If I Am Facing Bankruptcy, Will I Need To See A Judge?

The term Bankruptcy Court does not always mean what it does in the traditional sense of Court. Like any other legal proceedings, a Judge does oversee the bankruptcy process.

However, the debtor will not need to appear before a Judge. The bankruptcy attorney may need to appear before the judge if certain circumstances arise, but most of the debtor’s interactions will need to appear before the bankruptcy trustee.

If the debtor hires legal counsel and other creditors try to file any notices or requests or make any objections, the bankruptcy attorney may have to appear in front of the Judge.

However, the client does not need to attend. However, this does not mean that the debtor will not need to appear before the court.

Meeting of Creditors

This appearance in court where the debtor needs to appear is otherwise known as the “meeting of creditors.” This meeting is held for both Chapter 7 and Chapter 13 bankruptcies.

The meeting is also called a 341 hearing. The purpose of this meeting is to answer questions about the information provided by the debtor in the bankruptcy petition.

Who Runs the Meeting?

The 341 hearing or “meeting of the creditors” is run by the bankruptcy trustee who was appointed to oversee the case. The trustee is normally an attorney trained in bankruptcy law.

This individual is in charge of going through the debtor’s property and distributing proceeds to the creditors.

What Happens at the Meeting?

Normally, the bankruptcy trustee will conduct an interview of the debtor. He or she must verify the information given by the debtor in the paperwork submitted to the court to see what debts exist, as well as what can be sold to satisfy debt that exists.

In most cases, there is no property for the bankruptcy trustee. In those cases the trustee submits a statement to the Court stating that nothing is available.

Before the meeting, the trustee will already have reviewed the petition, schedules and all support documents. These documents will include pay stubs of the debtor, tax returns and other documents showing the debt of the filing party.

However, the trustee needs to make sure that the debtor is telling the truth and needs to go through everything to ensure that no discrepancies or mistakes exist or were made.

What Mistakes or Discrepancies Could Exist?

They can include a number of things. The debtor could have entered in something incorrectly or left out an asset, whether intentionally or by mistake.

The trustee will also make sure that assets that were disclosed were properly valued and that nothing was fraudulently concealed or transferred prior to filing.

Chapter 7 Versus Chapter 13 Bankruptcy

The types of questions asked in a bankruptcy proceeding do vary between Chapter 7 and Chapter 13 bankruptcy filings.

In Chapter 7 bankruptcy, the bankruptcy trustee will pay off creditors with proceeds obtained from selling all of the nonexempt assets in the bankruptcy estate. Most Chapter 7 cases are what are called “no asset” cases meaning there is no property available to the trustee.

However, in Chapter 13 bankruptcy, the trustee will reorganize the debtor’s debts to allow him or her to keep nonexempt property in exchange for paying back debt via a repayment plan.

Therefore, questions will go more into what the debtor’s monthly income is, monthly expenses and more to ensure that enough disposable income exists to allow for a repayment plan that works for all parties involved.

Again, the trustee will also want to make sure that all assets are being reported, as well as income. If any income is concealed or hidden, that will cause major problems down the road for the debtor and can be considered fraud.

Do Not Worry

The key here is to be upfront and honest with the bankruptcy trustee. If everything was disclosed properly and no assets or debts were hidden, the debtor should not be worried.

No formal hearing before a judge will be needed. The meeting of creditors will be simple, to the point and short. If all goes well, the debtor will never have to appear before a judge.

Contact Us Today

Facing a bankruptcy can be an intimidating process. We are here to walk you through it every step of the way. If you need assistance, Collins & Arnove can help.

To learn more, call 972-516-4255 for a free consultation or visit us online.