What to Expect in Bankruptcy Court
Many of my bankruptcy clients would be very anxious about having to “go to court” during their bankruptcy proceeding. Most of these fears were based on misconceptions and horror stories that simply aren’t true.
In a typical bankruptcy case, you don’t ever actually see the bankruptcy judge or “go to court”, you simply meet with a court appointed trustee at a “341 Meeting of the Creditors”, named after section 341 of the bankruptcy code. The trustee’s job it is to oversee the bankruptcy process and represent your unsecured creditors.
Your Meeting of the Creditors will typically take place 30-45 days after the bankruptcy is filed. In the majority of bankruptcies, these meetings are relatively simple and painless for the debtor and most meetings in a Chapter 7 bankruptcy last as little as 5-10 minutes. In a Chapter 13 bankruptcy , the trustee also has to go over your budget to ensure that the proposed payment plan is feasible, so they can take a little longer to complete, but usually aren’t more than 20 minutes.
The trustee will swear you in under oath, ask some questions to make sure that you are eligible to file bankruptcy, verify your social security number, and examine your bankruptcy schedules for any irregularities. If you hired an experienced bankruptcy attorney to prepare your paperwork and fully disclosed all relevant information, then there shouldn’t be any surprises. Each State has exemptions that allow you to protect all or a portion of your assets and the majority of bankruptcy cases end in a finding of “No-Assets”, meaning that all of your property is protected from your creditors.
Although it is referred to as the “Meeting of the Creditors”, it is unlikely that any of your creditors will actually attend the Meeting. Sometimes your secured creditors will attend the Meeting to offer a Reaffirmation Agreement on your secured debts. By signing a reaffirmation agreement, you are able to keep any property that you pledged as collateral for the loan by agreeing to repay the debt even though you’ve filed bankruptcy. You’re under no obligation to reaffirm any debts, and you should consult with your bankruptcy attorney before signing any reaffirmation agreements.
Many clients ask “Was that it?” after the completion of their Meeting and can’t believe how dignified and simple “going to bankruptcy court” was.