How to Win the Bankruptcy Game: Your Court Appearance

Your Court Appearance

Judges are not allowed to be present at your creditors� meeting. As a result the trustee runs the show and the rules can be rather flexible. You are always free to consult with your attorney at any time during the questioning. Your attorney also has the right to interject clarifying remarks when necessary. This is not an inquisition, it�s just an information gathering session. Chances are there will be several other filers waiting in line. The trustee may appear rather bored, as he is required to repeat the same set of questions over and over. You should concentrate on blending in with the whole procedure as much as possible. Don't make waves or try and get into a debate.

Though the law does not require it, some trustees may ask you to surrender all your credit cards at some point in the proceeding. (They are only required to do so for those creditors who specifically demand that their cards be returned) If you plan to keep one or more of your cards, make this intention known to your lawyer before the meeting begins. (These are the cards you paid off in anticipating of your filing).

Schedule your court appearance carefully. Discuss this important subject with your attorney. If he doesn�t mention the following � you bring it up. The best times are 1. Just before Christmas, 2. On a Friday just before a holiday weekend 3. During July or August during the vacation season.

Have your attorney sit down and prepare you for each court appearance. Be sure to discuss all questions you may be asked. Try to anticipate the unexpected as much as possible. You don�t want any surprises at this stage of the game.

Should a repossession agent show up to repossess an asset inside your home, you can legally refuse them access to your residence. The only way they can prevail is to go to a court and obtain a court order. Few creditors will bother. Especially if there�s an automatic stay in effect.

I would be remiss if I didn�t include a short note about what can go wrong at this point. When you get to court, you will be placed under oath and asked a series of detailed questions regarding your financial situation. Be very careful. This is no time for playing games. If the trustee comes to feel that you are not being completely honest he can do some rather unpleasant things to you. First he may forward a recommendation to the court that the discharge of your debts be disallowed. (Ouch!) But it gets worse. He may also report your suspected deception to the U.S. Attorney for federal prosecution! So the motto here is - be honest! Make every effort to appear open and fully cooperative.

The Infamous "Slam-Dunk"

If you�re facing a divorce - this information may be useful. But please, if you use this ploy against a spouse, be sure that they really deserve it.

Jack and Sally have been having problems lately and it appears that divorce is in the wind. One night Jack asks Sally to sit down and discuss their problems. In his most sincere voice he tells her how much he regrets what has happened and that he feels that the marriage is over. The only thing left to do is to divide up the marital assets fairly. Jack says that he wants to do the right thing for Sally. He offers Sally what sounds like a really good deal provided she doesn�t hire an attorney and is willing to forgo receiving any alimony. Jack offers to make the house payments for a full ten years. He also offers to pay off her car and will even make the payments on their considerable credit card debt. Not a bad deal she thinks. She gets to live in the house for a full decade. She gets her car paid off and she can stop worrying about those old credit card bills. Jack tells Sally that she won�t get a better deal through an attorney and if she decides to hire one, this deal is off. This is a limited one-time offer. Jack pulls out some papers which Sally happily signs. Smiles all around. Sally keeps the house and Jack accepts all the debt.

Two days after the divorce was final, Jack filed for Chapter 7 bankruptcy and wiped out all the debt he just accepted! Sally gets absolutely nothing out of the deal. She must now make the house payments or lose the house, must make the car payments or lose the car and like a boomerang those nasty old credit card bills come swooping back!

This terrible ploy has been visited upon so many ex-wives that new protections have been written into the bankruptcy code with the intention of protecting the victim�s situation. But there are some limitations.

The new bankruptcy law now allows the injured (slam-dunked) spouse to file for protection within 60 days of their ex-spouse�s creditors� meeting. This means that she must retain a lawyer (who of course will need to be paid) and file during the relatively restricted 60 day window. If she misses the window or cannot afford to hire an attorney � she loses. Many ex-husbands are hoping that their ex-wives lack either the knowledge or the resources to take advantage of this new law.

Leasing a Car So That the Bankruptcy Court Can�t (or won't) Touch it�

As with everything else in this report, be sure to run this past your lawyer before you take any actions. This strategy may be just the ticket you need to drive a decent late-model car or it might work at all. It's a gamble but there are those who have pulled it off...

You lease a car. Don�t get greedy here. Just lease a decent non-luxury model. A new Chevy or Ford will do nicely. Do not make a large down payment, just the usual one. Be sure there is no automatic-repossession-upon-notification-of-bankruptcy-filing clause in the lease agreement. Increase the contract�s penalties for returning the car before the final lease expiration date. Make sure there are no provisions for recovering any funds by surrendering the vehicle during the term of the lease. Make sure you stay current on the payments. And of course, don�t list the lease on your list of debts to be discharged on your bankruptcy petition.

The court may not like your lease if the car is too fancy or the term of the lease too long. Keep the lease down to two or three years, the shorter the term the better.

The court assigns a trustee whose job it is to recover as much money as possible by selling off your non-exempt assets. If you owned the car outright with no debt, and it�s value exceeds the usual maximum threshold (usually a measly $1,200) the trustee would quickly sell it off and use the funds to help satisfy your creditors. His decision would be a simple one.

But when a trustee decides whether or not to sell off a particular asset he must look at how much time and effort will be required versus how much money he might recover. If the effort is not worth the return, the trustee will take a pass, which is our goal in this case.

Because lease agreements vary so much, there are no black and white rules about whether or not a trustee will terminate a lease. A vehicle leased according the formula provided above may present the trustee with one of those situations where terminating the lease is more trouble than it�s worth. (Besides, it�s not going to produce any additional funds for your creditors - so why bother at all?)

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