Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

After filing a bankruptcy case, some debtors experience “cold feet.”  Some have difficulty facing the trustee at the 341 meeting.  Others cannot meet their Chapter 13 plan payment obligations.  Still others are tempted by the promises of a non-bankruptcy resolution, like debt consolidation.  Before you back out of your bankruptcy case, make sure that your decision will be in your best interest.

Once you abandon your bankruptcy case, the federal legal protections that prevent your creditors from collecting will expire.  Your bankruptcy case prohibits creditors from filing lawsuits, garnishing wages, and calling or otherwise harassing you over your debt.  The minute your case is dismissed you become fair game to your creditors.

Failing to complete your bankruptcy case means you will not receive the benefits of a bankruptcy discharge.  Once your bankruptcy case is completed, the court issues a bankruptcy discharge which acts as a legal injunction forever prohibiting creditors from collecting from you personally.  This protection is extremely powerful and never expires.  On the other hand, when your case is dismissed, the creditor may charge you with interest and/or penalties that you did not anticipate.

If you dismiss your case and later re-file, you will have two bankruptcy cases on your credit file.  Dismissing a bankruptcy case does not erase the first case from your record and does not lessen its impact on your credit score.

If circumstances change after you file your bankruptcy case, discuss the matter with your attorney.  Most problems can be resolved without dismissing the case.  For instance, a Chapter 13 debtor who suffers a loss of income may be able to convert the case to a Chapter 7 and receive a discharge without further repayment.  In another example, if a Chapter 7 debtor incurs unexpected medical debt, the debtor can convert the case to Chapter 13 and include the new, post-petition medical bills in the Chapter 13 case. 

The general rule in bankruptcy is, “Once filed, follow through.”  However, every case is different and presents its own challenges.  Speak with your attorney and discuss your legal options.  You and your attorney can formulate a plan that will benefit you and your family.

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Costly thy habit as thy purse can buy,

But not express'd in fancy; rich, not gaudy;

For the apparel oft proclaims the man;

- Polonius to Laertes in Hamlet

Clients commonly want to know how to dress for the meeting of creditors.  This is the first (and usually the only) time you will see the bankruptcy trustee, so it is important to make the right impression.  How you dress may mean the difference between flying under the trustee’s radar and being squarely in the crosshairs.

While the trustee is not a judge, and the meeting is intended to be “informal,” your appearance should convey respect towards this federal process.  Some clients believe that they should dress like they are very poor.  This is not recommended and will make you stand out in stark contrast to the attorneys and creditors who may attend your meeting.  Likewise, some clients over-dress for the meeting.  Wearing a suit or Sunday best attire will also attract unwanted attention and cause you to stand out apart from the other debtors.

The best advise is to dress in a business casual manner.  For men this means long pants and a collared long or short sleeved shirt.  For women long pants or skirt, and a modest top that covers the shoulders.  Jeans, t-shirts, shorts, short skirts, flip-flops, and revealing clothing are not appropriate.  Hair should be neatly trimmed and you should convey an overall clean and neat appearance. 

If you are actually poor, the trustee will recognize this fact from your bankruptcy schedules and will appreciate your respectful appearance.  If you are not poor, dressing like you are homeless will cause the trustee to wonder why you are appearing that way.  This may cause further questioning - which is never a good thing for a debtor!

Leave personal electronics and expensive jewelry at home!  Bankruptcy trustees are always looking for personal items that may be under-valued or not disclosed on the bankruptcy schedules.  Again, leave expensive phones and jewelry at home.

The vast majority of bankruptcy meetings are quick and uneventful.  Make sure you are not causing questions from the trustee by your appearance or by personal items brought to the meeting.  The goal is to have no one notice you or remember you case.  If you have further questions about how to dress for your meeting of creditors, consult with you bankruptcy attorney.

When a debtor files a bankruptcy case, notices of the meeting of creditors is sent to all the creditors of the debtor.  The meeting of creditors is also called the trustee’s meeting and the 341 meeting (after section 341 of the bankruptcy code which compels the meeting).  This notice informs the creditor, among other things, that the debtor has filed a bankruptcy; of contact information for the debtor’s attorney and the trustee assigned to the case; and of the date, time and place of the meeting of creditors.

While notices are sent to all of your creditors the odds are that no creditor will appear at your meeting of creditors.  If a creditor does show up, it is almost always a local creditor, like a local bank seeking information regarding a secured loan, or individual creditor.  It is rare to see a representative of a national creditor at a meeting of creditors. 

The main reason that creditors do not appear at the meeting is that creditors are not allowed much time to ask questions of the debtor.  What the creditor can gain from the meeting does not justify the expense of sending a representative.  The bankruptcy trustee conducts a busy docket of bankruptcy debtors and is required to question each debtor.  Consequently, the trustee will only allow a few minutes for any creditor questions, and will not permit any “fishing expeditions” from a creditor.  A creditor who needs more time for questioning the debtor can schedule a private examination called a “section 2004 exam.”  Section 2004 exams are extremely rare.

Most individual creditors who appear at a meeting of creditors do so because they do not understand the process.  Individual creditors usually believe that their attendance is important to maintain their claim against the debtor.  The questions are generally inane, like: “Are you going to pay me?” or “You promised to pay me, right?”  The trustee cannot give legal advice to creditors, so without an attorney the individual creditor is usually left floundering.

When a creditor is represented by an attorney, the questions generally concern the debtor’s schedules of assets, liabilities, income, and expenses.  These questions may seek to uncover inconsistencies in the schedules.  Questions that go beyond the schedules may be objected to by your attorney.  The trustee will not permit the creditor to engage in a deposition of the debtor with the trustee acting as judge.

If you expect a creditor to attend your meeting of creditors, discuss the matter with your attorney.  While the ordinary bankruptcy case will not have creditors in attendance at the meeting, every case is unique.  Discussing your case with your attorney is the first step in being prepared for creditors at the meeting.