bankruptcy attorney Interview Questions and Answers

1. What are the different types of bankruptcy available under the U.S. Bankruptcy Code?

   • Answer: The main types are Chapter 7 (liquidation), Chapter 11 (reorganization for businesses), Chapter 13 (reorganization for individuals with regular income), and Chapter 12 (reorganization for family farmers and fishermen). There are also less common chapters such as Chapter 9 (municipalities) and Chapter 15 (cross-border insolvency).

2. What is the difference between Chapter 7 and Chapter 13 bankruptcy?

   • Answer: Chapter 7 involves the liquidation of non-exempt assets to pay creditors. Chapter 13 allows individuals with regular income to create a repayment plan over three to five years. Chapter 7 is generally faster, while Chapter 13 offers the possibility of keeping assets.

3. What are some common misconceptions about bankruptcy?

   • Answer: Common misconceptions include that bankruptcy ruins your credit forever (it impacts it significantly but doesn't ruin it permanently), that you'll lose all your possessions (exempt assets are protected), and that it's a simple process (it involves significant paperwork and legal procedures).

4. What is the role of the bankruptcy trustee?

   • Answer: The trustee oversees the bankruptcy process, ensuring compliance with the Bankruptcy Code. In Chapter 7, they liquidate non-exempt assets and distribute the proceeds to creditors. In Chapter 13, they monitor the debtor's compliance with the repayment plan.

5. What are exempt assets?

   • Answer: Exempt assets are those protected from creditors in bankruptcy. These vary by state but often include a certain amount of equity in a home, a vehicle, and personal property. The specific amounts and types of exempt property are determined by state and federal law.

6. Explain the means test in Chapter 7 bankruptcy.

   • Answer: The means test determines whether an individual's income is above a certain threshold. If it is, they may be ineligible for Chapter 7 and instead be required to file for Chapter 13. The test compares the debtor's income to the median income in their state and considers their expenses.

7. What is a reaffirmation agreement?

   • Answer: A reaffirmation agreement is a contract where a debtor agrees to continue paying a debt after bankruptcy, even though it could be discharged. These agreements are often used for secured debts like mortgages and car loans but are not always advisable.

8. What is an automatic stay?

   • Answer: The automatic stay is a legal protection that goes into effect once a bankruptcy petition is filed. It prevents creditors from taking collection actions against the debtor, such as lawsuits, foreclosures, wage garnishments, and repossessions.

9. What is a discharge in bankruptcy?

   • Answer: A discharge is a court order that relieves the debtor from personal liability for certain debts. Not all debts are dischargeable; some, like student loans and certain taxes, are often non-dischargeable.

10. What are some common reasons for business bankruptcy?

    • Answer: Common reasons for business bankruptcy include poor management, insufficient capital, economic downturns, increased competition, and failure to adapt to market changes.

11. How does bankruptcy affect credit scores?

    • Answer: Bankruptcy remains on a credit report for 7-10 years, significantly lowering credit scores. It makes it harder to obtain credit in the future but doesn't permanently prevent it. Responsible credit use after bankruptcy can help rebuild credit.

12. What advice would you give someone considering bankruptcy?

    • Answer: Seek legal counsel from a bankruptcy attorney to discuss options, understand the process, and determine the best course of action. Be honest and forthcoming with the attorney about finances and assets.

13. What is the role of creditors in bankruptcy proceedings?

    • Answer: Creditors file claims to be paid from the debtor's assets or income. They have a right to participate in bankruptcy proceedings and may object to the debtor's plan or actions.

14. Can you explain the concept of "priority claims" in bankruptcy?

    • Answer: Priority claims are debts that have precedence over other unsecured debts in receiving payment from the debtor's assets. These typically include certain taxes, child support, and alimony.

15. What are some ethical considerations for a bankruptcy attorney?

    • Answer: Ethical considerations include maintaining client confidentiality, providing competent legal representation, avoiding conflicts of interest, and ensuring honest and transparent communication with clients and the court.

16. What is the process of filing for Chapter 7 bankruptcy?

    • Answer: The process involves gathering financial documents, completing bankruptcy forms, undergoing credit counseling, filing the petition with the court, meeting with creditors, and potentially attending a meeting of creditors with the trustee.

17. What is the process of filing for Chapter 13 bankruptcy?

    • Answer: It involves creating a repayment plan, which needs court approval. Credit counseling is required, and the debtor must provide detailed financial information. The plan must be feasible and pay creditors a certain percentage of their claims over three to five years.

18. How long does the bankruptcy process typically take?

    • Answer: Chapter 7 typically takes 4-6 months, while Chapter 13 can take 3-5 years depending on the complexity of the case and the repayment plan.

19. What are some common objections to a Chapter 13 plan?

    • Answer: Creditors might object if they believe the plan is not feasible, doesn't pay them a sufficient amount, or if the debtor hasn't disclosed all assets or income honestly.

20. What is a creditor's meeting (341 meeting)?

    • Answer: The 341 meeting is a meeting between the debtor, creditors, and the bankruptcy trustee where the debtor is examined under oath about their finances and assets. Creditors can also ask questions.

21. What are some strategies for maximizing asset protection in bankruptcy?

    • Answer: Strategies include properly claiming exemptions, understanding state exemption laws, and ensuring all assets are accurately reported to the court.

22. What is the difference between secured and unsecured debt?

    • Answer: Secured debt is backed by collateral (e.g., a mortgage on a house, a car loan). Unsecured debt is not backed by collateral (e.g., credit cards, medical bills).

23. What is a non-dischargeable debt? Give examples.

    • Answer: A non-dischargeable debt is a debt that cannot be eliminated through bankruptcy. Examples include student loans (in most cases), taxes, alimony, child support, and debts resulting from fraud.

24. How can a bankruptcy attorney help someone avoid bankruptcy?

    • Answer: By negotiating with creditors, creating debt management plans, exploring other options such as debt consolidation, and helping clients improve their financial situation to avoid bankruptcy if possible.

25. What is the role of the bankruptcy court judge?

    • Answer: The judge oversees the proceedings, rules on legal issues, approves or rejects bankruptcy plans, and ensures the process is conducted fairly and according to the law.

26. What is a proof of claim?

    • Answer: A proof of claim is a formal document filed by a creditor that outlines the amount of debt owed to them by the debtor.

27. How does bankruptcy affect co-signers on loans?

    • Answer: The discharge of a debt in bankruptcy does not usually release co-signers from their responsibility. The creditor can still pursue the co-signer for the debt.

28. What are the potential consequences of failing to disclose assets in a bankruptcy filing?

    • Answer: This can lead to serious consequences, including the dismissal of the bankruptcy case, denial of discharge, and even criminal charges for fraud.

29. What are some common mistakes people make when filing for bankruptcy?

    • Answer: Failing to accurately disclose assets and liabilities, not understanding the implications of the different bankruptcy chapters, and not seeking professional legal advice.

30. What is a reaffirmation hearing?

    • Answer: A reaffirmation hearing is a court proceeding where the court reviews a reaffirmation agreement to ensure it is fair and in the best interests of the debtor.

31. What is the difference between a voluntary and involuntary bankruptcy?

    • Answer: Voluntary bankruptcy is initiated by the debtor, while involuntary bankruptcy is initiated by creditors when the debtor is unable to pay their debts.

32. What are some of the legal fees associated with bankruptcy?

    • Answer: Attorney fees, filing fees, and other court costs. The amount varies depending on the complexity of the case and the attorney's fees.

33. What is the impact of bankruptcy on student loan debt?

    • Answer: Student loans are generally not dischargeable in bankruptcy unless proving undue hardship. This is a difficult burden to meet.

34. How can a bankruptcy attorney help someone navigate the emotional challenges of bankruptcy?

    • Answer: By providing support, understanding, and guidance throughout the process. A good attorney will explain the process clearly and help alleviate stress and anxiety.

35. What is a stay relief hearing?

    • Answer: A hearing where a creditor requests the court to lift the automatic stay, allowing them to pursue collection actions against the debtor.

36. What types of records and documents are needed to file for bankruptcy?

    • Answer: Pay stubs, tax returns, bank statements, credit card statements, loan documents, and a list of assets and liabilities.

37. What is the role of a bankruptcy mediator?

    • Answer: A bankruptcy mediator helps debtors and creditors reach agreements to resolve disputes outside of court.

38. What are the requirements for eligibility for Chapter 12 bankruptcy?

    • Answer: The debtor must be a family farmer or fisherman with regular income, and a significant portion of their debt must be related to their farming or fishing operation.

39. What is the difference between a secured claim and a priority claim?

    • Answer: A secured claim is backed by collateral, while a priority claim has preferential treatment in repayment due to its nature (e.g., taxes, child support).

40. How does bankruptcy affect tax liabilities?

    • Answer: Bankruptcy may discharge some tax debts but not all. Certain taxes, such as income taxes, have priority and are often not dischargeable.

41. What is the significance of the "fresh start" doctrine in bankruptcy?

    • Answer: It's the underlying principle of bankruptcy, allowing individuals to discharge debts and obtain a financial fresh start after meeting certain requirements.

42. What are some potential long-term effects of bankruptcy?

    • Answer: Reduced credit scores, difficulty obtaining credit, challenges in renting or buying a home, and potential impacts on employment.

43. What is the best way to find a reputable bankruptcy attorney?

    • Answer: Check online reviews, seek referrals from trusted sources, and verify the attorney's qualifications and experience with state bar associations.

44. What questions should I ask a potential bankruptcy attorney before hiring them?

    • Answer: Ask about their experience, fees, success rate, approach to bankruptcy cases, and communication style.

45. What is a preference in bankruptcy?

    • Answer: A preference occurs when a debtor pays one creditor more than others within 90 days (or one year for insiders) before filing for bankruptcy, giving that creditor an unfair advantage.

46. What is a fraudulent conveyance in bankruptcy?

    • Answer: A fraudulent conveyance is when a debtor transfers assets to avoid paying creditors before filing for bankruptcy, often hiding assets to prevent their use to pay off debts.

47. How can I prepare for my meeting of creditors?

    • Answer: Review your financial documents, prepare answers to potential questions, and be honest and forthcoming with the trustee and creditors.

48. What happens if my bankruptcy case is dismissed?

    • Answer: Creditors can resume collection activities, and the debt remains unpaid. The reasons for dismissal range from failure to comply with court orders to insufficient information provided.

49. What is a Chapter 11 reorganization plan?

    • Answer: A detailed plan submitted by a debtor in a Chapter 11 bankruptcy proposing a way to reorganize the business and repay creditors over time.

50. What is a cramdown in Chapter 13?

    • Answer: A cramdown is when the bankruptcy court approves a Chapter 13 plan over the objection of creditors. The court must find the plan to be fair and equitable.

51. Can a bankruptcy attorney help with debt negotiation outside of bankruptcy?

    • Answer: Yes, many bankruptcy attorneys can also assist with debt negotiation, debt consolidation, and other strategies to avoid bankruptcy.

52. What is the difference between a Chapter 7 trustee and a Chapter 13 trustee?

    • Answer: Both oversee the bankruptcy, but in Chapter 7, the trustee is primarily responsible for liquidating assets, while in Chapter 13, the trustee monitors compliance with the repayment plan.

53. What is an adversary proceeding in bankruptcy?

    • Answer: A lawsuit filed within the bankruptcy case to resolve disputes between the debtor and creditors or between creditors.

54. How does bankruptcy affect my ability to get a mortgage in the future?

    • Answer: A bankruptcy will make it more difficult to get a mortgage, requiring a longer waiting period and potentially stricter lending requirements.

55. What is the impact of bankruptcy on a person's ability to travel internationally?

    • Answer: Bankruptcy typically doesn't directly restrict international travel, but significant debt and credit issues might affect visa applications.

56. What is the significance of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?

    • Answer: This act made significant changes to the bankruptcy laws, including stricter requirements for Chapter 7 eligibility and increased oversight.

57. How does the location of a bankruptcy filing impact the process?

    • Answer: State laws vary regarding exemptions and procedures. The specific bankruptcy court's rules and practices will also influence the process.

Thank you for reading our blog post on 'bankruptcy attorney Interview Questions and Answers'.We hope you found it informative and useful.Stay tuned for more insightful content!