Some Common Questions About the Meeting of Creditors

What do I need to bring?

You will always need to bring your Social Security card and a valid, government-issued photo ID. If you can't find your Social Security card, you can bring an original W2, but not a copy. The Trustee will not hold your meeting without these, so don't forget!

Where are the Meeting of Creditors held?

For Chapter 7 cases in Allegheny County, the meeting will be held on the 7th floor of the Liberty Center in downtown Pittsburgh. 1001 Liberty Avenue, Pittsburgh, PA 15222. For Chapter 7 cases outside Allegheny County, the locations differ. Make sure to verify with your attorney before the meeting.

Chapter 13 Meeting of Creditors are held downtown in the US Steel Building, 32nd floor. 600 Grant St., Pittsburgh, PA 15219.

What should I wear?

There are no formal requirements, but you should at least dress in business casual. No Steelers jerseys!

Am I going in front of a judge? Is this in a court room?

Nope, you will go in front of a trustee, who is an attorney who reviews your case and asks you some simple questions about your filing. The meeting is held in a conference room, not a court room. Don't imagine this as a courtroom drama right out of a television show. It is a simple, straightforward affair.

Will my creditors be there to ask me questions?

Very rarely. The trustee sits in their place. It is rarely worth the creditors effort to attend, as there is very little they can do if your case is properly filed. If they do show up in a Chapter 13, it is usually to make sure there claim is being allowed (claims are what the creditors say you owe).

I will review the questions asked by the trustee several days before the Meeting of Creditors. While this meeting is fairly informal and should not cause anxiety, it is a hearing held under oath. I always tell my clients, as long as you tell the truth and don't hide anything from the trustee, there is nothing to worry about! The meeting is mostly a review of what you have already confirmed and filed, so there shouldn't be any surprises as long as you have been thorough.

Contact us if you have any questions about your Meeting of Creditors.

Don't Transfer Property Before Filing Bankruptcy!

A big mistake people can make before filing bankruptcy is to transfer property to a friend or relative for less than full value before a bankruptcy. This could potentially be viewed as a fraudulent transfer. If you are considering filing a bankruptcy, make sure not to transfer property before speaking with a bankruptcy attorney.

Why is this an issue? Bankruptcy law allows you to exempt or protect personal property when filing. The purpose of the bankruptcy exemptions is to allow a true fresh start by permitting the debtor to keep property necessary to make a living and get back on their feet. However, these exemptions are not unlimited. While the exemptions are sufficient to protect the value of most debtor property, sometimes they do not protect everything.

This is potentially a problem for debtors who own their home outright or owe very little. This is more often the case with older clients who have been paying down their home for decades. Individual debtors may only protect $23,675.00 in equity in their home (joint debtors up to $47,350.00). If your home exceeds these limits, you would need to repay money through a Chapter 13 bankruptcy, and Chapter 7 bankruptcy will no longer be an option.

Some individuals think a way around this is to transfer the property to a friend or family member before filing. The Bankruptcy Court will not allow this. In fact, if you filed a bankruptcy after such a transfer, the Court can actually un-do the transaction. Most Trustees will ask if you have transferred property in the last 4 years before filing, and you are required to answer truthfully under the penalty of perjury. Trustees may also do property searches and look back even further. The bankruptcy petition specifically asks if you have transferred property into a self-settled trust in the last 10 years. In any case, you do not want to attempt to hide such a transfer.

It's safest to avoid all transfers of property in the months (and even years) leading up to a bankruptcy, even small, innocuous transfers. If you have transferred property, it may be transferred back before filing. Or, a Chapter 13 bankruptcy can be filed on the property as if it had never been handed over in the first place. When in doubt, hold on to the property until speaking with a bankruptcy attorney. There are options if property has been transferred, but it could make things difficult.

Contact us to set up a free consultation and discuss how to properly protect your property..

Labor Day

Labor Day may be the unofficial end to summer, but with temperatures pushing into the 80s, it sure doesn't feel that way. It's a great day to relax and forget the purpose of the day (work!).

As a bankruptcy attorney, people often ask me how many of my clients work. The answer? Virtually all of them! Bankruptcy is an option to help hardworking people more than anyone else. Hardworking people have things to lose, and people to protect, and the bankruptcy process will guard both.

The vast majority of my clients are hardworking people who hit one or two common hardships. The most common is medical bills. This country doesn't do a great job of providing reliable health care for working class citizens, and one or two major medical situations with sub-standard health coverage can push anyone into bankruptcy. Fortunately, medical bills are dischargeable in both Chapter 7 and Chapter 13 bankruptcy. With medical bills often reaching in the tens-of-thousands of dollars or more, bankruptcy is often the only option. Otherwise, these bills will stop you from moving on with your life.

Temporary job loss can also result in bankruptcy, and this can happen all too often in a fluid and recovering economy. Bills can pile up fast in a few short months, especially with interest rates on loans and credit cards well in the double digits. Missed mortgage payments can be paid through Chapter 13 bankruptcy, allowing me to even stop sheriff sales. It is a situation I have seen countless times. Someone is laid off for as little as three or four months, unemployment can't cover the mortgage or credit card payments, they go back to work (sometimes for a reduced salary) but it is too late. The bills are beyond control.

Another common scenario leading to bankruptcy for working individuals is divorce and marital separation. Expenses that were once split must now be paid in full. Two salaries become one, and sometimes all of the bills can't be paid. Divorce can also lead to massive legal bills. Living situations that were feasible while married can fall apart quickly with divorce. Divorce is bad enough on its own, but when it destroys your finances, it makes life that much more difficult. Bankruptcy can help.

Labor Day is a great time to relax and unwind. If you are hardworking and facing debt issues, related to the examples above, or caused by some other misfortune, contact us to discuss your options and see if bankruptcy may provide you with some relief. In the meantime, enjoy summer while it lasts!

Does Bankruptcy Have a Debt Limit?

Is it possible to have too much debt to file bankruptcy? Can your creditors object because you owe them an especially large amount of money? It depends on the type of consumer bankruptcy you file, but in the vast majority of the cases, the answer is "no".

It is a reasonable question to ask. Whether you owe $5,000 to a couple of credit cards, or $200,000 in medical bills seems like two greatly varied scenarios that would be treated differently. However, in the vast majority of cases there is no difference, debts large and small get discharged just the same.

So, what are the narrow situations where the debt limit in consumer bankruptcy comes into play? Only in Chapter 13 bankruptcy is there an absolute limit or cap on debts that may be included. As of April 1st, 2016 (the limits are updated periodically, so always check at a later date) the limit on unsecured debts is $394,725, while the limit on secured debts is $1,184,200. Unsecured debts are generally credit cards, medical bills, and personal loans, secured debts are generally mortgages, and car payments (which tend to be larger obligations).

Clearly, the number is quite large and will not affect most bankruptcy filers, except perhaps those with very large mortgages, or high amounts of medical or business debt.

As for Chapter 7 bankruptcy, there is no cap. You may exceed these debt limits. For most debtors, this cap will not be a concern. Even seemingly massive debts can be included in a Chapter 7 bankruptcy. Debt amounts are usually not the issue. It is when, and how, these debts are accrued that may become a problem. If debts are run up through fraud or deliberately large purchases in the months preceding filing, there will be an issue, regardless of the size. 

If you are facing the bankruptcy debt limits, there are some options available. An experienced bankruptcy attorney can help you to classify your debts, or seek other bankruptcy options. Contact us with any questions about your debts, large or small.

Reviewing Your Credit Report for Bankruptcy

The primary reason to file a bankruptcy is to eliminate, or at least restructure, your debts. The best way to find out about these debts in detail is to run a three-source credit report (which I can do in my office). So, it follows that you need to review your credit report closely to make sure it includes all of your debts (which you want to discharge).

A good credit report contains a wealth of information about your credit and finances. It will list creditors, creditor addresses, amounts owed, and debt limits. It will include old debts, debts closed out, and debts transferred. It will include information about your mortgage and your car payment. And, of course, it will include the number that Americans often obsess over... their credit score.

So, what to make of it all? If you are applying for a mortgage or a loan, you should focus on the credit score. It is determined by an algorithm meant to determine your credit-worthiness. Credit score is best left for discussion in another post. My focus today is reviewing your credit score for bankruptcy purposes.

The most important information, from a bankruptcy perspective, on your credit report is the creditor addresses. These address help your attorney serve the proper creditor departments so that your bankruptcy is recognized. The address on most correspondence with creditors is often just a correspondence or collections address. A good credit report includes addresses for legal and bankruptcy departments. This helps assure that your bankruptcy is properly processed by your creditor.

The amount owed is also important information on your credit report, especially when filing a Chapter 13 bankruptcy reorganization. This information helps your attorney estimate how much a repayment will be. The amount my clients believe they owe is often much less than the amount listed on the credit score, as they often do not take interest and penalties into account.

What to look for beyond the addresses and amounts? Medical bills.

Medical bills are often NOT reported to the credit agencies, and therefore do not show up on your credit report. You will want to review the report closely, and if these bills do not appear, gather up statements showing how much you owe towards these medical debts so that your attorney can include them in your petition. Remember... if they're not included, they're not discharged. It's especially worth tracking down these medical bills (all of them) in a Chapter 7. I have seen clients literally finds thousands of dollars in medical bills when I insisted they keep looking. It's worth the time, because if you do not include them, they can attempt to collect after the bankruptcy is discharged.

Also, you will need to inform your attorney of any personal debts, or debts owed to anyone that isn't a finance company, such as attorney fees. These debts will obviously not show up on a credit report. When in doubt... find the bill!

In review... read your credit report by focusing to make sure you have listed all of your creditors, especially medical bills. Second, make sure the amounts look correct, but don't worry too much about this, as your creditors will need to file exact claims if they wish to collect from you anyways.

Review that credit report closely! Make sure everyone is included!