Every meeting with a Seattle bankruptcy attorney or lawyer should include an explanation of both the preparation process leading up to filing, as well as the requirements and steps you must take after filing. Each attorney, firm, or office may have a different procedure leading up to filing. However, one thing all of these procedures should have in common is to make sure the actual requirements for filing are met before filing, and that documentation is provided for the requirements of a bankruptcy discharge after filing.
Categorically, procedures fall into two categories; pre-filing procedures and post-filing procedures. For a Chapter 7 bankruptcy, most of the work occurs pre-filing. For a Chapter 13, the amount of work for the client is similar to a Chapter 7 but typically involves a lot more work in the post-filing steps.
Pre-filing steps include the following:
Engagement: Unless you plan on filing a bankruptcy petition yourself without the assistance of an attorney, the first step is to engage an attorney. While we at Johnson Legal Group don’t advise filing without an attorney, and don’t suggest using a non-attorney preparer, it is an option for some. Engagement usually involves either an email or phone call to the office of one or more attorneys you have researched or been referred to.
Initial Consultation: The next step is your initial consultation. Consultations can happen almost immediately over the phone or in person. Neither is really better than the other, however meeting in person does allow you to get to know the attorney you might be hiring, guage his interest in your case vs your money, and provides a more comfortable and intimate setting to over your debt situation. Initial consultations will cover your overall debts, particular types of debts that are treated special by the law, your asset and income level, and suggestions as to whether debt negotiation/settlement, Chapter 7 or Chapter 13 seems more viable.
Contracting: The next step is signing your attorney’s engagement agreement and fee agreement. This typically happens at the end of the initial consultation if you decide to pursue a bankruptcy or debt settlement with the attorney. In some instances, the forms are ready to go and you can sign right away. The attorney or an assistant will make copies, and should always keep a copy for your own records.
Data Collection: After signing, most attorneys will send you hope with a series of information forms to fill out which cover information needed to prepare the bankruptcy petition. Forms range from seven or eight pages up to thirty or more. Typically more skilled attorneys will have larger forms. However, these forms don’t actually take that long to fill out. Many of the questions rarely apply to most clients. In addition, the forms should ask you to collect your last six months of pay stubs, most recent bank statements, last two years of tax returns, and the latest copies of all bills or debts you have.
Credit Counseling Class: Your next step in the process is to take a credit counseling course. Credit counseling courses are required under the bankruptcy code and are required to be taken before filing. In some jurisdictions, this rule is true in theory but isn’t enforced with extreme regularity. However, its good practice to get this done before . Credit counseling classes can be taken online, over the phone, or in person. Providers can usually be obtained through your attorney who may know who the cheapest providers are. The class takes between one and two hours, and costs between $10 and $70 depending on who you select. If you cannot afford the class, providers are supposed to provide this service free of charge.
Petition Preparation: Once all your documents are in, along with whatever payment you have negotiated, your attorney should begin preparing your bankruptcy petition, and if he has not done so already, will typically download your credit report into filing software during this stage. After doing the initial preparation based on the information provided, the attorney may email the client to clarify certain information or to obtain clarification on information that is incomplete, doesn’t seem to make sense, or requires specific information. If you are doing a Chapter 13, the attorney will show you the anticipated payment amount based on the income and cost statements you provided.
Client Review: Reviews by the client can be done in person or over the phone. Technically this should be done in person as most jurisdictions require a “wet” signature, or an actual handwritten signature. Others permit electronic signatures. In the Seattle area, electronic signatures are typically used even though the local rules technically require a wet signature.
Filing: Once the petition is confirmed by the client and all requirements are in, the attorney will then file the case electronically. The process is usually out of the eye of the client and can take a few minutes if an automated software is being used, or as much as a half an hour of the attorney is “old school” and inputs all of the information manually. After filing, the attorney pays the appropriate filing fee, files the means test form, social security statement, creditors matrix and credit counseling certificate separately.
After filing your bankruptcy petition, there are a few more steps to take before you will receive your discharge. A Chapter 7 case will take fewer steps and far fewer time than a Chapter 13. If approved, a Chapter 13 bankruptcy will take between three and five years to conclude, and should always be filed with an attorney.
Financial Management Class/Certificate: Soon after filing your bankruptcy in either Chapter, you will need to sign up for, and complete, a financial management course. This takes approximately two hours and covers budgeting and money management after a bankruptcy discharge has been granted. The class essentially prepares you for life after bankruptcy. After completion, the course provider or you will have to deliver the completion certificate to your attorney, who will then file the certificate with the court.
4002 Document Submission: At least one to two weeks before your 341 meeting (read below), you will need to submit what in Seattle bankruptcy are called 4002 documents. Other jurisdictions may call these documents something else, but they all essentially require the same information. You must provide (1) bank statements showing your balance on the day you filed (2) most recent tax return (3) sixty days worth of pay stubs prior to filing, and (4) a declaration signed by the debtor stating the documents are true and correct copies – under the penalty of perjury.
341 Client Preparation: Prior to your 341 hearing, your attorney should prepare you by either telling you or emailing you what to expect and the steps that you’ll be taking leading up to the 341 meeting. Typically an attorney will then go over what to expect in person before the meeting. This conversation and/or email should (1) instructions to bring a photo ID and proof of social security (2) to read the Bankruptcy Information Sheet which is a requirement in the Western District of Washington in Seattle, and may not be the same in other jurisdictions (3) a list of questions that will likely be asked (4) most importantly, the obvious where and when your 341 hearing will be held.
If you or a family member has particular needs, these should be addressed well in advance. If there is a good reason why the time for the meeting cannot be met, an attorney can petition to have the meeting moved. If you or a loved one needs a translator, the trustee can provide a translator telephonically at your hearing.
341 Meeting of Creditors: The length and complexity of the 341 meeting depends on (1) whether any creditors show up (2) what Chapter of bankruptcy you filed, and (3) what order you are called in. For Chapter 7s, the 341 is usually very quick and unless the trustee is particularly chatty, usually take less than 5 minutes per person. Chapter 13s will often take quite a bit longer, as the trustee will ask specific questions about assets, income, and expenses.
Rarely creditors show up, but it does happen. In Chapter 13 cases its more common in cases where back taxes are owed, an IRS representative may show up. When private creditors show up, usually everyone there is in for an awkward speech or presentation by a creditor who doesn’t know what they are doing. In those cases, answer any questions that might be asked but your attorney should be objecting anytime the creditor presents statements for the record. The 341 meeting is meant for questions, not moral speeches.
Proposed Plan Objections: (Chapter 13 only) Before and after the 341 meeting, creditors and/or the trustee may file objections to the plan. The objections may be over a number of things, including the value of any home, technical mistakes in the plan, failure to comply with various plan requirements, and so on. Typically an attorney can correct these objections very quickly. Other times there is a major flaw in the plan which cannot be corrected and needs to be addressed more fully. Common flaws are failure to properly pay back all mortgage arrears during a plan, objections to lien stripping inherent in the plan, failure to pay back tax arrears, or calculations in the reasonable expenses are too high.
Plan Confirmations Hearing: (Chapter 13 only) At the plan confirmation hearing, either your plan will be approved by a judge or not approved. Hopefully by the confirmation hearing all the objections are dealt with and the judge will simply sign off on the plan and everything can move forward. If there are outstanding objections, then the judge will decide whether the plan should be confirmed or not. Not all plans are confirmed, as there are numerous requirements that need to be met before a plan can be approved.
Initial Plan Payment: (Chapter 13 only) Within thirty days of the proposed plan being filed, the initial payment must be made to the trustee. If an automatic withdrawal from your paycheck is arranged, then this will be done automatically. If the plan payment requires direct payment from the creditor, then this will need to be mailed to the trustee
Payment Period: (Chapter 13 Only) After confirmation, your plan payments will continue for the plan duration; either 3 or 5 years, or in cases where you pay back 100% of your creditors, less.
Discharge: For a Chapter 7, roughly 90 days after your 341 hearing, you will receive your discharge and notice should be mailed to you. For a Chapter 13, after all plan payments are made you should receive your discharge along with a final accounting. Once you receive your discharge, you should be done with your bankruptcy filing and can breathe a sigh of relief.
With your discharge… you’re bankruptcy is done and you are free to live life post bankruptcy. After your discharge is completed, you can reopen the bankruptcy to include unlisted creditors you might have found, list assets you didn’t realize you had, and the like. Otherwise, you are debt free; excluding the non-dischargeable debts of course. Where bankruptcy gets technical is on preparing the filing and amending the filing afterwards, and for those two reasons alone, its a good idea to always use an attorney. Attorneys who do bankruptcy can usually file these cases quickly and very easily compared to a client the first time. Its worth the money, and its worth spending a little more on a quality attorney over a bankruptcy mill.