Although It’s Federal Law, Filing Bankruptcy Is Truly Local

Federal Law

It is true that the federal bankruptcy laws apply to every American in each state. However, there is a local flavor to filing bankruptcy depending upon which state you live in and in which County that you live in. For this reason, when considering bankruptcy, you want to find a bankruptcy law firm that is aware of the local tendencies. Let’s look at the state of Illinois for example. Illinois is in the same federal district as the state of Wisconsin. However, each state utilizes a different set of exemptions which entitles debtors to keep property away from the trustee’s administration ability and away from creditors. In certain cases, you may be able to protect more property in Illinois or more property in Wisconsin depending upon the particular type of property.

Illinois v. Wisconsin

Let’s take a look at how the trustees operate within the same federal district but different states. In Illinois, the chapter 7 bankruptcy trustees are given plenty of latitude and autonomy to conduct their investigative meetings without tremendous micromanagement from the United States trustee’s office. This allows the trustee to ask questions that he or she deems relevant in determining what assets may be available as well as the total financial situation of the debtor. In Wisconsin, the same federal district, the trustees are mandated to ask specific questions while conducting the 341 meeting of creditors. In fact, debtors can listen to those questions being asked of debtors whose cases are called before them. Talk about knowing the answer to the pop quiz. Debtors can formulate their answers in advance of actually being examined.

Documentation Required

The trustees also asked for different items or documentation when filing a chapter 7 bankruptcy case. In Illinois, if the trustee is looking for additional information, he or she will inquire. The debtor typically does not have to provide any evidence of property other than what is listed in the bankruptcy petition. In Wisconsin, the trustees require the debtor to do a lot of the legwork. If the debtor has a financed home, he must provide to the trustee the first page or more of the recorded lien. The same is true if the debtor is paying for an automobile. The trustees in Wisconsin like to engage in lien stripping. This is where they jump into the shoes of a creditor who has not properly perfected its lien. That creditor loses it secured status and becomes an unsecured creditor, lumped in with all of the other unsecured creditors. If the debtor does not have this documentation, the trustee will not hold the meeting typically. In fact, the trustee may continue the meeting to another date when that trustee is making its way through the circuit of that state. Thus, your continued meeting of creditors could be an hour and a half away.

Local Bankruptcy Attorney

As you can see, although bankruptcy is federal law, each state is different with regard to how the case is processed. Even within the same federal district much like Illinois and Wisconsin, the cases are handled extremely differently. For this reason, as well as many others, you want to make sure that you have at your side an attorney who understands bankruptcy law at the local level. In fact, you would be wise to find a bankruptcy lawyer who practices extensively in the county in which you live. The laws have gotten more and more complicated since 2005 when the law changed. You don’t want to get caught up in a situation where you have to surrender assets to the trustee in exchange for your fresh start. If done correctly, chapter 7 should provide you with a fresh start without having to turn over any of your property.

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