Whenever someone files for Chapter 7 or Chapter 13 bankruptcy, they are supposed to do so in good faith. A bad faith filing means they did something to abuse the system. Your bankruptcy lawyer in Phoenix, AZ will work with you to ensure that you follow all of the rules and do everything in good faith.
Unfortunately, it appears that some Chapter 7 trustees and their attorneys are targeting people who thought they followed all the rules, but without the assistance of an experienced bankruptcy lawyer in Phoenix, AZ, the trustees and their attorneys may take advantage of a simple mistake made by a debtor, or a gray area of the law, which can be devastating to a debtor filing for bankruptcy. In their defense, the Chapter 7 trustees cannot legally advise a person who may have made a mistake. Nevertheless, they will take advantage of such errors.
It’s all due to a new economy.
A New Economy
The economy has improved and bankruptcy filings have drastically decreased. That means trustees and attorneys are not getting as much money from bankruptcy filings as they once were. Trustees are paid a percentage of what property they sell and disburse to creditors. The attorneys for the trustees are paid from the gross proceeds of what will be disbursed to creditors. In some instances, the majority of assets collected to pay unsecured creditors end up in the accounts of the Chapter 7 trustee. With less filings, less money is paid toward the trustees administrative fees.
Part of a trustee’s responsibilities in administering the bankruptcy estate is to scrutinize paperwork filed in the case. This important responsibility is meant to maximize proceeds to creditors and to find bad faith filings and refer those to the U.S. Trustee. This is a good thing.
Unfortunately for many unrepresented debtors, mistakes are made either by the debtor or the document preparer and those mistakes can cost a debtor dearly. Not only can a debtor be fined, the debtor can lose property and have their discharge set-aside, which means creditors can collect against the debtor.
In a perfect world, there would be a perfect solution. Unfortunately, the bankruptcy system is not perfect. For now, though, there are two things you can do to help with this situation. These two things make it possible to file a successful Chapter 7 and Chapter 13 bankruptcy, even with an imperfect system.
First, always use a bankruptcy lawyer in Phoenix, AZ if you file Chapter 7 or Chapter 13 bankruptcy. That will prevent you from actually making a bad faith filing or a mistake in the documents that you file. Using an attorney will also protect you if a trustee and the trustee’s lawyer try to argue a gray area of the law, and, in essence, offer to “settle” the matter or subject you to a litigation. Having a lawyer on your side will increase the odds that you will come out of the process unscathed.
While the system is not perfect, it is, in my opinion, the best bankruptcy system out there. Unfortunately a system is not better than the people who operate within that system. Having the right bankruptcy lawyer in Phoenix, AZ can make the system work for you. You can’t do it on your own, but you can do it with a strong litigator on your side.
This blog is intended as a general discussion of legal issues and not as a statement of fact, legal advice or a legal opinion. No attorney-client relationship is created by this blog. Do not act or rely upon law-related information in this communication without seeking the advice of an attorney licensed to practice in the relevant area.