Interviewer: What are the steps when someone begins this process? I believe they’ll go and maybe give you a call? Typically, what do you have the client start doing?
Court Koehler: I try to make the process as simple as I can for my clients. It’s part of my job. When somebody calls me and they’re having trouble, the first thing is to determine what you said earlier – whether bankruptcy is the best option for them and, if so, which chapter to file under. If we ultimately determine that Chapter 13 is the best idea, then what I have is kind of a short worksheet that I have you fill out. It includes your expenses and your income, your assets, things like that. Then I also have you give me pay stubs and tax returns. Those will be necessary during the process.
With all that information, I take and fill out your petition. Usually within a week or so, you can get a petition filled out and actually filed. At the point when it’s filed, there’s an automatic stay that goes into place. The automatic stay is an order from the court that goes out immediately when I file the case. It prevents any debt collectors from contacting you, any lawsuits from going forward, any foreclosure actions. All the stuff has to stop because of this automatic stay that comes from the court. That happens right away.
Then, over the next few months, there will be a meeting with the trustee that’s assigned in your case. It’s a short meeting. He goes over your petition schedules and answers any questions that you might have about your case. It can be scary for people, but it’s really not a big deal as long as you’re prepared for it. It really only lasts maybe five or 10 minutes of actual questioning time. That’s the first big step.
Then the second big step is to get your plan confirmed. What that means is we propose a Chapter 13 plan that includes a monthly payment. It tells what creditors are going to get paid in what ways. It’s basically a schedule of how your debt’s going to be paid down over the course of the plan. We propose that plan to the judge and the trustee has an opportunity to object to it. If the trustee has an objection, the judge will confirm it. Then you enter the payment plan at that point, and either you’re going to be in the three- or the five-year plan that we talked about earlier.
You’ll go through and you’ll make your payments over that period of time. At the end of that period, if your payments are correct and current, then you will get a discharge of all of your other debt that hasn’t been paid off. You usually have to pay a little bit of money back to your unsecured creditors, like your credit cards and things like that. The rest of it will be forgiven. Then as far as your secured debt – your houses and your cars and things like that – you’re just required to get current so that you paid any back payments and things like that that were missing. Then you go on paying the mortgage bill and the car payments as you were before.
Interviewer: How long does the whole bankruptcy process take?
Court Koehler: This is another question that I get a lot. Really, for all intents and purposes, the process for the client takes about a week. It’s meeting with me and then getting all of your documents that I need and helping me file the case. You won’t have to go to court. You have to go to the meeting with the trustee, but that’s really the only thing you have to do over the course of the plan, but you’re not technically going to receive your bankruptcy discharge until after the Chapter 13 plan is done. It will take a couple of months to confirm the plan. Then, once you begin making the payments and things like that, you’re going to be making them for either three to five years, depending on your income level.
Interviewer: You mentioned that someone would have to go to court at one point?
Court Koehler: Really, it’s pretty rare for bankruptcy client to have to go to court. That’s because it’s a confirmation hearing. I go to court, but you don’t have to go with me unless you want to. Sometimes people do, but they’re really not required to. Unless something goes terribly wrong with your bankruptcy and there are some questions of fraud or there are some creditors that have valid complaints or things like that (which are really, really rare) you won’t have to go to court unless you want to.
The only thing you have to actually show up for is the meeting with the trustee –the Section 341 meeting sometimes it’s called – or the first meeting with creditors. That’s the meeting where you go and you meet with your appointed trustee. He will go over your bankruptcy petition and kind of ask you some questions about it and things like that. That’s really the only time that you have to go. It’s not a court. It’s just a room with the trustee. He’s not a judge or anything like that, but it’s sort of similar to going to court, but that’s really the only time you have to do that.