Bankruptcy Intake

TIP #1 – Reassuring the Debtor One of the most common concerns the debtor has (when inquiring about how the bankruptcy process works) is their “fear” of going to court. I calm many of our clients by pointing out the fact that they are filing a “voluntary” petition — not an “involuntary” one. I also tell the debtor, “Going to Bankruptcy Court is very much unlike going to Common Pleas Court because you committed a misdemeanor or other crime.” As a paralegal, you will find that most people who have never filed bankruptcy before confuse this very fact, but will not ask you about it. Therefore, by pointing out the difference to the debtor right away, you will help them relax and build some confidence in the situation as well as in you, the interviewer. TIP #2 – Explaining the Stays Often the debtor does not understand what is meant by a Bankruptcy Stay. One thing I do to help explain it so they will understand better, is to have them imagine a big umbrella. The moment their bankruptcy petition is filed-stamped by the court, that “bankruptcy umbrella” covers them entirely and the Bankruptcy Court temporarily owns everything they have. No creditor can come and take anything because they have to petition the Bankruptcy Court to do so. The umbrella, as we paralegals know, is representative of the “Stay” in bankruptcy law, and so far; most of our clients understand the concept and thank us for explaining it to them in this manner. TIP #3 – The 341 Hearing Another question that comes up over and over again from the average debtor is the 341 Hearing process. Again, we go back to Tip #1 of this article and bring up the “fear” factor regarding the debtor’s interpretation of the word “court.” Because you can never calm the debtor’s fears 100% with mere words, I urge our clients to arrive at their 341 Hearing at least 45 minutes before their scheduled court time to watch other cases ahead of them. This way, the client will get a better “feel” of how the process works and be more “at ease” when they go in front of the Trustee. I believe that other bankruptcy paralegals like myself, who process so many bankruptcy petitions and have attended 100’s of 341 Meetings, normally forget this is the debtor’s first experience in Bankruptcy Court. In fact, the client is naturally going to be a little nervous and anything you can do to put them at ease will result in a more satisfied client and make your job a whole lot easier. TIP #4 – Amendments As a bankruptcy paralegal, I am sure you are aware that debtors normally try to hide their assets during the initial intake interview. After you explain to them the purpose of exemptions and how they will be used in their particular situation, the debtor’s next question will normally be: “What if my income were to change during my bankruptcy, or if I were to gain assets (like purchasing a car); would that detour the procedures or do I have to re-file a new bankruptcy petition?” I immediately put the client at ease by explaining about Amendments. I might say something like: “If we filed a bankruptcy petition for you in court today, and you accepted a new job next week; we can file an Amendment to your Schedule I and J.” Of course, most debtors will not understand what the word “amendment” is and what the reference to “Schedule I and J” means, so you may want to automatically explain the meaning at that time; knowing the client will probably be too embarrassed to ask you about it themselves. By taking this extra step, the client will normally be more “at ease” which in turn will help him or her to open up and supply you with more information about their current financial situation. This, of course, will result in a more complete bankruptcy petition and less work on you as a paralegal in the long run. TIP #5 – Overlooked and Concealed Assets Finally, one of the main problems many of us have during the initial intake interview process is to make sure the debtor has revealed all of his or her assets. As we know, this information is essential because if an asset is overlooked now, and you don’t find out about it until the 341 Hearing, you will have to do a lot of extra work and delay the client’s bankruptcy discharge. So save yourself some time and make sure you get all the information on the debtor’s assets at the initial intake interview. This includes often overlooked items like anticipated tax refunds, back child support owed by uncollectable, wedding rings valued at $200 or more, 401K plan, and whole life insurance policies among others. However, many of us already know that debtors filing for bankruptcy come into the office with the pre-conceived notion that the Bankruptcy Court is going to take everything they own. Therefore, the debtor does not want to reveal information like the $2,000 mom just loaned him or her to pay the rent and utilities. Or, how about the deed to the piece of land valued at $15,000 the parents gave their daughter or son for a wedding gift several years ago? These are just two examples of pertinent information that could change the entire bankruptcy case, so it is essential to obtain this type of information from the client in the beginning. But how do you go about getting the debtor to provide you with this type of information? The answer: by helping the client to relax. When you first meet the client, shake his or her hand. Show him or her that you are very happy to meet them and provide them with the assurance that you are there to help them, not hurt them. Then, take a moment to explain to the debtor what the bankruptcy process is, utilizing some of my examples above.