bankruptcy

Why is this bankruptcy taking forever?!

Justin HarelikDear Bankruptcy Adviser,
Why does it take so long to get bankruptcy papers filed and processed? I have a friend who said she gave papers to the attorney more than eight months ago and paid the full fee, but she hasn't met with her attorney, and the attorney has not filed any papers for her.
-- Barbara

Dear Barbara,
It is always interesting when someone asks me whether a colleague has done something or is doing something wrong. The first things that come to my mind are the sayings, "Let him who is without sin cast the first stone" and "People who live in glass houses shouldn't throw stones." I am far from perfect in the handling of all my cases, too.

4 things that delay bankruptcy:

  1. Protecting assets.
  2. A previously filed case.
  3. Income being too high.
  4. Attorney unaware of the paid balance.

While I am constantly trying to stay on top of my cases, I have some clients that call me a year after paying the balance asking for an update. Their most common statement is that they did not know to call me or did not want to bother me. I'm always surprised by this as most of my clients call me every day once the balance is paid and push to get the case filed.

That being said, there might be reasons why the case hasn't been filed. Here are four common reasons for a delay:

Assets need to be protected: Your friend might have assets that cannot be protected if the case is filed now. The attorney may have discussed a way to legally and appropriately protect those assets prior to filing the case. This can delay the filing for a long time.

Previously filed a bankruptcy case: You can only file for Chapter 7 bankruptcy protection and receive a discharge, or elimination, of debt once every eight years. I have many clients that are in need to file again but have not reached the eight-year mark from the date the prior case was filed. The attorney might be holding off on filing until the new case can be filed.

Income is too high for a Chapter 7 bankruptcy: Sometimes extra work can push a client's typical income beyond the Ch. 7 threshold. This means the client isn't eligible for Ch. 7 bankruptcy right now, but usually will be once the extra work or overtime ends. Attorneys sometimes have to wait in order to show the court that the income was a temporary increase and not permanent.

Attorney is unaware that the balance has been paid or has not received all the necessary documents to file: Attorneys aren't always made aware that a balance has been paid. While your friend might not want to "bother" the attorney, she has paid him to perform a service. She needs to contact him regularly to confirm that she has paid the balance and that she has supplied all the required documents. Tell her to remember the saying: "Patience is a virtue, but persistence to the point of success is a blessing."

Your friend needs to call the attorney every day until she is given an update. After making calls for one consecutive week with no success, she needs to take a trip to his office. If the office is too far away or she is not able to travel easily, she needs to mail the attorney a certified letter asking for a case update.

At that time, if there has been no update or resolution, she should consider filing an official complaint with the state bar. While this does not always resolve the issue, it is the most likely approach to get a response from the attorney. I will assume that the attorney would prefer to protect his license over holding onto fees paid for work not yet performed.

Ask the adviser

To ask a question of the Bankruptcy Adviser, go to the "Ask the Experts" page and select "Bankruptcy" as the topic. Read more Bankruptcy Adviser columns and more stories about debt management.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CREDIT CARD WEEKLY NEWSLETTER

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

Debt Adviser

Charged-off debt still on me?

Dear Debt Adviser, If a debt is charged off, am I responsible for paying off that debt? -- Jenny Dear Jenny, Yes, oui, ja, da, si and dui. In any language, including good ol' American legalese, you must pay. But don't... Read more

advertisement
Partner Center
advertisement

Connect with us