During my first meeting with the debtor, I let the debtor tell his or her story. It is okay to keep the client on track, but I make sure the debtor feels like he or she has told you everything that he or she feels is important regarding his financial and emotional situation.
Then, it is my turn to explain to the debtor what bankruptcy is all about.
A good starting point is a discussion of exemptions: what assets are exempt from the bankrupt estate by state or federal laws. Then, it is easy to transfer the story into a bankruptcy context by describing how the debtor's property is treated in bankruptcy. Next, I discuss the three types of claims in bankruptcy: secured, priority and unsecured. Then, I tell the debtor what his or her options are regarding property encumbered by a security interest: surrender, reaffirm or redeem. Thereafter I explain the significance of priority claims. Finally, I describe "unsecured claims." I usually explain that unsecured claims are all claims other than secured claims and priority claims and include such items as credit card bills, medical bills, deficiency claims, etc.
Next, I discuss the significance of and the importance of the discharge. I tell the debtor that all claims are discharged except: a) secured claims that are reaffirmed, b) certain non-dischargeable debts, and c) claims that are successfully challenged by other parties, such as creditors or the trustee.
Then, I explain other features of the chapter 7 bankruptcy case; such as: preferences, fraudulent transfers, property acquired post-petition that can be included in the debtor's estate.
I make sure the debtor is aware that he or she does not have legal protection until his or her case is filed with the Bankruptcy Court. I tell the debtor that if he or she is filing bankruptcy to stop a foreclosure or repossession of property, it is his or her responsibility to turn in all information and materials and set an appointment to allow his or her case to be filed with the Bankruptcy Court before the foreclosure or repossession takes place.
When meeting with a new client, I make sure that he or she is aware of the following information:
1. You must list all assets. Failure to list any assets may result in federal prosecution.
2. You must list all debts you owe.
3. If you owe child support, alimony, or maintenance, failure to make these payments on time during your bankruptcy will result in your case being dismissed.
4. You must receive a certificate of completion from a credit counseling course before you can file bankruptcy. You must also receive a financial management course before you can receive your discharge.
5. If you owe a debt to the bank where your bank account is, the bank may freeze any funds that are in your account as of the date of filing and apply those funds to your debt.
6. Any inheritance or insurance benefits resulting from someone's death which you are entitled to receive within six (6) months from the date of filing will be property of your bankruptcy estate.
7. Failure to attend your creditor's hearing or other court hearing may result in the Court denying your discharge or dismissing your case.
8. You must list all "future" interest that you own, such as a remainder interest in property (property you receive when someone else dies) or a present interest in a trust.
9. You must list all contingent interest such as "causes of action" or possible lawsuit claims. Consult with your attorney as to how to value such claims.
10. If you operate a business, you must receive permission from the trustee to continue operating the business. If the business is solely owned (not incorporated), the business assets become property of the estate. If the business is incorporated, your stock interest becomes property of the estate.
11. If you do reaffirm a debt, it is mandatory that you remain current on your monthly installment payments. Failure to do so may result in the reaffirmation agreement being denied and the loss of any property securing the debt.
12. Certain debts, including property taxes, income taxes, employee taxes, student loans, debts owed to a former spouse are not dischargeable and must be paid timely. For Chapter 13 cases, the Debtors are responsible for all post-filing taxes, including income and property taxes.
13. Charges made on credit cards in excess of $600.00 within 90 days of filing the bankruptcy and cash advances made in excess of $825 within 70 days of filing the bankruptcy are presumed to be nondischargeable and the creditor may file an objection to such debts being discharged.
14. Bankruptcy can adversely affect your credit rating. It can stay on your credit report for a period of up to 10 years. However, financial institutions or their lending institutions will base their decisions on their individual lending policies.
I give the debtor this list in written form with a place for him or her to sign, indicating an acknowledgment of receiving and understanding the information. I tell him or her that if he or she does not clearly understand the information, he or she needs to consult with me before signing.
I next explain the bankruptcy process. I tell him or her that we will use the worksheet information to prepare his or her schedules and statement of financial affairs. We will set up an appointment to finalize the bankruptcy filing and the meeting may take up to two hours. I tell him or her the significance of the filing of the bankruptcy petition: that it imposes the automatic stay. I tell the debtor that what he or she can expect at the Sec. 341 meeting (or creditors meeting), that the Trustee will announce that creditors and parties have 60 days to file objections to discharge or objections to dischargeability of claims, and the effect of the discharge once and if it is granted.
Finally, I tell the debtor that he or she is not my client until he returns with the completed worksheet and the retainer. Until then, he or she has no obligation to me nor I to him or her.
I also tell the debtor that he or she must deliver to my office the completed worksheet which I would provide, plus all documents requested with that worksheet, plus the attorney's fees and filing fee before the next scheduled appointment. He or she will meet with my legal assistant who will make sure that the debtor has delivered all the appropriate information. My legal assistant will use the worksheet and related documents to prepare the bankruptcy documents. My legal assistant will also arrange a subsequent appointment with the debtor for him or her to work with me on finishing the preparation of the petition and other bankruptcy documents.