Not all of my consultations go well. In fact, I had one this week that ended with a potential client quickly scooping up the documents she had brought in off my desk and rushing for the door. She couldn’t seem to get out of there fast enough.
She didn’t like what I had to say. She had called me in the morning and asked if she could come in later that afternoon. She said she was ready to file. She said she had everything she needed. We scheduled an appointment for a few hours later. She was there on time, and she was ready to get down to business.
Of course, I knew nothing about her. I’m always pleased when someone wants to hire me, but I’m also wary of someone who wants to hire me without spending any time with me and learning about the bankruptcy process. I launched into consultation mode and began asking her the same questions I ask all potential clients.
That’s when the trouble started.
She had recently received a very large tax refund. I asked if any of the money was left, and how she had spent it. Yes, there was still quite a bit left. She had paid some bills with some of the money. But she had also given a large portion of it to her grandmother to repay a loan. She began getting flustered and didn’t understand why I needed to know anything about her tax refund.
I explained that if she still had a large portion of the refund when we filed her bankruptcy petition, there was a good chance that she would have to turn it over to the bankruptcy trustee, who would distribute it to her creditors. I could tell that she was not enjoying our conversation. I explained to her that the bankruptcy rules only allow certain assets to be protected, and that unprotected assets may have to be turned over. Tax refunds for the year in which the bankruptcy case is filed are unprotected in Colorado.
I also asked her if she was being garnished. In fact, she was. That was the big reason she was in such a rush to get filed as soon as possible. To stop the garnishment.
After I went through all of my questions, I let her know that there were some issues that she should be prepared for if she filed.
First, filers are required to disclose certain financial transactions. One of those transactions is the repayment of any debts to family members within the twelve months of filing. I let her know that she was going to have to disclose the payment to her grandmother and that there was a chance that the trustee would want to recover that money, either from her grandmother or from her.
Next, I let her know that the trustee would ask whoever had been garnishing her paycheck to return the money to him so it could be distributed to all her creditors. And since he was going to do that, the trustee would also ask her to turn over 25% of any wages she was due on the day the case was filed.
Altogether, I told her that she may have to turnover a portion of whatever wages her employer owed her on the day we filed, the money she paid to her grandmother, and any remainder of her tax refund if she hadn’t spent it before we filed.
This was too much for her. She was not prepared for the idea that she may have to pay any money to her debts in bankruptcy. She also had no idea that she was going to have to meet with the trustee. She thought that she would drop off the account statements from her debts and that I would take care of the rest. She didn’t realize that she would have to answer any questions at all.
Suddenly, she wanted nothing to do with me or the bankruptcy process. She grabbed her things and rushed for the door. I barely had time to get out of my seat. But to be honest, I didn’t try too hard. My job is to help people through the bankruptcy process, but it requires their cooperation. They have to be willing to give me answers to the questions I ask. They have to be willing to tell the truth. In return for full disclosure, they’ll be relieved of most, if not all, of their debts and get a fresh financial start. She wasn’t prepared to do that.
If someone who files bankruptcy decides not to tell the truth, they can’t expect any assurances. They can’t expect that when the truth inevitably comes out that there won’t be any consequences.
So, while I was sorry to see her so unhappy about the information I was giving her, it was probably best for the both of us that she left without hiring me.
If you’d like to learn more about the Chapter 7 and Chapter 13 bankruptcy process, we hope you’ll come in for a consultation with an experienced Colorado bankruptcy attorney. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.
Colorado Bankruptcy Law Group, LLC
We are Denver, Colorado bankruptcy attorneys. We help people who have been blindsided by life's unexpected events find their way to financial recovery.
3773 Cherry Creek North Drive, Suite 575