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What To Expect When You Go To Bankruptcy Court

What To Expect When You Go To Bankruptcy Court

Most bankruptcy debtors are not comfortable going to court hearings for their case. Yet, bankruptcy court appearances are a mandatory component of a debtor’s bankruptcy. In fact, a debtor’s failure to attend hearings will probably lead to case dismissal as a penalty.

Bankruptcy Court Is Not to Be Feared

The fear and stigma surrounding bankruptcy court appearances is unwarranted. Most bankruptcy hearings are uneventful, routine and highly efficient. A unique aspect of the bankruptcy court experience is the atypical collegial rapport shared between counsel and court personnel. In other litigation settings, counsel are adversarial and engage in gamesmanship. But, in the hallways of bankruptcy court, counsel resolve matters and make deals. Few, if any, aspects of bankruptcy hearings are contested and likely to involve protracted arguments. Bankruptcy court is a high-volume, fast-moving, extremely efficient and results-oriented venue.

Typical Bankruptcy Court Hearings

The following list comprises typical bankruptcy court hearings a debtor can expect to participate in during his/her case:

  • Initial meeting of creditors – This is called the “Section 341 meeting,” referring to its designation in the Bankruptcy Code. The U.S. Trustee’s Office examines the debtor and his filings in this hearing. Creditors may attend, ask questions and examine documents. Attendance is mandatory for debtors. The meeting takes mere minutes. This hearing happens in the Trustee’s Office.
  • Chapter 13 confirmation hearing – Debtor’s attendance is not always mandatory, depending on the jurisdiction. Questions may be posed by counsel, the trustee or judge, and the debtor may have to give brief testimony.
  • Motion for relief from stay hearing – Debtor’s attendance may be required at this hearing. Motions for relief from stay are typically filed by secured creditors who want to foreclose on debtor’s property (car, house, etc.). Motions for relief are commonly filed in Chapter 13 bankruptcies. If the automatic stay is lifted due to a creditor’s motion for relief, the bankruptcy filing on the part of debtor no longer precludes the creditor from proceeding with foreclosure upon debtor’s property. Motions for relief are negotiated and commonly resolved, with consent orders presented to the court.
  • Motion to dismiss hearing – Motion is filed by the trustee in many cases. A creditor could also file the motion to dismiss. A Chapter 13 trustee often files a motion to dismiss if debtor lags in bankruptcy plan payments or if debtor’s case is lasting beyond the maximum 60 months. These motions can be filed anywhere from immediately in a bankruptcy to years later. In some cases, after the trustee files such a motion, if the debtor is financially able, he can catch up his payments to bring his case current and have the motion to dismiss his case dismissed.

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