Do I need to go to court during bankruptcy?

Many people owing debts put off bankruptcy because they envision that they will have to go to court during the process and be scolded and cross-examined about their financial problems by a judge or opposing counsel. Fortunately, during bankruptcy, having to go to court is a rarity.

The 341 meeting

For most filers, the only thing that comes close to resembling a courtroom proceeding is the meeting of creditors or 341 meeting. During this meeting, the bankruptcy trustee and creditors ask filers (who also have their attorneys present) about their debts. Although this sounds like a stressful experience, it is generally a 5-10 minute straightforward and relaxed meeting. In most cases, creditors do not show up to the meeting. If any do, it generally is for the filer's convenience (i.e. to help complete a reaffirmation agreement).

If Chapter 7 bankruptcy is filed, the purpose of the meeting is to determine whether filers have any nonexempt property that can be sold to pay their debts in the liquidation sale. As a result, the questions generally focus on the value of the filer's property, monthly expenses and whether the filer accurately disclosed their income and assets in the bankruptcy petition.

On the other hand, if Chapter 13 bankruptcy is filed, the main goal of the meeting is to ensure that creditors are treated equally under the repayment plan. In such cases, the questions revolve around the sources and amounts of the filer's income, whether the filer has dependents, the filer's monthly expenses and other similar questions. After the 341 meeting, the court has a hearing to determine whether the proposed repayment plan should be approved. However, it is the filer's attorney, not the filer, which attends this hearing in the majority of cases.

So when is going to court necessary?

Although the meeting of creditors is the closest thing to a courtroom proceeding that most filers experience, there are rare cases where the filer may have to attend court. This generally occurs if the bankruptcy case involves an adversarial proceeding. In many cases, this occurs if the filer's creditors are accusing the filer of trying to defraud them. In such cases, the filer must attend court in order for it to determine whether these allegations are true.

Additionally, filers may have to attend court if creditors object to an exemption the filer claimed or the filer's ability to discharge a debt. However, these are occur very seldom.

Because courtrooms rarely require your attendance during bankruptcy, you should not let a fear of them deter you from seeking the help with your debts that you need. An experienced attorney can explain the bankruptcy process to you and ensure that you receive the debt relief that you are seeking as soon as possible.