8/29/2016 H OW DOES THE BANKRUPTCY PROCESS WORK ? Presented by Hon. Colleen A. Brown, U.S. Bankruptcy Judge District of Vermont Conference of the National Paralegal Association ~ Hilton Hotel, Burlington, Vermont ~ October 20, 2016 1 Source of Relief • Bankruptcy relief is found in Title 11 of the United States Code, is therefore a national statute, and applies in the same way in each state in the country. • Bankruptcy Judges preside over bankruptcy cases, and all proceedings, contested matters, litigation generally involving a debtor and a debtor’s property. 2 1
8/29/2016 Trustees • There are “panel” or “case” trustees who oversee the administration of Chapter 7 cases. • Their job is to liquidate assets and disburse those funds to creditors. • They are compensated based upon the amount of money they disburse in the case. 3 The trustee disburses rather than liquidates assets in Chapter 12 & 13. • Chapter 12 and 13 trustees are known as standing trustees and often work as trustees full time, administering all of the Chapter 12/13 cases in their districts. • Standing Trustees are also compensated based upon funds distributed but collect those sums from the debtor’s payments into the plan and are capped at 10% of all such payments. 4 2
8/29/2016 Section 341 Meetings • Every bankruptcy debtor, regardless of the chapter under which he/she filed for relief, must appear at a meeting of creditors, called a section 341 meeting. • There, the trustee examines the debtor under oath to verify the accuracy of the debtor’s schedules, to determine if there are assets to liquidate or causes of action to pursue, and explore questions about whether the debtor filed the bankruptcy case in good faith. 5 Four most common types of bankruptcy cases • Chapter 7: Liquidation • Chapter 13: Adjustment of Debts of Individuals with Regular Income • Chapter 12: Adjustment of Debts of Family Farmer or Fisherman with Regular Annual Income • Chapter 11: Reorganization 6 3
8/29/2016 Pre-Filing Checklist If the debtor owns real property 1. do a title search • review tax bills (to ascertain whether any • property taxes owed and take note of assessed value) obtain copies of any appraisals of the • property review mortgages, if any, and in particular • verify accuracy of information filled on the mortgage form, and verify all mortgages were properly executed and recorded 7 If the debtor owns any vehicles 2. review certificate of title for each vehicle • read loan docs to ensure they are accurate and • if secured verify security interest is properly perfected Scrutinize the information from the debtor to ensure lists of property and debt correspond (e.g., if there is a vehicle and no auto loan, verify vehicle has no loan against it). 8 4
8/29/2016 3. Encourage the debtor to be scrupulously thorough in listing all debts and all property; scrutinize the information from the debtor to ensure the lists of property / assets and debts are internally consistent and add up; and verify the addresses of all creditors. If there are attorneys representing any of the creditors, add the attorneys’ name to the schedules and matrix. Stress how important it is for the debtor to prepare an accurate and reasonable budget. 9 Urge the debtor to get appraisals of significant 4. assets, particularly if none has been done recently and the assessment of that property does not seem accurate to the debtors. • The value of large assets is crucial to many aspects of a bankruptcy case, including choice of exemptions, possible avoidance of judgment liens, vulnerability to relief from stay motions, and plan terms / confirmation. 10 5
8/29/2016 Obtain from the debtor, for the attorney to 5. review: at least 2 years of federal and state tax returns (or a letter stating the debtor need not file returns), at least 2 months of statements for all bank and investment accounts, copies of documents from any lawsuits involving the debtor in the last 6 years, copies of any divorce proceeding documents and/ or documents evidencing an obligation to pay any type of family support or maintenance; 11 receipts / payment history for any public assistance the debtor receives; copies of the debtor’s most recent mortgage statements; copies of at least 2 months’ of pay stubs; proof of any payment the debtor made to a family member within the last year; and proof of any unusually large payment, or “catch- up”/ “back payment” the debtor made to any creditor within the last 3 months. 12 6
8/29/2016 Prepare a statement showing 6. all fees the attorney is charging for the case, all fees the debtor has already paid, and the terms of the engagement of counsel, to record and file with the petition and schedules, pursuant to Bankruptcy Rule 2016. Encourage the debtor to file all outstanding tax 7. returns prior to filing the bankruptcy case. Failure to do so delays bankruptcy case administration and the plan confirmation process. 13 Exemptions are critical and complex: Review the state and federal exemptions 8. available to the debtor in order to assist the attorney in weighing the impact of choosing state vs. federal exemptions, and identifying the assets that might be at risk under each available exemption scheme. 14 7
8/29/2016 Questions? • Your local Bankruptcy Clerk’s Office is a wealth of information: familiarize yourself with their website and get to know them. • Learn how to use PACER. • Sit in on sec 341 meetings and/or court hearings – they are all open to the public. • Consider working with a legal services agency on a pro bono case. • You will learn a lot, have guidance, and help someone in great need. 15 8
HOW DOES THE BANKRUPTCY PROCESS WORK? Presented by Hon. Colleen A. Brown, U.S. Bankruptcy Judge, District of Vermont Conference of the National Paralegal Association ~ October 20, 2016 ~ ~ Hilton Hotel, Burlington, Vermont ~ T ABLE OF C ONTENTS A. I NTRODUCTION .................................................................................................................................... 2 B. T HE P LAYERS ....................................................................................................................................... 3 C. F REQUENTLY U SED B ANKRUPTCY T ERMS ........................................................................................ 5 D. T HE F OUR M OST C OMMON T YPES OF B ANKRUPTCY R ELIEF ......................................................... 8 E. B ANKRUPTCY E LIGIBILITY R EQUIREMENTS ................................................................................... 11 F. ......................................... 11 I NDIGENT D EBTORS , F EE W AIVERS , AND P RO B ONO O PPORTUNITIES G. P ROPERTY OF THE B ANKRUPTCY E STATE AND E XEMPTIONS ....................................................... 13 H. A DMINISTRATION OF B ANKRUPTCY E STATES ................................................................................. 14 I. P REPARING A D EBTOR – AND THE D OCUMENTS – TO F ILE FOR B ANKRUPTCY R ELIEF ............... 15 J. I MPACT OF B ANKRUPTCY ON AN I NDIVIDUAL ’ S C REDIT H ISTORY ............................................... 16 K. I NFORMATION R ESOURCES ............................................................................................................... 16 APPENDICES ........................................................................................................................................... 17 1. D OCUMENT C HECKLIST FOR F ILING A B ANKRUPTCY C ASE .......................................................... 18 2. S OME I MPORTANT P RE -F ILING P REP .............................................................................................. 19 1
Recommend
More recommend
