Bankruptcy papers, not the court appearance, are the big deal

21 Aug Bankruptcy papers, not the court appearance, are the big deal

Bankruptcy debtors obsess about the first meeting of creditors as the most important moment in their bankruptcy case. But it’s really the bankruptcy schedules that are the critical task, the event that requires the debtor’s best effort.

I’ve spent years teasing clients about their fears about the first meeting of creditors; they imagine an inquisition, a test in which they have to prove themselves worthy of bankruptcy relief. No amount of telling them that it is routine, that no rights are won or lost at the first meeting, seems to allay their fears. They toss sleepless; they forget stuff they know; they look like the trustee is a firing squad. Afterwards, I get to tease them: it was as straight forward as I tried to tell them.

But a client thanking me for supporting him at the first meeting of creditors, “this critical event” he said, made me articulate for him what I knew, unknowingly, before: it’s really the complete and honest disclosure in the papers filed with the court that is the critical event. The first meeting of creditors is just the debtor’s opportunity to validate those disclosures.

Clients have a tendency to see filling out the lists of assets, debts and financial history as non events. They’ve filled out forms before, this is commonplace, they think. I often have to struggle to get them to take it seriously, to read all of the questions, and to think about assets and transactions that don’t fit their definition of “assets” or transfers.

Yet it is those schedules, signed under penalty of perjury, that are the foundation of the bankruptcy case, and the critical event to a bankruptcy discharge. An asset, a transaction, a claim that is disclosed in the schedules, can seldom produce a bankruptcy debacle. Disclose, disclose, disclose. Take the papers seriously, review them carefully before they are filed, and what follows is usually a cakewalk.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.

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