After starting a bankruptcy case, a debtor must stay closely involved with all activities in a bankruptcy case until a discharge is received AND the bankruptcy case is closed. In some ways, bankruptcy is like a deal that Congress has made with a debtor. If a debtor follows the bankruptcy rules and meets certain financial tests, a debtor obtains debt relief. But if a debtor does not pay attention to the bankruptcy case and does not follow the bankruptcy rules, rights will be lost, benefits delayed, and if the bankruptcy case is closed without a discharge being entered, a debtor may have to pay extra to reopen the bankruptcy case to achieve the debt relief desired. In some situations a bankruptcy case may be dismissed. Some ways that a debtor must remain involved with the bankruptcy case are:
A) Read all Mail Sent by the Court and Other Parties Related to the Bankruptcy Case – Pay close attention to all information sent by the court because a good way for a debtor to protect its rights is by staying informed about the bankruptcy case. For example:
- The Court may notify a debtor that certain forms were not filed, and there will be a deadline for filing the forms to avoid dismissal of the case. Generally all information is required to be filed no later than 14 days after a bankruptcy case was opened, and if not filed, the bankruptcy case may be dismissed with an order barring the debtor from filing again for a specific period of time (i.e., 180 days or more).
- A creditor may file a lawsuit to have its debt deemed non-dischargeable, and it is imperative that the complaint be answered within thirty (30) days of a summons being issued by the court.
- A creditor may file a motion asking the judge to allow the creditor to take action against the debtor. The written notice of motion will indicate the deadline for filing a written response, usually fourteen (14) days before the hearing.
B) Notify the court of any change in mailing address -- If a debtor has a change of mailing address, it is the debtor's responsibility to promptly file a change of address form so that the Clerk's Office, trustee, and creditors know where to mail documents to the debtor.
Download Form:Change of Address (The debtor should also mail a copy of the change of address form to the trustee, U.S. Trustee, and all creditors.)
C) Understand the Concept of Due Process for all Parties – Due Process means that all parties must have the opportunity to prepare for the court hearing before the court makes a ruling. To prepare for a court hearing, a party must have time to prepare and review issues so that the party can determine the right action to take or which arguments to address. Bankruptcy court is not like television court programs. It is not appropriate to surprise the judge or surprise the trustee or creditor by showing up at a hearing with new witnesses or new evidence. The court only becomes involved when there are two sides that need a resolution. This means that the court AND the other party must be allowed to prepare for a court hearing. Therefore:
- A debtor must be presented with evidence in time to respond with its own evidence;
- A trustee or creditor must be presented with evidence in time to respond with its own evidence; and
- The court must be provided with evidence from all parties far enough in advance of a court hearing so that the court can properly review and consider all arguments and evidence.
D) Follow all Deadlines for Filing Documents and Submitting Evidence – When court hearings are scheduled or when the clerk's office is preparing to take action, a debtor will be sent a notice by the court, the trustee, or a creditor. The notice will clearly state the deadline for completing the action required, such as filing a document with the court, filing a written response to a motion, and/or mailing the response to the trustee or creditor. Therefore, pay close attention to deadlines for filing documents, deadlines for filing evidence to support a legal argument, and making court appearances because there may be serious financial consequences.
- If there is a deadline for filing a document or other evidence (and serving it on the opposing party), that deadline is the date the document must be received by the court. If a debtor mails a document to the court, generally allow at least three business days so that it is timely received. The postmark date does not count. Generally, documents and evidence must be filed with the court AND mailed to the other party fourteen (14) days before a hearing.
- Judges will generally not allow anyone to argue facts and the law at a hearing if the arguments were not written and timely filed and served on the opposing party.
- Following deadlines gives the opposing party confidence that the debtor is involved and is acting responsibly and participating in the process. Communication is a good way to get the opposing party to be patient and work collaboratively.
E) Promptly Communicate With Attorney – If a debtor has an attorney, and the attorney contacts the debtor about a court date or other papers that need to be filed, the debtor should call the attorney immediately. Do not wait until the last minute, as there are court deadlines that must be complied with, and it is not reasonable to expect the attorney to meet the deadline without a debtor's cooperation and information. Just because a debtor has an attorney does not mean that the court will reset hearing dates or give extra time to submit evidence and file documents. Failure to meet court deadlines or be present at court hearings can result in a bankruptcy case being dismissed or in the court granting a motion in favor of a creditor, EVEN IF A DEBTOR HAS AN ATTORNEY.
F) Attend the Mandatory 341(a) Meeting of Creditors – Within thirty (30) to forty-five (45) days after a bankruptcy case is filed, the debtor must show up at the Office of the United States Trustee so that a trustee and creditors can ask questions about the debtor's financial situation. This meeting is required under section 341(a) of the Bankruptcy Code and is called a 341(a) Meeting of Creditors. The clerk's office mails a notice that contains the date, time, and location of the 341(a) Meeting.
G) Attend all Court Hearings – Most court hearings are scheduled because a trustee or creditor filed a motion. If the court sets a hearing date to rule on a motion, the debtor should timely respond to the motion AND attend the hearing, regardless of whether or not the debtor has an attorney.
- At a court hearing, the judge generally will explain the ruling to a debtor, and if the debtor has filed a written motion or response, the judge will allow the debtor to state the debtor's position on the motion.
- If a debtor has an attorney, this is an excellent time to talk with the attorney before and after the court hearing. Often a debtor has no defense to the motion. However, attending a court hearing is a good method for understanding the judge's ruling.
- Often a debtor is not represented by an attorney, and therefore the debtor may need to talk with the judge to understand the impact of a ruling. This is important because often a judge's ruling will be made in a simple order that either "denies" or "grants" a motion, without any other explanation or reasoning. A debtor will NOT be able to obtain an explanation by calling the judge's staff, calling clerk's office staff, or writing a letter to the judge.
H) Be Honest – Never hide information from the court or trustee and never be untruthful about details of financial condition. The bankruptcy case trustee, U.S. Trustee, or other parties can ask the court to deny a discharge of debts if a debtor provides false information. This may result in the loss of property and dismissal of a bankruptcy case without a discharge and loss of the bankruptcy case filing fee. The debtor may have transferred or given property to a friend or relative before or after the bankruptcy case was filed, and the court or trustee has the right to examine such transactions. Do not hide this information, as the bankruptcy court process is designed to benefit all creditors in a certain priority and plan for fairness. Sometimes property must be returned to the bankruptcy estate so that it can be distributed in accordance with these rules, and hiding information can be considered bankruptcy fraud and may result in criminal prosecution.
