no law license to protect, they have no real incentive to give you the level of service that you would receive from a licensed attorney. Because Bankruptcy represents one of the best dollar-for-dollar returns on investment of any type of legal service, you're foolish to try to save a few hundred dollars by hiring someone who is not a lawyer. As is true of many endeavors, YOU GET WHAT YOU PAY FOR.
ASSEMBLE AND ORGANIZE YOUR BILLS: When a Bankruptcy client hands me a grocery sack full of bills, most of the still in the original envelopes, and containing many duplicates, I tend to see red. It is not an attorney's job to sort through a slew of bills, unless you are willing to pay extra for such service.
DON'T CHANGE THE LEGAL STATUS OF ANY OF YOUR PROPERTY! This is the most important advice that can be given to prospective Bankruptcy Debtors. People contemplating Bankruptcy occasionally assume that if they put their cottage, boat, or similar assets in the name of a brother, sister or someone else, they can avoid losing it to the Bankruptcy Trustee. Doing this may constitute Bankruptcy Fraud, a serious federal crime that can not only prevent the offender from obtaining a discharge of debts, but trigger a criminal investigation. When you file for Bankruptcy, there is a lookback period of anywhere from two to six years, and any giving away of property to "insiders" (typically family members) can be set aside by the Trustee, AND cited as a basis for denial of discharge, which means that you will suffer the liquidation and loss of assets that is the downside of Bankruptcy, without the elimination of debts that is the upside. Further, aside from these considerations, any time that you put property in the hands of someone else, whatever the reason, you are at that person's mercy. You may have a falling out, and the recipient of a sham transfer may refuse to deed the property back.
DON'T make "preferential payments" to creditors in advance of Bankruptcy, because these can also be set aside by the Trustee. Maybe you owe money to a parent, sibling, or close friend and don't want that person to go unpaid. The proper way to go about that is to wait until you've gotten your discharge, then you can pay whomever you wish to. But paying it anytime to an "insider" within a year prior to filing only serves to enable the Trustee to sue that insider to recover. Consequently, to make things right with your parent or sibling, you could end up paying them twice!
DON'T go on a spending binge, particularly one that is funded by credit cards. Debts that are incurred while contemplating Bankruptcy may not be dischargeable.
DO maintain careful records of where the money goes, if you come into a small inheritance or other windfall payment. Again, giving money away to your children within a year of filing Bankruptcy exposes them to a lawsuit by the Trustee.
DON'T pass up overtime because you're planning to file Bankruptcy.
WHEN MEETING WITH A LAWYERDO show up on time for the meeting. Many lawyers operate on a tight schedule that can be thrown off when people show up late for appointments.
DON'T bring small children to the appointment with you, unless they are extremely well-behaved. It is impossible for an attorney to concentrate on giving you legal advice when your child is exploring books, knicknacks and other things in the office.
DO bring some means of payment with you to the appointment, namely cash or a check. That doesn't mean that you should feel obligated to hire an attorney with whom you're not comfortable. Every lawyer is different in his or her approach to consultations, but my practice is to ask that people bring a means to make SOME payment to the initial consultation---not necessarily the full fee, but at least $200.00. I have found that people who come to the initial meeting without money to pay aren't really serious and will rarely, if ever, become paying clients.
DON'T expect the lawyer to do your homework for you---unless you are prepared to pay extra. When clients bring back their questionnaires with numerous blank spaces, or information that is clearly inaccurate, they are making the lawyer's job more difficult and delaying the commencement of their case. Accuracy in the schedules is essential, particularly with respect to income and expenses. When a client fills in some even number, such as $35,000, as the amount of their last year's income, it is obvious that they have estimated, rather than taking the extra time to obtain the actual amount.
DO supply the attorney with all of the documentation that he or she is REQUIRED by law to forward to the Trustee. If you don't do that, your meeting with the Trustee may be delayed, and additional charges may apply. It isn't the attorney's responsibility to obtain such items as recorded mortgages, deeds, and bank records. It is the DEBTOR'S responsibility.
DON'T keep any secrets from your attorney, such as pending lawsuits or an inheritance. Usually, the money you obtain from a personal injury suit, for example, or an inheritance may be EXEMPTED (retained by the Debtor rather than turned over to the Trustee), but ONLY if it is disclosed! Whenever a significant asset is hidden, not only are you at risk of losing that asset, but losing your discharge as well. Further, failure to disclose a pending or contemplated lawsuit can jeopardize that case as well. Numerous Bankruptcy Debtors with personal injury cases that they didn't disclose to their attorneys have had such P.I. cases thrown out of court on the grounds of "judicial estoppel," a legal principle that basically means that you can't tell differing stories to different courts.
DO tell your lawyer if you have an aged or ailing parent whose death would trigger a significant inheritance. Such an inheritance could be seized by the Trustee if the triggering death occurs prior to, or up to a year following the initiation of the Bankruptcy. If you've already received an inheritance, let your lawyer know how much you got, how much you have left, and how you spent the portion you no longer have.
DURING AND AFTER YOUR MEETING WITH THE TRUSTEEDO be prepared to go through a screening by U.S. Marshals at the courthouse, and allow sufficient time for that process. The more "junk" you bring along (a big wad of keys, a pocket full of loose change, and other metal or metallic objects), the longer it will take. Leave your cell phone and other unnecessary items in your vehicle, but bring your driver's license and Social Security card along, as the Trustee will need to check them.
DON'T perpetuate any omission from your original Petitions and Schedules, primarily relating to assets, when giving testimony to the Trustee. The Trustee meeting provides Debtors with their last opportunity to correct any mistakes or omissions, such as lawsuits, anticipated tax refunds, and other assets. If you leave the meeting without having corrected your omissions, your ability to do that later is no longer assured.
DO listen to what other Debtors are being asked by their attorneys and the Trustee, as it will prepare you for what you're about to be asked.
DON'T forget to complete the second part of the "Debtor Education" course as soon as possible after your meeting. If you forget to do that, your case is subject to being closed, and a significant filing fee is charged to get it reinstated.