How To Be a Good Bankruptcy Client

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Just as lawyers have duties to their clients and the court, the client will also have duties to the lawyer and the court. In bankruptcy cases, some of these duties are spelled out in the bankruptcy laws. Others are implied from other requirements. Here are some of the duties of a debtor (that’s what we call the person who files a bankruptcy case).

Be honest. Do not hide anything. There is a high likelihood that you will be found out if you do. Lying in connection with a court case is called perjury. If you are found to have lied on your schedules, at your meeting of creditors, in any other papers filed with the court, or any other testimony in court, you can lose your right to a discharge, or lose the discharge if it has already been issued. Learn more about the consequences of lying under oath at Perjury in a Bankruptcy Case.

Provide accurate and complete information. So much information goes into filing a bankruptcy case. You have to identify all your creditors, your assets, your income, your expenses, and information on your financial transactions and dealings over the two years prior to filing bankruptcy. That means you can’t leave off that $500 you owe Uncle Fred (“I don’t want him to know about the bankruptcy”) or the boat you dock at the marina (“After all, who will even know it’s there?”)

Cooperate with your attorney. Your attorney is there to help you. She knows what is needed for a successful case. If she asks for information, provide it promptly. If she needs to speak with you about your case, return the call as soon as possible. Pay your attorney’s fee promptly, too. Do not expect your attorney to carry you along in perpetuity if you cannot or will not pay the fee.

Complete Pre-filing Credit Counseling.  Every debtor must complete a credit counseling session before the case is filed. This can certainly be a chore. After all, by the time you’ve reached the point of talking with an attorney about your financial issues, there isn’t much a credit counselor can do. Studies have borne this out. But still, this remains a requirement in the bankruptcy laws and you must submit to it or you will not be allowed to file a case.

Complete Post-filing Debtor Education. The flip side of the credit counseling requirement is the debtor education (or financial responsibility) course. Every debtor takes this course after filing but before the case can be discharged. If you fail to take the course, you will not receive that for which you have worked so hard in this process - a discharge order.

Provide copies of your tax returns for two years and pay stubs for six months. The pay stubs are used to determine whether you pass the means test for a Chapter 7 or whether you need to file a Chapter 13 payment plan case. The tax returns are required to prove that your tax returns are up to date.

File tax returns during the course of the case. Especially in a Chapter 13 case, which can last up to five years, you must file your tax returns every year or risk having your case dismissed.

File a statement of intention. If you have collateral securing payment of a debt, like a car loan, a home mortgage or any other type of secured debt, you must file a statement of intention with the court indicating what you intend to do about the collateral and the debt: reaffirm, redeem or surrender. You are also responsible for seeing to it that you perform your intention within the time limit, which is usually 30 days after the meeting of creditors.

Attend a meeting of creditors. You are required to attend a meeting of creditors regardless of the chapter under which you file. Meetings for Chapter 7 and for Chapter 13 may look a lot different, but they are both designed to do two things: give creditors a chance to question you about treatment of their debt and about your finances in general and give the debtor a chance to clarify, explain, or add to the information filed in the schedules.

Cooperate with the trustee. The trustee is charged with many duties, including the duty to determine whether you have any assets that she can liquidate (sell) to generate cash to pay creditor claims. You must surrender any nonexempt property if requested by the trustee and you must provide access to your books, records and documents if requested by the trustee. If you fail to provide the trustee with documents or information she needs to do her job and evaluate those assets, you will lose your discharge.

Pay your plan payments in a Chapter 13 case. If you fail to make your payments in a Chapter 13 case, your case will be dismissed. In fact, if you fail to make other types of payments during the course of your case, your case can either be dismissed or you will not receive a discharge. These include alimony and child support, and in some jurisdictions, tax debts, mortgage and car payments.