If you plan to file chapter 7, you can have a completed bankruptcy in as little as five or six months. Some filers, though, are not that lucky. While the below situations are not common with every filer, hiccups along the way do happen, and it's helpful to know what to expect. In addition, understanding the potential hazards might help you prepare to file in a more informed manner. Read below and find out about these problematic situations.
Familiarize Yourself With the Terms
Like all legal matters, bankruptcy has its own language. Here are a few to know:
Trustee — The person presiding over your case. They make decisions about your case and get paid from a portion of your property if any is seized.
Federal bankruptcy code — This is the law governing all bankruptcies, both consumer and other. While bankruptcy is a federal matter, the laws of the filer's state of residency can play a large role too.
Creditors — Anyone who you owe money to, from credit cards to mortgages and auto loans.
Discharge — When a debt is forgiven with a filing.
When problems crop up with your bankruptcy case, it may be referred to as an adversarial action. Most of the below actions are legal matters, and filers are often confronted with a lot of confusing legal wording when apprised of the filings in court. Your attorney will be assisting you in taking care of any issues and getting your bankruptcy case back on track. Be in close communication with your lawyer about any of the below:
When Creditors Object
When you list your debts on the bankruptcy debt matrix, it's with the hope that everything you list will be discharged. Unfortunately, creditors may object to certain issues. One of those goes back to the time you were approved. If you were not honest about your income or other issues when you applied for the card, the creditor may object. Other common objections concern the use of credit cards right before a filing. There are rules about how much you can charge and how much cash you can take on advance in the period right before you file. Often, creditors file objections and appear at the creditor's meeting.
When the Trustee Objects
The trustee has a responsibility to ensure that your bankruptcy paperwork is complete. They may have problems with any area of your documentation and that can hold things up. The trustee may ask for proof of income and more. They may also take a closer look at the filer's property. In some cases, they may physically inspect the property of the filer to verify the values of items listed on the forms. Finally, the trustee can look at past sales or gifting of property going back several months. Naturally, hiding assets can result in charges of fraud.
Speak to your chapter 7 bankruptcy law consultant to find out more.