Filing a Chapter 7 bankruptcy is scary, and most people are falsely convinced that it would ruin them financially. But the reality is that bankruptcy can often improve your credit score because a person who declared Chapter 7 in the past is not as high a credit default risk as one who is suffocating under a mountain of debt. Events happen that are out of our control. Job loss, foreclosure, illness - there is a multitude of reasons why you may need the help of a New York bankruptcy lawyer.

Ultimately, filing for a Chapter 7 bankruptcy protection may the right choice for you. Chapter 7 is known as a "straight liquidation bankruptcy" and is the most common type of consumer bankruptcy. It has generally been the bankruptcy used by those with few or no valuable assets.

To help you understand Chapter 7 bankruptcy, Storobin & Spodek LLP, a bankruptcy law firm in New York, is publishing a series of articles. This one will deal with the meeting with the U.S. Trustee in the bankruptcy court, a meeting also known as the 341 hearing.

At the New York bankruptcy court 341 hearing, the United States Trustee asks the person filing for bankruptcy several questions. You should keep in mind that the Trustee is not a judge and does not rule on your bankruptcy case.

Answer these questions directly, without elaborating unless asked to clarify by the Trustee. Make sure to bring your driver's license and social security card.

Please note you must bring your social security card and Drivers’ license [it must have the same address that is on your petition] to the hearing.

QUESTIONS THAT ARE USUALLY ASKED:

1. Name, social security number, and address.

2. Did you read the Bankruptcy Information Sheet?

3. Did you sign the petition, schedules, statements, and related documents you filed with the New York bankruptcy court?

4. Have you read the petition, schedules, statements, and related documents?

5. Are you personally familiar with the information contained in these documents?

6. Is the information in these documents accurate?

7. Do you see any errors or omissions in these documents?

8. Are all of your assets identified on these documents?

9. Have you listed all of your creditors?

10. Did you ever file bankruptcy before?

POTENTIAL PROBLEMS

A. There are several types of loans that are nearly impossible to be discharged. One of them is the student loan. For such loans, one must prove inability to pay, which sounds much simpler than it really is. There would have to be an adversarial proceeding proving much more than what one would normally need to prove in a bankruptcy.

Likewise, parking tickets, child support, alimony and income taxes are not discharged via a Chapter 7 bankruptcy. Large payments to family, as well as anything related to fraud, may not be erased by declaring a bankruptcy.

You should also remember that your loan co-signers won't be discharged just because you filed a bankruptcy. They may be forced to pay your debt even though your Chapter 7 bankruptcy was approved.