In a typical bankruptcy there are usually four parties:
1) The debtor
2) The debtor’s attorney
3) The trustee
4) The judge
What about the creditors?
They almost never participate in a bankruptcy proceeding.
Creditors have the right to object to the bankruptcy in certain situations, but a good Minnesota bankruptcy lawyer will always make sure that the creditors have no grounds to object before starting the bankruptcy.
In fact, making sure that the case will be approved and discharged before the Chapter 7 Bankruptcy or Chapter 13 Bankrutpcy case even gets filed is one of the primary services that the bankruptcy lawyer provides.
What does each of these actors do in a bankruptcy?
1. THE DEBTOR
The debtor is the person who actually files the Chapter 7 bankruptcy or Chapter 13 bankruptcy. Usually the debtor has fallen on tough financial times, and needs the protection of the bankruptcy court to get a fresh financial start.
The debtor has to provide all of his or her financial information, and make a clean breast of all of his or her transactions for the last few years.
Usually the debtor gets to keep all of his property, because it is exempt.
The debtor’s attorney will double check all of the debtor’s property to make sure that he can keep it, and will also help the debtor take care of or surrender any property that can’t be protected.
2. THE DEBTOR’S ATTORNEY
The debtor’s attorney is the person who:
- Advises the debtor
- Organizes all of the debtor’s information
- Goes over the debtor’s financial history
This ensures that the debtor gets a discharge without trouble.
Not only does the debtor’s attorney do all of the paperwork, but he or she works with the debtor to make sure that any potential issues in the debtor’s financial situation are fixed before the case is filed.
This is to make sure that the debtor can pass through the bankruptcy process with a minimum amount of trouble, and so that the debtor can be certain that the bankruptcy will work before it gets filed.
One of the most important aspects of bankruptcy law is that it is predictable. A good bankruptcy attorney can tell a potential client whether his case will be successful or not before it is filed.
This means that you will not have to go to trial and fight to get your discharge. It also means that bankruptcy is cheap, unlike other types of law where things need to be litigated.
The debtor’s attorney will also be the contact point and facilitator for interactions between the debtor and the other parties involved in the case: the trustee and the judge.
3. THE BANKRUPTCY TRUSTEE
Most people don’t know who the bankruptcy trustee is or what role he or she plays in the bankruptcy process, even though the trustee plays a very important role.
The bankruptcy trustee’s job is to:
- Sell any property that the debtor cannot exempt (or protect) in the bankruptcy, and then
- Distribute the money from the sale to creditors
Usually there is no money to distribute to creditors.
According to the Department of Justice in 96% of 2002 cases, there was NO money distributed to creditors. This means that in most cases, the trustee does not have very much work.
The trustee will read the debtor’s bankruptcy petition, and determine whether the debtor’s property is exempt.
The debtor is legally required to list all of his property on the bankruptcy schedules, but this is often only the starting point for where trustees look to find property.
Bankruptcy trustees have a powerful obligation to creditors to find non-exempt property and sell it for the benefit of creditors.
Trustees can also:
- Look at DMV records
- Do asset searches
They have lots of powers for getting documents from many sources, both governmental and private
The trustee will also preside over a hearing called the meeting of creditors. At this hearing, creditors can come and ask the debtor about any property the debtor may own.
Creditors, however, almost never come to these hearings in Minnesota.
Instead, the trustee will ask the debtor a series of questions under oath that will have the debtor state that all of the information in the petition is true, correct, and complete.
Your attorney will work with you to make sure that everything is true and complete, and the questions shouldn’t take more than five minutes.
In a Chapter 13 Bankruptcy, the trustee will take the money from the monthly payments and distribute it to creditors according the Chapter 13 plan that the debtor’s attorney prepared.
4. THE JUDGE
Most people who file for bankruptcy never meet their judge.
It is true that there is a judge assigned to every case, but unless there is litigation (and there usually isn’t), the debtor will never meet the judge.
The judge issues any orders in the case, such as the discharge order, and decides any contested issues.
Contested issues include:
- Objections to exemption by the trustee or creditors,
- Objections to confirmation by the trustee or creditors,
- Determinations of dischargeability of certain debts
- Motions to dismiss based on things like bad faith by the debtor
WHAT TO DO NEXT
If this has convinced you that filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota is not as daunting as you first thought, then why not not speak to us now at 612.824.4357?
Tell us what you need us to do, and we’ll give you all the help and advice you need.
We’re looking forward to helping you.
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