Anxiety and Bankruptcy: Is the Bankruptcy Process as Horrifying as They Say?
Anxiety is the worst. I have it. You have it. We all have it to some degree or another and none of us like it too much. Ok, so anxiety has its good quality: it is meant to keep you alive. That is a perk. Thank you, Anxiety. I appreciate that. But let’s face it, for something that is supposed to have such a noble purpose it comes with way too many lousy side effects.
The very thought of filing for bankruptcy understandably causes many people to experience a high degree of anxiety. Let’s face it, this is a new experience with many unknowns and probably quite a bit of anticipatory anxiety. Everyone considering bankruptcy has heard someone – whether that be a friend, family member, creditor, or otherwise – say, “You don’t want to do that” then proceed with a 20-minute unasked-for monologue that may or may not be comprised entirely of opinion based upon something other than the truth. Regardless of whether those monologues are accurate or not, the problem is that when you are hearing things from left and right, it becomes overwhelming. There are too many “unknowns.” There are too many “what-ifs?” At that point, it becomes difficult to tell whether the concerns about bankruptcy are truly demons, or just shadows in the night. In those types of situations in life I believe it is important to take a moment to inspect the situation – metaphorically look under the bed, turn on the light, open the closet. I am hopeful that a quick walk-through of the process can pull back the blankets and perhaps show that there is nothing hiding to get you.
What Will Happen if I go to an Attorney’s Office for an Initial Consultation?
Many people filing for bankruptcy have never been in an attorney’s office – or they have and still have a bitter taste in their mouth from the expensive attorney fees from a civil or criminal lawsuit. But in terms of the actual meeting with the bankruptcy attorney, you probably won’t find a lot of monsters hiding under the bed. Hopefully the consultation will be a little more exciting than talking to an accountant, but no guarantees. The consultation will most likely revolve primarily around the amount and type of debt you have, assets you may or may not want to protect, different types of bankruptcy, and your options.
Will it cost me money to meet with the attorney? Most likely it won’t cost you anything unless you decide to file. Finances are a huge concern for people considering bankruptcy – for obvious reasons. What if you meet with an attorney, the attorney charges a small fortune just to tell you that bankruptcy is not a good option for you? Honestly, I don’t know of any attorneys that do that. In fact, I doubt that attorney would stay in business very long if that was his or her practice. Before you go into an attorney’s office, ask how much it will cost for an initial consultation? Most, if not about all, attorneys that practice bankruptcy provide free consultations to people considering bankruptcy. Sometimes bankruptcy is the right option for person’s situation and sometimes it isn’t. If after the consultation you decide not to proceed with the bankruptcy, or your attorney does not think it will help you, you shouldn’t be out anything other than the time you spent discussing options.
Will anybody in the attorney’s office think poorly of me? Many people feel embarrassed to file for bankruptcy. But any attorney who has practiced bankruptcy for even a short period of time will tell you they have heard just about every reason for bankruptcy. In reality, there are hundreds of reasons a person needs to file and just about all of them revolve around the simple fact that sometimes life can be harsh. These reasons include but are not limited to: medical bills, losing a job or taking a cut in pay, expensive car repair bills, home repairs bills, lawsuits, garnishments, car accidents, injuries, gambling problems, credit card debt gets too high, divorce, family member dies creating loss in household income, new addition to the family creating more bills, etc. Nobody asks for these, but life happens and there are a thousand ways a person’s finances can get shot and make them need to file bankruptcy. Bankruptcy is not about figuring out how, when, and why a person got into financial problems. It is about trying to help a person get out of a bad situation. I think it is safe to say that the attorney’s focus will be on what they can do now, and whether bankruptcy is something that will help.
Is there a chance meeting with an attorney could get me into trouble? No, in fact the attorney is there to keep you out of trouble. Communication with an attorney is protected by attorney-client privilege. If you think there is something unique about your situation where filing bankruptcy might get you into trouble, bring it up. It is way better to stay out of trouble in the first place then try to get out of it later.
If I Decide to File, What Personal Information Will I Need to Disclose?
Many people are concerned that if they file bankruptcy they may need to share potentially embarrassing personal information with their attorney. I find this is especially true if much of the debt is related to medical bills. This is understandable. If you are like most people, you probably don’t commonly share tons of personal information with someone you just met, and probably don’t feel particularly comfortable doing so. In order to file bankruptcy, there really shouldn’t be any reason to dive into the reasons for your medical bills or discuss embarrassing family drama. In the vast majority of cases, your attorney will only need information relating to your financial situation (i.e. credit report, bills, bank statements, paystubs, information about lawsuits against you, appraisals of property, etc.). Hopefully this shouldn’t embarrass you. But if you are embarrassed by showing this personal information, just remember you are working with a bankruptcy attorney. The attorney does not expect to see an A+ credit rating with amazing finances. If that was the case you probably wouldn’t have gone to that attorney’s office in the first place.
Will I Have To Go To A Hearing?
You will be required to attend a hearing with a trustee, referred to as a 341 hearing. This hearing is typically one of the biggest sources of anxiety for most people, especially if you have never seen one. If you are expecting a grand Law and Order type of event, you will likely be horribly disappointed. A 341 hearing would not make for great TV and is typically, very anticlimactic. Once in a blue moon something exciting might happen, but the overwhelming majority of the time these hearings are very painless and over in just a few minutes (less than 10 minutes). Typically, the trustee will ask you to swear the truth then ask very factual based questions such as: what is your name, what is your address, did you read the petition, and is it true and complete? One of the questions bankruptcy attorneys seem to get asked the most after a 341 hearing is, “So…was that it?” As long as you have been honest and upfront in your dealings and bankruptcy petition, the 341 hearing should be very short and uneventful. If you aren’t hiding anything, then you should be afraid that anything is hiding at the hearing waiting to get you.
What Happens Next?
This will largely depend on what type of bankruptcy you filed. Either way you will need to take a credit counseling class, which is little more than getting on a website and watching a video. Don’t worry, it is not a horror movie. If the trustee requested any additional information at the 341 hearing, you will need to submit that information. If nothing further is needed for a Chapter 7, you will sit tight until you receive the discharge notice from the Bankruptcy Court. If it is a Chapter 13, you will make the monthly payments in the amount that your attorney would have disclosed to you previously which should come as no surprise. And if you have any questions, make sure to consult with your attorney.
Bankruptcy can be a new and potentially anxiety-producing situation for most people considering filing for the first time. There is nothing anyone can say or do to help get rid of all anxiety. Anxiety is just a part of life. As with many things in life, I have found that often the anticipation and fear of the unknown can be the worst part about it. I find that usually if you turn on the lights, search the closets, and look under the bed, the lurking demons are just shadows on the wall.