Can a Divorcing Couple File a Joint Bankruptcy? And when it’s just not a good idea.

Divorcing couples can file a joint bankruptcy proceeding so long as they are still married on the date the bankruptcy petition is filed and, most importantly, when they agree to be completely cooperative and open about their finances with each other. The bankruptcy proceeding will not stay (i.e., delay) the divorce proceeding in most instances, so that both proceedings can happen simultaneously.

The benefit to a joint bankruptcy proceeding is the cost savings of one case instead of two but the couple must remain transparent for the duration of the proceeding including about their income and employment, finances and expenses, current living situation including any financial contributions and expenses of a new significant other, etc. There can be no secrets or confidences between the attorney and one of the two spouses that are jointly represented.  Even the most cordial of divorcing couples can turn sour when a disagreement arises in the divorce especially when it comes to the hot topics of spousal support, custody and division of assets.

Married couples can also file separate bankruptcy cases, and it is common for one spouse to file bankruptcy while the other spouse does not.

The ideal situation for a jointly administered bankruptcy case is when the divorcing couple is eligible to file a joint chapter 7 proceeding, which typically lasts three months start to finish. If the divorcing couple is not eligible for chapter 7, they can still file a joint chapter 13 however this is often can be impractical since most chapter 13 plans last five years.

There are also situations where one spouse (or both) may benefit from divorcing first, especially in a situation where one spouse does not qualify for chapter 7 without a support obligation in place. It becomes difficult and potentially a conflict of interest for the attorney when the best interests of one spouse conflicts with the other’s best bankruptcy plan. When any conflict happens, one spouse needs to seek separate counsel to file a separate bankruptcy case. If there’s any foreseeable conflict, it may be better to pursue separate bankruptcy proceedings from the start.

Generally to be eligible for chapter 7, the combined annual gross income must be no more than the applicable state median income for their household size. Under the “means test” calculation, it may still be possible for otherwise above-median debtors to qualify for chapter 7 when the divorcing couple maintains two separate households and when there are certain expenses and/or debts owed, including above-average health care costs, domestic support obligations, mortgage arrears owed, significant state or federal taxes are owed, and when there are mortgage or other secured debt payments that will be maintained. Sometimes eligibility for chapter 7 becomes possible after divorce, especially if the couple is still residing together now and one or both spouses only qualifies for chapter 7 once they have a smaller, separate household for the purposes of the means test.

Also see Bankruptcy and Divorce: What Should Come First

2015 Minnesota Median Income effective for bankruptcy cases commenced on/after November 1, 2015 and through April 2016

Median income is a critical measure in bankruptcy upon which the ‘Means Test’ calculation is largely based to determine whether a debtor qualifies for Chapter 7 bankruptcy versus Chapter 13. Essentially, if a debtor’s annualized gross income exceeds the median income for their household size and state of residence, they are generally (but not always) ineligible for Chapter 7 bankruptcy and instead steered toward a five-year Chapter 13 repayment plan.  In Chapter 13, median income also determines whether a debtor is required to do a 5-year plan (when above-median income) or 3-year plan (when below-median income).

It’s also important to note that annualized gross household income is determined by doubling all household income from all sources for the last six full calendar months prior to filing bankruptcy. Chapter 13 bankruptcy is a more likely outcome than Chapter 7 when this annualized income is above the applicable state median income. The Means Test calculation and eligibility for Chapter 7 is more complicated than simply a measure against median income and other factors including mortgage payment as well as arrears, taxes owed and domestic support obligations, and a number of other factors also figure into the means test calculation.

As of November 1, 2015, the Median Income in Minnesota is as follows:

2015 and 2016 (through 04/01/16) Minnesota Median Income per applicable Household Size:         

1 Person          2 People          3 People          4 People          5 People

$51,199           $68,515           $80,804           $98,447           $106,547 

State median income is determined by Census Bureau data and adjusts at least annually. The latest adjustment is effective November 1, 2015 and the next adjustment date is expected April 2016.

To read more about Median Income and the Means Test, see What is the Median Income in Minnesota and How Does is Factor into Chapter 7 Bankruptcy and What is the “Means Test” and Why Does it Matter in Bankruptcy.

Wartchow Law Office is a law firm located in Edina, Minnesota with an exclusive practice in Chapter 7, Chapter 13 and Chapter 11 bankruptcy law, representing individual consumer and business clients throughout the Twin Cities of Minneapolis and St. Paul, Minnesota.

 

Debt Consolidation vs. Debt Settlement vs. Bankruptcy? What Can You Expect from Each and Which Option is Better?

When facing mounting debts that cannot be repaid according to the regular monthly terms, one should consider all options for debt resolution including bankruptcy relief and non-bankruptcy alternatives. But before you hastily take the most convenient option, consider the benefits and disadvantages for each. In fact, I often encourage my bankruptcy clients to make an apples-to-apples comparison between their debt resolution options—including a list of the pros, cons, risks and costs for each resolution—and often the best and cheapest option quickly becomes clear.

Debt consolidation is a general term for taking out one larger, lower interest loan and using the loan proceeds to pay off any number of smaller, higher interest rate debts. In this way, you are repaying 100% of your debts but potentially saving money on interest over time. While balance transfers and credit card checks with promotional interest rates may be tempting, it’s critical to read the fine print for any hidden fees of balance transfers and the deadlines when the promotional interest rates expire. For example, credit cards and some new loans will charge a small percentage fee on the amount of credit used for the balance transfer or to initiate the loan. Also, the promotional rate expires in only a short time and often any balance remaining after that deadline will revert to the standard interest rate which can be three times higher than the promotional rate. Debt consolidation may work best for people who have regular, predictable income so that they can commit to the monthly consolidated payment and their only issue is the high interest rates. Debt consolidation also assumes that you can obtain financing at a lower interest rate than your current credit cards, which usually necessitates a minimum credit score if not also a pledge of collateral to secure the consolidation loan. Debt consolidation usually will not work well for people who cannot afford a consolidated loan payment (even at lower interest) or for those who cannot obtain new credit due to a low credit score and/or lack of collateral.

Debt settlement (or debt negotiation) is an option that occasionally makes more sense than filing bankruptcy, particularly for higher income individuals, individuals with substantial assets or individuals with access to cash to pay off just a few debts at a reduced balance. Debt settlement involves negotiating a final settlement of the debt and release from future personal liability one-by-one with each creditor. Depending on the number of debts that need to be settled and how far into default each debt is, the debt settlement process can be tedious, expensive and can easily take two or more years to complete with all creditors. There is always the risk that until the debt is fully settled, the creditor can still collect on the full balance and initiate a lawsuit against you. Depending on individual circumstances, debts will typically settle for 25% to 75% of the amount owed and payment is required in either one lump sum or series of payments over no more than six months. Because inevitably some of the debt is repaid and you may end up incurring attorney fees for assistance with the process, debt settlement is almost always more costly overall than a standard chapter 7 bankruptcy proceeding. Finally and unlike what happens when a debt is discharged in bankruptcy, beware that a debt settled for less than the full amount owed often will result in your receiving a Form 1099 for the amount forgiven which is treated as income for tax purposes (with few exceptions, see Received a 1099-Misc on Cancelled Debt? You May Qualify for Exclusion from Taxes if You Were Insolvent or Filed Bankruptcy). For these reasons, debt settlement can be a far more expensive and time-consuming option than bankruptcy.

In bankruptcy, most unsecured debts are discharged in full and the majority of chapter 7 debtors pay nothing more than the attorney fee and filing fee. In chapter 13, some percentage of the debts is repaid but the total paid into a chapter 13 plan can still be significantly less than what a debt settlement may cost.

For help in assessing of your debt resolution options, contact Wartchow Law Office located in Edina, Minnesota.

More on Divorce and Bankruptcy: How do Child Support, Spousal Support (Alimony / Maintenance) and Property Settlements Impact either Chapter 7 or Chapter 13 Bankruptcy?

How certain payments owed under a divorce or family law decree—including child support, spousal support (also called maintenance or alimony) and even property settlements or cash equalizers— may impact your bankruptcy filing depends on whether you are the recipient such payments or the obligator of such payments, i.e., the payer.

For a recipient of child support, spousal support or other domestic support obligations (also called “DSO”), this support income must be added to all other sources of income in order to determine whether one is eligible to file chapter 7 under the means test. Generally speaking, if one’s total annual income from all sources including domestic support income is less than the median income for your state and household size, you will qualify for chapter 7. However if you are above the median income, you are instead steered toward filing chapter 13 with some exceptions. Median income varies by state and household size and is regularly updated. Especially if you are ‘on the line’ of the median income or above it, it is the initial job of any bankruptcy attorney to calculate the means test and advise on eligibility for chapter 7 under current median income standards.

For the payer of domestic support obligations, such support payments are typically allowed as an expense on the means test which effectively reduces one’s annual income. This means that if your regular wage or self-employment income is above the median income for your state and household size but the subtraction of domestic support payments brings you back down below the median income, then you would qualify for chapter 7 bankruptcy. Qualification for chapter 7 via this route is also called “rebutting the presumption of abuse” on the means test. However if one’s income is such that the subtraction of DSO payments does not reduce the income below the median or alternatively if one is not actually making the required DSO payments, then they may not qualify for chapter 7 and instead file chapter 13.

The means test involves various additional factors other than income and domestic support payments. For more information about median income and the means test, see What is the “Means Test” and Why Does it Matter in Bankruptcy? and 2014 Median Income in Minnesota.

Regarding property settlements (also sometimes referred to as equalization payments or cash equalizers), these are usually ordered in a divorce based on a fair distribution of marital assets rather than a need for financial support by one spouse. For example, a wife may be ordered to pay a property settlement to her ex to “equalize” her award of a family home having equity that was built up during the marriage. In this case, the wife that keeps the family home may be required to pay her ex-spouse one half of the home equity by a certain future date. Property settlements also commonly arise when one spouse is assuming most or all of joint debts acquired during the marriage and the other spouse emerges from divorce debt free other than the obligation to pay the property settlement. In any event, unpaid property settlements and cash equalizations are valuable assets that must be listed in the bankruptcy case of the recipient.

As with all assets, any individual bankruptcy debtor is limited as to the total value of assets which may be exempt and it’s possible that a portion of a large unpaid property settlement (above approx. $12,000) could be non-exempt if the recipient files bankruptcy. In this case, the non-exempt portion of the property settlement would become property of the bankruptcy estate and either liquidated in chapter 7 or, in chapter 13, at least the equivalent of the non-exempt portion must be paid into the plan. This situation is also circumstance dependent and may be affected by the facts of one’s situation, including whether the obligator spouse has a practical ability to pay the settlement.

For the payer of the property settlement, this award is a liability that must be listed in the creditor schedules. Unlike most debts, one’s liability to pay a property settlement is not usually discharged in chapter 7 bankruptcy however may be discharged under some circumstances in chapter 13 bankruptcy.

A qualified bankruptcy attorney will explain more how a property settlement would be treated under your specific circumstances, the chapter of bankruptcy you file and local bankruptcy law. For more information on how property settlements are treated in chapter 13, see Bankruptcy and Divorce: Some Payments in a Divorce Decree May be Dischargeable in Chapter 13.

Also read more about family law and timing considerations in bankruptcy: Bankruptcy and Divorce: What Should Come First?

Located in Edina, Minnesota, attorney Lynn Wartchow represents clients in all chapters of bankruptcy in Minneapolis, St. Paul, Ramsey and Hennepin County, and throughout Minnesota. Contact for a free consultation.

What are the Bankruptcy Exemptions and Which Assets can be Protected in Bankruptcy?

When filing either chapter 7 or chapter 13 bankruptcy, each individual debtor is allowed to exempt a limited amount of equity in real property, cash, personal assets and other property while still obtaining a discharge of most debts. Only when a debtor exceeds the available exemptions will they have “non-exempt” assets that will either be liquidated in chapter 7 or, alternatively, the debtor will effectively pay to keep over the duration of a chapter 13 plan.

Bankruptcy exemption law allows for the exclusion of certain assets from the bankruptcy estate and, thereby, protects such assets from the reach of either creditors or the bankruptcy trustee. When filing bankruptcy in Minnesota, a debtor elects to utilize either the federal exemptions or the Minnesota state exemptions. Since the federal exemptions are more liberal as to what assets can be protected, a Minnesota debtor will only elect state exemptions when they have over $20,000 in equity in a homestead (or, less commonly, a significant certain asset such as pending insurance proceeds or personal injury award). Most debtors however opt to use federal exemptions for the availability of up to a $12,775 “wildcard exemption” which can be used to protect any assets which are not otherwise protected under a separate federal exemption.

As of the date of this post, the federal exemptions provide for the following amounts per debtor:

Asset Type

 

Available Federal Exemption*
Equity in homestead property

 

$23,675 per debtor (double for joint filers)
Household goods, furniture and wearing apparel

 

$12,625 (limit of $600 per item in this category)
Wedding rings

 

$1,600
Alimony / child support

 

unlimited so long as funds are necessary for support of the family
Unemployment / Disability benefits (future benefits only)

 

unlimited
Social Security benefits (future benefits only)

 

unlimited
Cash value of life insurance policy

 

$12,625 (only one policy is exempt)
Vehicle equity

 

$3,775 (only one per debtor)
Personal injury claims that are not yet settled

 

$23,675
ERISA-qualified retirement accounts such as 401(k), 403(b) and 408 plans

 

unlimited
Individual Retirement Accounts (IRAs)

 

usually unlimited subject to certain limits on recent contributions
Other retirement benefit plans including Public Employee Retirement Association (PERA), Minnesota State Retirement System (MSRS), and Teachers Retirement Association of Minnesota (TRA)

 

unlimited so long as the employee does not have a right to withdrawal of funds upon termination
Tools of trade (must be used in employment)

 

$2,375
Workers Compensation

 

unlimited only if claim has not been settled or paid out (however proceeds already received can be exempted under Minnesota law)
Anything else not exempt under any other provision such as excess equity in a vehicle, cash, bank account balances, second vehicles, recreational equipment, stocks and bonds, ownership interest in a business, inheritance proceeds, claims against a business or individual, tax refunds, etc. up to $13,100 total “wildcard” / (d)(5) exemption

 

* These amounts are valid as of 2016 and adjust periodically. You should consult a bankruptcy attorney to analyze the available exemptions for your particular circumstances.

 

File Bankruptcy to Protect Your Wages and Other Earnings from Garnishment

From the moment that a bankruptcy petition is filed, the “automatic stay” is invoked and this automatic stay of legal proceedings affords many protections from collection activities, including wage garnishment on W-2 income, other income levies such as from 1099 income–usually earnings of self-employed persons or independent contractors–and bank account levies. In other words, the filing of chapter 7 bankruptcy effectively puts all collection activities and legal proceedings on immediate hold due to the automatic stay. Depending on the circumstances, the automatic stay can be lifted for various reasons but rarely, if ever, so that a creditor can continue wage garnishment or bank account levies. (One of the more common reasons for the bankruptcy court to allow the automatic stay to be lifted is for the foreclosure of a homestead that is in default and for which there is no proposal to cure the arrearages, for example through a Chapter 13 plan.)

Wage garnishment is a collection remedy that is usually only, but not always, available after a judgment has first been obtained or at a minimum after you have not responded to a summons and complaint previously served on you several weeks prior. If you have been served with a summons and complaint in a collection lawsuit and/or a judgment has been entered, you are likely also aware that a wage garnishment is headed your way. While most employees will receive notice of the wage garnishment prior to the garnishment taking effect via the next payroll, employers do not always provide prior notice of the upcoming garnishment and availability to claim potential exemptions from garnishment. While a debtor often has advance notice of a wage garnishment, you almost never receive notice of a bank levy until after it has already occurred.

For most people in Minnesota, a wage garnishment means that 25% of your net (“take home”) earnings will be garnished each payroll until the underlying debt is paid off. There are exemptions to wage garnishment available to some individuals meeting certain criteria.

Even if you are a self-employed or contract worker, 1099 non-wage income can still be garnished, especially if the garnishing creditor is aware of such income from previous disclosures made to them including in credit applications.

Bankruptcy puts an immediate stop to wage garnishment and all other collection tactics. In some cases, the last 90 days of wages garnished from you can be refunded by the garnishing creditor within weeks after the bankruptcy is filed.

Located in Edina, Minnesota, bankruptcy attorney Lynn Wartchow represents clients in all Chapters of bankruptcy in Minneapolis, St. Paul, Ramsey and Hennepin County, and throughout Minnesota.

Typical Questions Asked at the Chapter 7 Meeting of Creditors

The Meeting of Creditors is typically the only mandatory appearance most debtors will have to make in their bankruptcy proceeding. While it is a short and usually uneventful occurrence, it is a court hearing nonetheless and all answers are provided under oath and must be truthful and accurate. The bankruptcy trustee assigned to the case will call each case by the debtor’s name, verify the identity of each debtor with their driver’s license and social security card, check any other documents that were requested to be provided at the Meeting (for example, recent post-petition paystubs and file date bank statements), swear-in each debtor under oath to provide truthful testimony under the penalty of perjury, and then ask a series of mostly yes-no questions. Many questions asked at the Meeting of Creditors will repeat information that was already disclosed in the bankruptcy petition and schedules.

These are some of the common questions asked by the Chapter 7 trustee at the Meeting of Creditors in Minnesota (note: the questions asked at a Chapter 13 Meeting of Creditors are similar to this list but may be more extensive):

  • State your name and current address for the record.
  • Have you read the Bankruptcy Information Sheet provided by the United States Trustee?
  • Did you sign the petition, schedules, statements, and related documents that were filed with the court?
  • Did you read those documents before you signed them?
  • Are you personally familiar with the information contained in those documents?
  • To the best of your knowledge, is the information contained in those documents true and correct?
  • Are there any errors or omissions to bring to my attention at this time?
  • Are all of your assets identified on the schedules?
  • Have you listed all of your creditors on the schedules?
  • Are you married? Have you ever been married? If you are recently divorced, the trustee may also ask if you have any money or property still owed to you from the divorce.
  • Have you ever filed for bankruptcy before? If yes, when, where and what type?
  • Are you employed in the same job as when you filed bankruptcy?
  • Do you have a domestic support obligation, such as child support or alimony?
  • Do you own or have any interest whatsoever in any real estate? If yes, you may also be asked when did you purchase the real estate, did you take any equity out of the property in the past five years?
  • Have you given away any property or given any property within the last two years? If yes, what did you sell, how much was it worth and to whom did you sell it?
  • Do you have a claim against anyone or any business?
  • Are you the plaintiff in any lawsuit?
  • Do you have the right to sue anyone in a lawsuit?
  • Does anyone owe you money?
  • Has someone died and left you an inheritance? The trustee may also mention that if anyone dies in the next six months and you inherit something, it could become “property of the estate”. This means that you must report any such inheritance to your attorney and to the court.
  • In the 90 days prior to filing bankruptcy, did you pay any one unsecured creditor more than $600?  If yes, the trustee may want to know how much you paid total, to whom and may request to see copies of the checks/payments.
  • In the past six years, have you run any business? If yes, the trustee may ask questions about the nature of the business, what assets the business owns and what happened to the business if it is no longer operational.

Keep reading for more information on What Happens after the 341 Meeting of Creditors is Over

Located in Edina, Minnesota, Lynn Wartchow represents consumer bankruptcy clients in Chapter 7 and Chapter 13 filings in Minneapolis, St. Paul, Ramsey and Hennepin County, and throughout Minnesota.

What the Supreme Court Decision Overturning DOMA in United States v. Windsor Means for Bankruptcy Law and Joint Bankruptcy

In a 5-to-4 decision in United States v. Windsor, the U.S. Supreme Court ruled today that married same-sex couples are now entitled to receive federal spousal benefits in the states in which they are legally married. The landmark ruling overturns a portion of the Defense of Marriage Act (DOMA) from 1996 which denies federal benefits to legally married same-sex couples despite the recognition of those marriages under state law.

What this historic decision practically means is that same-sex couples in the 14 states/districts where same-sex marriage is legal can now enjoy the numerous benefits bestowed by federal law on married couples, including a lower tax rate on their married-filing-joint federal income tax returns, spousal tax exclusions on transfers of funds and assets, other estate tax benefits, social security survivor benefits, federal health care protections extended to married couples such as COBRA coverage and Medicare’s spousal benefits, spouse-based sponsorship for U.S. citizenship, the ability to file joint bankruptcy petitions, and many more.

When it comes to bankruptcy, all married couples in these 14 states (including Minnesota) can now file joint bankruptcy petitions at least in a state which recognizes their legal marriage. The benefit to filing a joint bankruptcy case rather than two individual bankruptcies is that a same-sex couple will not needlessly pay two filing fees (currently $306 per Chapter 7 case) nor will they have to pay two attorney fees (usually charged at a flat rate). Instead, a joint bankruptcy filing requires the payment of just one filing fee and typically only a small upcharge on the attorney fee, thereby saving the couple up to $2,000 or more on their joint Chapter 7 bankruptcy case. In addition to savings, a joint bankruptcy filing can also utilize the protections of two sets of exemptions rather than jut one, potentially protecting a  greater amount of valuable assets from possible liquidation in Chapter 7.

As of the date of this posting, the 14 states that recognize same-sex marriage include California, Connecticut, Delaware, District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont and Washington. California was welcomed to this list thanks to the Supreme Court’s same-day decision knocking down California’s Proposition 8 in a separate ruling.

The question is still unanswered as to whether same-sex couples legally married in one state can file a joint bankruptcy petition if they now reside in one of the other states which do not recognize same-sex marriage.

Lynn Wartchow is graduate of Carleton College and a bankruptcy attorney located in Edina, Minnesota representing all couples in Chapter 7 and Chapter 13 consumer bankruptcy proceedings throughout the Twin Cities area of Minneapolis and St. Paul, Minnesota.

 

Converting from Chapter 7 to Chapter 13: What’s Involved and Why Would You Convert?

Conversion to Chapter 13 from Chapter 7 isn’t a death sentence for your bankruptcy case (see Chapter 13: Not Always a Gloomy Diagnosis in Bankruptcy). Perhaps a Chapter 7 was filed underestimating your income and you didn’t actually qualify for Chapter 7 for this reason. Or perhaps you realize after filing your Chapter 7 that you have mortgage arrears that you wish to repay in order to save your home from foreclosure, which is something that you cannot do in Chapter 7. Or perhaps you discover after already filing Chapter 7 that you have non-exempt assets which you would rather ‘pay to keep’ in Chapter 13 rather than turn over to the Chapter 7 trustee for immediate liquidation. Also, conversion can arise when the Office of the United States Trustee brings a motion to dismiss your Chapter 7 case for abuse, usually citing that you did not qualify for Chapter 7 from the beginning. While converting to Chapter 13 is neither an everyday experience nor a great risk for the average debtor, it can arise and ideally your attorney has already explained the differences between Chapter 13 and Chapter 7.

What can you expect if you convert to Chapter 7 from Chapter 13:

  • File and sign new petition forms and amended schedules required for the verified conversion.
  • Formulate a Chapter 13 plan with your attorney. The plan will propose a monthly Chapter 13 payment to commence about one month after the conversion is filed and continue for three to five years. From this payment, mortgage arrears and priority tax claims can be paid off over three to five years, vehicle loans may be crammed down to the value of the vehicle rather than the pre-petition balance of the loan, and other terms can be written into your plan that are more versatile than can be achieved in Chapter 7.
  • Attendance at the Chapter 13 Meeting of Creditors. You will need to attend a Meeting of Creditors with the Chapter 13 trustee even if you have already attended a Chapter 7 Meeting of Creditors.
  • Additional attorney fees. Chapter 13 almost always costs more than Chapter 7, in large part due to the attorney work necessary to formulate a Chapter 13 plan and for the fact that your bankruptcy attorney continues to represent you throughout the entire three to five-year Chapter 13 plan (versus the few months in which a Chapter 7 bankruptcy is usually completed). Many times, these fees can be paid in large part ‘through the plan’, which means the attorney fees are paid over time through the monthly plan payments you make to the Chapter 13 trustee.

Unless you recognize a change in circumstances where you voluntarily wish to convert your case, your attorney will also apprise you of any event arising in your Chapter 7 case which may require conversion to Chapter 13.

For more information on how to convert your case from Chapter 7 to Chapter 13, contact Wartchow Law Office for a free bankruptcy consultation. Located in Edina, Minnesota, Wartchow Law represents clients in all forms of bankruptcy throughout the Minneapolis and St. Paul metro area of Minnesota.

What Happens after the 341 Meeting of Creditors is Over?

The answer to this depends on whether you have filed Chapter 7 or Chapter 13 bankruptcy. (Chapter 11 individual debtors also are required to attend a Meeting of Creditors). At a minimum and for all Chapter 7 and Chapter 13 cases, the debtor must take the second financial management course and file the certificate with the Bankruptcy Court. The Notice of the Meeting of Creditors will give a specific deadline for filing the certificate in a chapter 7 case (the certificate can be filed anytime up to the week prior to the discharge being received) while in chapter 13 the certificate may be filed at any time before their chapter 13 Plan is complete.

In most Chapter 7 cases, attendance at the Meeting of Creditors which occurs about one month after your case is filed, is the last active event for a debtor in a bankruptcy proceeding. Once the Chapter 7 trustee has concluded the Meeting of Creditors and determined that no additional questions or documents will be needed from the debtor, the debtor only has to complete the second financial management course and wait for their Chapter 7 bankruptcy discharge to be entered by the Bankruptcy Court about two months later. A Chapter 7 case is held usually open for two months after the date of the Meeting of Creditors so that certain actions can be taken in a case. Although these post-Meeting of Creditors actions are somewhat uncommon in the garden-variety Chapter 7 case, potential actions include turnover of a non-exempt asset to the Chapter 7 trustee, a creditor objection to the discharge of a particular debt (which is a common type of adversary proceeding), motions to dismiss a case brought by the attorney for the Office of the United States Trustee, or an administrative audit of the Chapter 7 case. Your Chapter 7 attorney can advise you of the potential actions and other requirements you may expect to occur after the Meeting of Creditors in your bankruptcy case, if anything. However most of the time once the Meeting of Creditors is over, it’s just a matter of waiting for your discharge without any further action required other than completing the financial management course.

In Chapter 13 bankruptcy, the Chapter 13 plan is often confirmed about one month after the Meeting of Creditors is concluded. While plan confirmation requires an additional court hearing, attendance is rarely required at the confirmation hearing and you should not plan to attend unless your attorney advises you to do so. Once confirmed, the Chapter 13 debtor must continue to make all Chapter 13 plan payments as well as any other requirements set forth under the terms of their confirmed Chapter 13 plan (such as to report any bonus income received during the plan to the Chapter 13 trustee or provide income tax returns each year). Since a Chapter 13 case will remain an active bankruptcy case while the plan is underway, there are a number of events that can arise after the Meeting of Creditors that require you’re your and your attorney’s involvement. For example if during the course of the Chapter 13 plan there are significant changes to income or expenses, your bankruptcy attorney may advise you to file a motion to convert to Chapter 7 rather than stay in Chapter 13. Also, if you move or change your address you must notify your attorney.

Located in Edina, Minnesota, Lynn Wartchow represents clients in Chapter 7 and Chapter 13 bankruptcy in Minneapolis, St. Paul, Ramsey and Hennepin County, and throughout Minnesota.