Individuals who will benefit most from bankruptcy are often the last to actually file. They fear never being able to obtain credit or purchase a home again. For some, the presumed embarrassment that will come as a result of going through the process is enough to keep them from making one of the most beneficial financial decisions of their lives’.
These are natural feelings and fears, but they share the same premise: the unknown. Fear of the unknown often keeps us from moving forward, as there is comfort in remaining in the current situation, even if that means receiving relentless debt collection calls and living paycheck to paycheck. With knowledge comes power, which is why we took the time to detail the role of everyone involved in your bankruptcy. Allow this information to help ease your anxiety and prepare you for the bankruptcy filing process.
The debtor is the individual filing for bankruptcy who has the primary responsibility of providing the court-appointed trustee with accurate financial documentation in a timely fashion. Debtors pursue bankruptcy as a result of various factors. The top ten reasons why individuals file bankruptcy are:
- Medical bills
- Credit card debt
- Student loans
- Reduced income
- Utility payments
- Job loss
- Unexpected expenses
Whether it be one of these factors or a combination of two or more, bankruptcy is one of the most efficient ways of achieving debt relief. Decades ago, individuals pursuing bankruptcy we’re recognized as “the bankrupt,” but the updated term is more widely accepted and less judgemental.
The Bankruptcy Trustee
When an individual files for bankruptcy, a bankruptcy estate is born. It is a separate legal entity and comprises of the debtor’s property but is in no way possessed by the debtor. The bankruptcy trustee is responsible for managing the estate and performing necessary legal duties. The court assigns the bankruptcy trustee to particular cases as responsibilities often vary.
In Chapter 7 bankruptcy, the trustee is responsible for:
- Gathering the debtor’s property
- Selling the property of the bankruptcy estate
- Challenging creditors’ claims when necessary
- Distributing proceeds to creditors
- Objecting to bankruptcy discharge when necessary
In Chapter 13 bankruptcy, the trustee is responsible for:
- Reviewing the repayment plan suggested by the debtor
- Making objections to the plan when necessary
- Collecting the agreed-upon payments from the debtor per the repayment plan
- Distributing payment to creditors
The most significant difference between the two trustees is that the Chapter 13 trustee will be continuously involved in your case as he or she will receive regular payments from you. Conversely, the Chapter 7 trustee will only determine that status of your assets at the beginning of the proceedings and only become further involved if he or she identifies nonexempt assets.
The U.S. Trustee
The U.S Trustee is someone you’ll likely never see or have any type of interaction with. The individual in this position is responsible for overseeing the actions of the bankruptcy trustee.
The U.S. Department of Justice explains that the U.S. Trustee Program “… monitors the conduct of bankruptcy parties and private estate trustees, oversees related administrative functions, and acts to ensure compliance with applicable laws and procedures.” They also keep an eye out for bankruptcy fraud and abuse and address it accordingly.
The individuals or businesses you owe money to are the creditors in bankruptcy. The amount owed is usually definite, as accounts like credit card debt and medical bills have a specific numeric value. There are some cases where individuals owe an unliquidated debt to a creditor, meaning that the total amount owed is not definite. Compensation for personal injury damages from car accidents is a key example of an unliquidated debt, but they can be disputed when factors like which party is at-fault is still in question.
It is also essential to know that only the creditors present before you filed for bankruptcy can be included in the bankruptcy process. If you were to open a new line of credit or somehow become aware of a foreign creditor after the process has begun, they would not be able to be discharged in your current bankruptcy.
The Debtor’s Lawyer
Although you do have the freedom to file bankruptcy independently, it is highly suggested that you acquire a Louisiana bankruptcy lawyer. Bankruptcy law is such a complex and specialized area that one minor mishap can result in the judge denying your discharge. Those who wish to have a smooth filing process should entrust their case with an experienced attorney.
An experienced bankruptcy lawyer can:
- Inform you of what chapter to file
- Implement expert legal knowledge of proceedings
- Use established legal relationships to your benefit
- Improve your chances of getting a discharge
- Protect your rights throughout the process
The Creditors’ Lawyers
Creditors have as much of a right to legal representation as you do, the only difference is that their legal teams are often in-house and have handled multiple bankruptcy filings for that entity in particular. Through experience with numerous cases, they’ve become well-aware of what the process entails, and if you are an individual filing pro se (without legal representation), they will use your limited knowledge of bankruptcy law against you. Acquire a Louisiana bankruptcy lawyer who can protect your best interests throughout the bankruptcy process.
The Bankruptcy Clerk
The bankruptcy clerk handles all of the paperwork involved in your bankruptcy. This position used to require extensive manual labor like organizing files and mailing out notices, but much of that has been automated.
The relationship is as follows:
- Your attorney files your bankruptcy case to the clerk’s office via digital means
- The clerk’s office maintains your file and keeps you current on needed documents and other similar tasks
As a debtor with a bankruptcy lawyer, it is unlikely that you’ll ever deal directly with the clerk’s office.
The Bankruptcy Judge
A bankruptcy judge is assigned to every case, but it is rare that you’ll ever come in contact with one as consumer bankruptcy doesn’t involve court proceedings. The involvement of the judge varies depending on the type of bankruptcy you’re pursuing.
In Chapter 7 bankruptcy, the judge will only get involved with the case if a dispute arises that needs resolving. In Chapter 13 bankruptcy, the judge is responsible for approving your repayment plan, settling disagreements, and addressing any other developments that occur during the case.
With every individual involved appropriately playing their role, the bankruptcy process is one that can be free of complications and unnecessary stress, but first, you must acquire a seasoned attorney who can serve as your legal representation. The Louisiana bankruptcy attorneys at E. Orum Young Law Offices have filed over 20,000 bankruptcies in Northeast Louisiana and can help guide you through a pain-free bankruptcy. Contact us today for a free case evaluation. Our Trial Guarantee ensures that we will take your case to trial per your request.