What to Expect at the Bankruptcy Hearing
The key to a successful bankruptcy hearing is strong preparation. The petition and supporting documents are the foundation of your case; if done correctly, you will be much more likely to have a successful outcome. Therefore, your bankruptcy petition should have been prepared by an experienced bankruptcy attorney.
The bankruptcy petition and supporting documents should have been sent to the bankruptcy trustee immediately after the filing of the bankruptcy petition. The trustee is an attorney that is paid a fee by the bankruptcy court to handle your bankruptcy filing. The trustee will ask you some questions at your hearing. If you require an interpreter, one will be provided for you at no cost by speaker phone. The bankruptcy trustee will also perform any needed investigation and complete his or her report for the bankruptcy court.
On the day of the hearing, dress in business-casual attire. It is suggested that men wear a button-down shirt and pants, not jeans. It is suggested that women wear a dress or shirt and pants other than jeans. It is also suggested that you wear no jewelry other than a wedding band.
Allow yourself enough time to arrive at the hearing a few minutes before your scheduled time. Expect to go through airport-like security when you enter the building. When you arrive in the hearing room, take a seat as close as you can to the front of the room so that you can hear the questions that the bankruptcy trustee is asking people whose cases are handled before yours.
While you are waiting, take out your identification and social security card. When your case is called, you and your attorney will take seats at the table behind which the trustee is sitting. There will be a tape recorder on the table to record the conversation. Everything that is said will be on record. Be sure to speak loud enough to be heard in the recording
Once you take your seat, the first thing you will do is hand your identification and social security card to the trustee. The trustee will then compare the information on those documents with the bankruptcy petition to confirm that they match. If you do not have these documents, the trustee will likely schedule for you to appear on another day.
The trustee will then swear you in, asking if you swear or confirm that the testimony that you will be providing is the truth. When getting sworn in, you will raise your right hand and say “yes” to the trustee’s question. Once you have done this, lower your hand. When answering a question, always tell the truth. If you don’t, you risk much more than financial problems. If it’s discovered that you have lied, you may not only be denied a bankruptcy discharge, but also be charged with a crime.
The trustee will then ask you for your name and address and will then show you your signature on the petition and ask if it is your signature. The trustee will then ask whether the petition includes all of your assets and debts, and he or she will then ask you whether you wish to make any changes. If you had forgotten to include an asset or debt or if you have moved, tell the trustee the details of any changes. If there are any changes, your attorney will likely be required to file an amendment with the court. The trustee may ask you if you read the bankruptcy trustee information sheet, which your attorney should have provided for you to review prior to the hearing.
The bankruptcy hearing serves two main purposes. First, it enables the trustee to determine whether there are any assets that he or she can sell to obtain money for your creditors. The trustee has a vested interest in finding assets, since the trustee gets paid a fee based upon the amount of assets that are found and sold. When you file bankruptcy, there are laws known as exemptions that enable you to keep the most common types of assets. Accordingly, the trustee will be looking for assets that aren’t exempt or that exceed the exemption limits.
The second purpose of the bankruptcy hearing is to provide the trustee the opportunity to determine whether you have committed fraud by filing bankruptcy; for example, if you accrued debts knowing that you couldn’t pay for those debts.
The exact questions asked of you will vary from trustee to trustee. In fact, the trustee may change his or her questions depending on the case. The following are some common questions related to those you are very likely to be asked. Please note that these questions can vary in how they are worded:
Do you own any real estate?
Have you owned real estate in the past 6 years?
Have you ever owned real estate?
If you currently own real estate or if you have owned real estate in the past 6 years, you should have given information about the real estate to your attorney, who would have reported it to the trustee immediately after the filing of the bankruptcy petition. The trustee will then ask you questions about any real estate, including how much is it worth and how much is owed on it.
The bankruptcy trustee will ask if you are suing anyone or have the right to sue anyone. This applies to any type of legal actions that you have brought against another. Typical legal actions occur due to an auto accident, slip-and-fall accident, or medical malpractice. If you are suing anyone or have the right to sue anyone, your attorney should again have provided this information to the trustee immediately after the filing of the bankruptcy petition.
You will be asked if you expect to inherit anything thing in the next 6 months. This question, as all questions, can be asked in different ways. For example, the trustee may ask if you are named in a will or trust.
The bankruptcy trustee will ask you if you have a bank account, and if you do, what is the most money that you have had in any bank account in the past 2 years. If it was a large sum of money, such as more than $5,000, the trustee will ask you what you did with the money. If you don’t have a bank account, the trustee will ask you how you pay your bills. This question can confuse people. An example of a proper response would be, “I pay my bills with money orders.”
The trustee will ask if you have transferred anything of value in the past 6 years. If you have, it is possible for the trustee to bring legal action to get those assets back.
The bankruptcy trustee will ask if you have paid any one creditor more than $600 in the 3 months prior to your filing your bankruptcy petition. If you have paid a creditor a large amount of money on the eve of filing bankruptcy, the trustee can sue to get that money back. This can becomes an issue when someone filing bankruptcy has repaid a loan to a family member or friend on the eve of filing bankruptcy. If this is the case, the trustee may sue the person who received the money to get it back to pay creditors.
The bankruptcy trustee may ask you what caused your financial difficulty. There is no one right answer; any reasonable answer will do. If you have large debts, the trustee may ask the reason for them. The trustee may ask you when you last used your credit cards. The trustee may also ask when you first realized that you had a problem paying your bills. Please note that if you state that you realized you couldn’t pay your bills and continued to use your credit cards or otherwise incur debts, this may be cause to deny you a discharge in bankruptcy due to fraud.
The bankruptcy trustee will ask you questions based on your bankruptcy petition. You don’t need to memorize it, but you should be familiar with its contents.
If the bankruptcy trustee is satisfied with your answers, the trustee will say that the meeting is closed, which means that you are done and may leave. If the trustee has further questions, a second hearing may be scheduled to allow you more time to answer the trustee’s questions or to provide requested documents.
Although bankruptcy can provide you with a great deal of financial and emotional relief, if it is not done correctly you risk much. It is essential that you use the services of an experienced bankruptcy attorney. If you are facing financial difficulty, call us today to schedule a free consultation at (718) 625-0800.