Attend the Meeting of Creditors with a Bankruptcy Attorney in San Diego

People looking for help from a trusted bankruptcy attorney in San Diego often come to our offices extremely anxious, fearing the ensuing process. Our clients often see the hearing as going to court, which only adds to the panic. To make matters worse, as nothing is done to debunk it, this myth is constantly perpetuated. The hearing conducted by a bankruptcy trustee is not the same as going to court, and therefore is nothing to be ashamed or terrified about.

The meeting of creditors or in legal language known as a “341 hearing” is meant to give the trustee a chance to ask you a couple of questions and verify under oath that every piece of information you’ve disclosed regarding the case is valid. This includes everything you’ve disclosed via petitions, schedules and various other documents.

Knowing how this meeting typically looks like and how to prepare for it will help you with your case, which is why our experts decided to cover the basics of this process.

Who Will Attend?

In most cases, the only people at the hearing will be the trustee, your bankruptcy attorney and you. A lot of clients have expressed their concerns that the creditors will attend the meeting and fear being intimidated by them. And while creditors have the right to attend such a meeting and ask questions, this is usually not the case. As you can imagine, the creditors have a tight schedule and the chances they will have the time to attend such a meeting are very slim. Simply put, time is money and they do not wish to waste any.

Even if the creditors do show up, an experienced bankruptcy attorney will make sure that they do not step over the line and will defend you against any inappropriate actions or questions on their side. Sometimes a United States Trustee representative could show up and ask you some questions, which you should answer in the same manner you would answer the appointed trustee’s questions.

What to Expect From the Meeting

For starters, the trustee will ask to see your Social Security card and your driver’s license. Then the trustee will swear you in. After that, they will ask a couple of questions to verify the information you’ve previously provided. Bear in mind that a trustee is not the prosecution and their purpose is not to undermine you.

With this in mind, asking you about something does not necessarily mean that something is wrong. For example, if they ask you to verify the salary amount you’ve listed that does not mean they are indicating that you are lying about your income. Rather than that, a trustee asks these questions simply to confirm the information given. And if you don’t understand the question or fear you might be misinterpreted, your bankruptcy lawyer will be there to help you.

Naturally, if some of the information had changed in the meantime, it is important to let your attorney know beforehand.

How to Prepare for the Meeting

After you file for Chapter 7 or Chapter 13 bankruptcy, the meeting of creditors will be scheduled in the next couple of weeks. And while this hearing is not a college exam, there are still some things you need to prepare in order to ensure that the meeting goes smoothly. First of all, you and your bankruptcy attorney should review the questions the trustee is likely to ask. An experienced bankruptcy lawyer already knows the most common questions the trustee asks, and can help you prepare your answers.

Furthermore, you should present your attorney with the updated versions of the required documents, so that your attorney is not caught off guard by the trustee in case something had changed in the meantime. Together with your lawyer, review the schedules, petitions, financial statements and any other documents. If you are filing for a Chapter 13 bankruptcy make sure you review your repayment plan too.

How Bankruptcy Affects Taxation

When weighing the pros and cons of bankruptcy, many often forget to ask about the relationship between bankruptcy and taxes. There are several things you should ask about how bankruptcy and taxes interact if you are considering filing for bankruptcy: are there any consequences, what are they, and is the timing a factor. Luckily, the experts at the leading San Diego bankruptcy lawyer group explained the basics of how bankruptcy and taxes relate.

Chapter 7 Bankruptcy

When filing for Chapter 7 bankruptcy, two estates are created: one individual and one related to your bankruptcy case. The bankruptcy estate is most commonly handled by an appointed trustee. Each of these estates is treated separately when it comes to taxing.

What this means is that you can file a tax return only for the individual estate. This includes income, deductions and credit for the individual estate and not for the bankruptcy estate. In turn, these are managed by the trustee, who files the tax return independently. The remaining assets are returned without any tax consequences after the case has been closed.

The IRS can file a proof of claim for income taxes as far due as three years from the date you file for bankruptcy, but any tax claims older than that are removed in the case of Chapter 7 bankruptcy. Afterwards the proof of claim is paid in assets that are left after the other creditors are paid.

Chapter 13 Bankruptcy

With Chapter 13 bankruptcy there are no separate taxable estates. The most likely scenario is that you will end up providing tax returns to a trustee as a result of the repayment plan. These refunds will in turn be used to pay creditors. You might also be charged with unpaid income taxes and will have to settle them according to the repayment plan in the next three to five years.  In case you excluded discharged debt from the income, the tax attributes are charged from your personal tax return. The trustee can then decide whether to use the tax return to pay the creditors or allow you to keep it.

Taxes and Debt after the Bankruptcy Case

Even after filing for either chapter 7 or 13 bankruptcy you will still be obligated to settle taxes and any debts acquired after the bankruptcy proceedings. Neither the taxes nor debts in this case are protected by an automatic stay as they were not disclosed in the filing to begin with. The automatic stay covers the collection by creditors that were involved in the process from the beginning.

Any debts discharged during bankruptcy are not considered taxable income. However, you must file for bankruptcy before receiving Form 1099-C, or the debt will be considered taxable income unless there’s an exclusion or exception referring to that debt.

Seek expert San Diego bankruptcy lawyer advice

If you are still uncertain how bankruptcy and taxes intertwine, you should probably hire a respectable bankruptcy attorney and follow their expert advice on the subject. It’s important to be completely familiar with how taxation works after bankruptcy in order to avoid mistakes that may cost you in the future. Furthermore, make sure you keep your tax records and allow your attorney to go through them. If you have any questions about taxation relating to chapter 7 or chapter 13 bankruptcy, contact us for a free, no-obligation consultation.

How Does Filing for Bankruptcy Affect Your Rent?

People looking for a professional bankruptcy attorney in San Diego are worried about this particular thing: what happens to tenants and the rent they pay after they’ve filed for bankruptcy? This question interests both the panicking occupants who are not sure if they will be able to keep paying for their rent or end up evicted, and from worried landlords who fear they will never be able to collect their due payments. Both parties should be well-informed in order to separate fact from fiction and avoid any serious repercussions, especially as new financial crises lurk around the corner.

Talk It Out

The first step both parties should take in the event a tenant files for bankruptcy is sitting down and having a talk about their options. Some landlords may be willing to develop a payment plan or accept half of the rent amount owned, while others may not be that open to negotiations. Many landlords use the rents collected to pay their own mortgage and cannot afford to support a bankrupt tenant. If you are a tenant filing for bankruptcy, the worst thing you can do is to avoid the landlord, similar to how you shouldn’t avoid the creditor. Maybe the landlord will understand your situation and offer to take a partial amount or accept late payments. In this case, make sure you get a written agreement and a receipt, as you might need them down the road.

Review the Agreement

Reviewing the lease agreement is imperative to tenants filing for bankruptcy. Tenants will need to review their obligations to the landlord as agreed upon in the document. This includes the amount they need to pay each month and the date the rent is due. It also includes the preferred payment method and the terms under which the landlord can increase the rent amount. Finally, they should find out if there are any fees for late rents and the terms and conditions of cancelling the agreement.

Bankruptcy and Rent

The law states that landlords are not allowed to terminate the lease or evict tenants after they’ve filed for bankruptcy. However, landlords can seek compensation for automatic stay but the relief won’t be immediate unless the tenants did not satisfy their lease obligations. Tenants can occupy the leased apartment up to 60 days (or more if the court allows an extension) before they decide whether they want to assign the lease to another party or accept the lease. In the latter case, the tenants are obligated to fulfill their financial obligations to the landlord in full.

If the tenant does not pay their rent on the first date after filing for bankruptcy, the landlord can address the bankruptcy court and seek payment. Tenants filing for bankruptcy are obligated to pay the rent and other contractual obligations, such as taxes, common maintenance bills and insurances. The most common problem landlords face is tenants filing for bankruptcy in between their due dates, meaning they only have to cover the rent for the month following the bankruptcy procedure. If the tenants cannot afford to pay their due rents, the landlord can move for eviction according to the lease agreement. Many tenants try and fight eviction, but this can lead to more serious complications for the tenant depending on their defense.

Consult an Expert Bankruptcy Attorney San Diego

Whether you are a tenant filing for bankruptcy or a landlord trying to collect the due expenses, contact the BK Lawyers, the respected San Diego bankruptcy lawyer group to review your options and obtain legal advice with no additional obligations. We promise informative, affordable and accessible service to all clients and promise the best results through full cooperation during the process.