By Columbia-Lexington Bankruptcy Attorney Lex Rogerson
Let’s start with the most important person — you. A person who files bankruptcy is called the debtor, because the whole process is about the debts you owe.
The people or companies you owe are called creditors. There are three different kinds. Secured creditors, including mortgage holders, auto lenders, judgment creditors, and finance companies, hold liens property, possessions, or property rights you own as collateral for their claims. Unsecured creditors, by contrast do not; these can include credit card companies, medical providers, and usually retail charge account issuers. Priority creditors are unsecured creditors whose debts receive preferred treatment and often are not dischargable, including tax creditors and domestic support recipients.
The people who appear in bankruptcy court most often are attorneys. Almost all debtors are represented by attorneys because it is almost impossible for a debtor to complete a bankruptcy successfully without a lawyer. Creditors may or may not be represented by an attorney, depending on whether they need something complicated like a challege to the discharge of a debt or something relatively simple like filing a proof of claim.
A trustee is appointed in virtually all consumer cases. This officer’s general duty is to represent the interests of the creditors as a group, but the specific role depends on the type of case. Chapter 7 trustees investigate the debtor’s assets and attempt to identify property they can liquidate (sell) for the benefit of creditors. Chapter 13 trustees review the debtor’s plan for paying toward his debts and recommend that the court confirm or reject it. Once a plan is confirmed, the trustee pays creditors from the debtor’s plan payments according to the treatment the plan provides for each.
In either kind of bankruptcy, the trustee presides at the section 341 meeting of creditors, a proceeding about a month after the case is filed when the debtor must appear and answer questions about his financial matters.
In Columbia Division (generally, the midlands), two standing trustees divide all Chapter 7 cases and two others split the Chapter 13 cases. While the trustees are not judges and do not make final decisions, their positions carry a great deal of weight with the court because the best interest of creditors enters into many different questions that arise.
The standing trustees are appointed by the office of the United States Trustee. This division of the U.S. Department of Justice supervises the bankruptcy system. Its main function in consumer cases is to review Chapter 7’s for abuse — that is, to weed out debtors who can pay a substantial portion of their debts.
Most bankruptcy attorneys have some kind of contact most every day with the office of the Clerk of the Bankruptcy Court. These folks keep track of all documents filed in bankruptcy cases — petitions, schedules, motions, orders, etc. They also assist the judges in scheduling and conducting hearings. Because the bankruptcy court was one of the first to automate, most documents have been filed and stored electronically for several years.
Finally, the top decision makers are the bankruptcy judges. These are federal judges appointed by the Fourth Circuit Court of Appeals in Richmond for 14-year terms. In the District of South Carolina, we have three: chief judge John Waites and judges Helen (Beth) Burris and David Duncan.
In several respects, bankruptcy judges are different from those in other courts. They deal with a huge volume of cases and therefore have adopted standard ways of dealing with routine matters efficiently. They also deal mostly with a relatively narrow area of the law and therefore can be very knowledgeable about the most obscure issues in that area.
In this district, our judges are especially good. They prepare thoroughly for every hearing that is not entirely routine. They are serious about reaching a just result and expend a great deal of effort toward that end. As a result, parties in bankrupcy court, and the public in general, receive a much better quality of justice.