Who Else Is Involved Besides Your Bankruptcy Lawyer?

The bankruptcy process has many players — from the debtor to the debtor’s creditors. There are many other players that oversee the bankruptcy process including your debt collection lawyer, the bankruptcy trustee, the bankruptcy administrator, the clerk of court and potentially an auditor. The bankruptcy judge is the federal official with decision making authority in bankruptcy cases. In appropriate cases there is also the ability to appeal the decisions of the bankruptcy court to a higher court, including the United States District Court, United States Court of Appeals, and finally the United States Supreme Court. Let our law firm and attorney in Raleigh, NC guide you through all the ins and outs of Chapter 7 and Chapter 13 bankruptcy. Call us today learn more!

Your Chapter 7 Law Firm

If you are thinking about filing for Chapter 7 in Raleigh, NC, consult with our law firm and debt collection attorney William. Before filing, he will educate you on the risks and benefits of bankruptcy, planning issues, timing of the case, your responsibilities in the court, and gathering information necessary to file. If with his assistance, you have determined Chapter 7 is the best move for your situation, William will help you begin preparing.

 

After filing, a Chapter 7 law firm will assist with:

 

  • Submitting Required Supporting Documents to the Court, Trustee, Bankruptcy Administrator and Other Parties in Interest;
  • Submission of Certificates Concerning Credit Counseling and Financial Education;
  • Representation at the Section 341 Meeting of Creditors;
  • Representation at Section 2004 Examination, If Required;
  • Representation in Connection with Any Audit, If Required;
  • Representation Concerning Negotiation of Reaffirmation Agreements;
  • Preparation and Prosecution of Any Motions to Redeem;
  • Responding to Creditor Inquiries;
  • Preparation and Filing of Any Required Amendments;
  • Preparation and Prosecution of Any Motions to Compel Abandonment;
  • Preparation and Prosecution of Any Motions to Avoid Judicial Liens;
  • Review of and Objecting to Claims, If Necessary;
  • Preparation of Filing of Proofs of Claim, If Advisable;
  • Defense of Dischargeability Actions;
  • Defense Against Motions to Deny Debtor’s Discharge;
  • Preparation and Prosecution of Any Motions to Reopen Case;

Your Chapter 13 Attorney

Similar to Chapter 7, a Chapter 13 debtor’s attorney represents the debtor in the bankruptcy case and helps them prepare the proper documents to file. Planning may take more time for Chapter 13 since it involves creating a detailed repayment plan. 

 

After filing for Chapter 13 bankruptcy, attorney William can assist with:

 

  • Preparation and Prosecution of Any Motions to Extend or Impose the Automatic Stay (For Repeat Bankruptcy Filings);
  • Responding to and Defending Against Motions to Dismiss;
  • Review of List of Claims Filed;
  • Responding to and Defending Against Motions for Relief from Stay;
  • Responding to Any Objections to Confirmation of Chapter 13 Plans;
  • Preparation and Prosecution of Any Motions to Value Collateral and Avoid Mortgages;
  • Preparation and Prosecution of Any Motions to Substitute Collateral;
  • Preparation and Prosecution of Any Motions to Sell Property;
  • Preparation and Prosecution of Any Motions to Purchase Property;
  • Preparation and Prosecution of Any Motions to Incur Debt;
  • Handling Insurance Inquires;
  • Preparation and Prosecution of Any Motions to Set Aside Dismissal of Case;
  • Preparation and Prosecution of Any Motions for Hardship Discharge.

While the above services are not required in all cases, the list is meant to demonstrate the importance of selecting experienced counsel. William has practiced as a debt collection lawyer in Raleigh, NC for decades now and has filed thousands of cases under chapter 7 and 13.

The Debtor

The Debtor is the person or entity that is the subject of a bankruptcy case. It is important to keep in mind that a person or entity files bankruptcy — you do not file bankruptcy against a particular debt. All liabilities and all assets are involved in the bankruptcy proceeding. It is the attorney’s role to explain to their clients how bankruptcy will impact all of their various assets and liabilities.

 

Section 109 of the Bankruptcy Code details who can be a debtor under the various bankruptcy chapters. An individual can be a Debtor in Chapters 7, 11, 12 and 13. As a practical matter, however, most individuals file bankruptcy under either Chapter 7 or Chapter 13.

Creditors

A Creditor is the person or organization to whom the Debtor owes money or has some other form of legal obligation to. Creditors can be divided into three general categories: Secured Creditors, Priority Creditors and General Unsecured Creditors. Lessors are also a unique form of Creditor which will be discussed separately below.

 

General Unsecured Creditors: hold claims that are not secured by property (collateral, such as a house or car) and are not entitled to priority (or special) treatment under the Bankruptcy Code. As such, they are afforded the least favorable treatment in a bankruptcy case and their claims are typically discharged, receiving little if any compensation for such claims. Examples include credit card companies, older tax claims, medical providers and payday loan companies.

 

Priority Unsecured Creditors: hold claims that are entitled to special or priority treatment under the Bankruptcy Code. Section 507 of the Bankruptcy Code ten (10) types of unsecured claims that are entitled to priority treatment. Examples of priority claims affecting individuals are: Child support and alimony claims (referred to in the Bankruptcy Code as “Domestic Support Obligations”); recent income tax claims, recent property tax claims and all withholding and sales taxes. Priority claims must be paid in full before unsecured creditors receive any distribution in the bankruptcy case.

 

Secured Creditors: hold claims that are secured by property of the Debtor. Generally, if you are “making payments” on something, the creditor is secured by the item you are making payments on. Examples would include your mortgage company, car finance company, jewelry store and furniture store. If you default on your payments, the creditor can recover and sell the property, and sue you for the balance outstanding after the property is liquidated. The deficiency owed after the property is sold is unsecured.

 

Less obvious type of secured creditors could be your bank or credit union (they would have the right of setoff against funds in your checking or savings accounts); a creditor that has a judgement against you (may be secured by any real estate you own); some credit cards issued by stores you may shop at (such as “Best Buy,” or a furniture store) may have a lien on the property you purchased from them; and finally some finance companies that may have required you to “list” personal property that you own.

 

The threat of a secured creditor to foreclose or repossess their collateral (your home or your only means to get to work) is a main reason people begin looking into whether bankruptcy may be right for them. Bankruptcy is a Federal right which allows you to keep property even if you are behind on payments and the creditor will no longer work with you.

The Bankruptcy Trustee

The trustee is a lawyer, often in private practice himself, but acting in the capacity of a bankruptcy trustee he is vested with certain statutory powers and acts on behalf of the bankruptcy estate (mainly for the benefit of the unsecured creditors as a group).

The trustee assumes legal control over all of the debtor’s property, which is referred to as “property of the estate.” The trustee, as the representative of your bankruptcy estate generally succeeds to all your property interests. In most cases, debtors are unaware of this fact since they normally remain in possession of their property during the administration of the case and their property legally revests when the case is closed, or upon confirmation of a plan in chapter 13.  However, it is important to note that while a bankruptcy case is pending a debtor has no authority, absent the trustee’s consent or court approval, to sell or give away any assets;

The trustee’s role varies somewhat depending whether the case is a chapter 7 or chapter 13.

 

In general, the Trustee:

 

  • Makes certain that the Bankruptcy Laws are complied with;
  • Makes certain that all property interests have been fully disclosed;
  • Makes certain that all liabilities (debts) have been fully disclosed;
  • Makes certain that any pre-bankruptcy transfers have been fully disclosed;
  • Presides over the 341 Meeting of Creditors;
  • Questions the Debtor at the 341 Meeting of Creditors;
  • Reviews the various schedules and statements filed in the case;
  • Advises Debtors of their responsibilities in order to obtain a discharge;
  • Investigates public sources of information to verify the accuracy of the schedules;
  • Assumes legal control over all of the Debtor’s property;
  • Objects to the Debtor’s exemptions should he believe they are improper;

In Chapter 7 Cases, the Trustee:

 

  • May seek to sell property of the estate;
  • May stand in a Debtor’s shoes and settle any pending or potential lawsuits (subject to Court approval);
  • May seek to recover preferential transfers and payments, from third parties;
  • May seek to recover fraudulent transfers;
  • May seek to collect rents on property you may own, but rent out;
  • May seek to recover unauthorized post-petition transfers;
  • May seek to deny a Debtor’s discharge;
  • Distributes any funds realized during his administration of the Estate according to the priorities set forth in the Bankruptcy Code;
  • May seek to revoke a discharge in appropriate circumstances.

In Chapter 13 Cases, the Trustee:

 

  • Reviews your proposed chapter 13 plan;
  • May oppose confirmation of the Debtor’s proposed plan, if he believes it fails to meet the requirements for confirmation;
  • Reviews the Debtor’s budget to make certain the plan is feasible (i.e., it appears that the Debtor can make the proposed plan payments).
  • Acts as a disbursing agent. He receives the Debtor’s payments each month and disburses the payments according to the terms of the Debtor’s Chapter 13 Plan.
  • Continues to monitor the case to make certain payments are being made;
  • Monitors the case to make certain the plan remains feasible;
  • Takes positions on any motions that the Debtor or other parties in interest may file.
  • Files a Final Report after all payments have been made and disbursed.

The Bankruptcy Administrator

The Bankruptcy Administrator is an officer of the judiciary serving in the States of North Carolina and Alabama (in all other states the functions of the Bankruptcy Administrator are the responsibility of the United States Trustee, an officer of the Justice Department). The Bankruptcy Administrator supervises may aspects of the Bankruptcy Case, including Trustees, the Estate, Fee Applications. After 2005 the Bankruptcy Administrator’s office has primary responsibility in chapter 7 cases to review the Bankruptcy Filing to make certain the filing is not an abuse of the bankruptcy system by carefully reviewing and verifying the financial information submitted to the Court by the Debtor and determining if the Debtor has sufficient income to pay his or her debts. If that determination is made, the Bankruptcy Administrator will file a statement of presumed abuse, which gives notice to a debtor’s creditors that the chapter 7 filing may be an abuse of the bankruptcy system.  Within 30 days of the filing of the notice of presumed abuse, the Bankruptcy Administrator may file a motion to dismiss the chapter 7, or alternately notify the creditors that after further investigation it has determined the chapter 7 filing is not abusive.  A debtor faced with a motion to dismiss may consider converting the case to a chapter 13 case, if the Bankruptcy Administrator’s position has merit.

The Bankruptcy Judge

The Bankruptcy Judge is the Federal judicial officer with decision making authority in bankruptcy cases. The bankruptcy court and its judges are created under Article I of the United States Constitution. Bankruptcy is a Federal, not a State, process.

 

The United States Bankruptcy Courts are units of the Federal District Court, which has original and exclusive jurisdiction over bankruptcy cases. The District Courts delegate initial decision-making authority to the bankruptcy courts generally through “standing orders of reference.”

 

Unlike United States District Court Judges, who serve for life, Bankruptcy Judges are appointed for a term of 14 years.

 

Appeals from decisions of the Bankruptcy Court are generally first appealed to the Federal District Court which referred the case to the Bankruptcy Court through the standing order of reference.

The Clerk of Court

The Clerk of the Bankruptcy Court is appointed by the Judges of the Bankruptcy Court and is the custodian of the court’s records. The Clerk’s Office is responsible for receiving filings, collecting fees and scheduling hearings.

The Auditor

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) provided for the audit of one of every 250 cases filed by individuals under chapter 7 or chapter 13 to verify the completeness and accuracy of the petition, schedules and other information submitted in the bankruptcy process. The Bankruptcy Administrator is responsible for selecting cases for audit. If a case is selected for audit an independent public accounting firm is selected to review bank statements, tax returns, pay advises, and the bankruptcy petition, schedules and statements and other relevant material.

 

If there is an error in the paperwork the audit firm may submit a report to the court of the finding of a material misstatement. It is up to the Bankruptcy Administrator, United States Attorney General’s Office and the Bankruptcy Court to determine the appropriate action upon a find of material misstatement by the audit firm. Complete disclosure, cooperation and honesty are a requirement to obtain a discharge, however, with current federal budget constraints the number of audits have continued to decline but will likely increase as funds become available.

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The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. Berggren Law Offices, PLLC looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and Berggren Law Offices, PLLC.

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We are bankruptcy attorneys assisting clients file for bankruptcy relief under the Bankruptcy Code.
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