The idea of declaring bankruptcy and having to go to bankruptcy court might seem intimidating. It might even be enough to prevent someone from filing. Fortunately, bankruptcy court is a lot less frightening than many people assume. It is nothing like the courtroom scenes shown on television and your bankruptcy lawyer will be with you every step of the way.
Meeting with Creditors
The first and sometimes only appearance you will make in court is for the initial meeting of creditors, also called a Section 341 hearing. The name is fairly misleading because usually your creditors do NOT show up for this meeting. You will actually meet with a bankruptcy trustee, who is an attorney, and will be reviewing your petition and asking you routine questions. In most cases, this meeting is fairly brief.
Those filing Chapter 13 bankruptcy will have an additional appearance for a confirmation hearing. This will be in front of the bankruptcy Judge and is also usually a routine appearance where your attorney, the trustee and the creditors are trying to agree on your bankruptcy payment plan. Most times, creditors do not object and simply submit their proofs of claim to be paid out of the proceeds of your plan. The Plan is something you’ve previously worked out with your attorney and is something within your budget. Any issues that come up are usually resolved through negotiation with the trustee and any objecting creditor.
The goal here is straightforward: you want to resolve your financial situation and creditors want to be paid from any income or assets that may be available. In most cases, unsecured creditors, like your credit cards, are receiving far less than the 100% owed, but it will be something within YOUR budget to help you reorganize your financial future.
Occasionally, a motion for relief of stay hearing is filed by a creditor. In most cases, this only occurs if a foreclosure on a property is sought by a creditor and you do not have a viable plan to deal with this debt. When a motion for relief of stay is lifted, creditors are legally permitted to move forward with foreclosure proceedings. Remember, these foreclosure proceedings are halted when you file for bankruptcy. Your bankruptcy plan or request to modify a loan within bankruptcy will often eliminate the Creditor’s need for this motion, or at least delay it while you try and come up with a feasible bankruptcy plan.
Remember, the creditors do not really want your house, they want a viable payment plan on your arrears and bankruptcy court is the way you try and find that plan.
If you are facing financial difficulties and bankruptcy seems like the best option, there is no need to put off filing because you fear bankruptcy court. The entire process is routine and professional, and your bankruptcy attorney will guide you through it and provide support. If you would like to know more about your bankruptcy options, contact Frank J. LaPerch, PC for information about what you can do to get your financial life back in order.