You'll need to attend a hearing or two when you file for bankruptcy. For instance, in both Chapter 7 or Chapter 13 bankruptcy, the court will appoint a trustee to conduct a hearing that all filers must attend—the 341 meeting of creditors. If you file for Chapter 13, you or your attorney will also have to appear at a confirmation hearing. Depending on your case, you might be required to go to more hearings.
In this article, you'll learn about the bankruptcy trustee, the meeting of creditors, and other hearings that the court could set in your bankruptcy case.
In a Chapter 7 bankruptcy filing, the bankruptcy trustee sells your nonexempt property—assets that you can't protect with a bankruptcy exemption—and distributes the proceeds to creditors.
In Chapter 13, the trustee doesn't sell your nonexempt assets. Instead, you pay the value of nonexempt assets through your repayment plan. The trustee will review your plan, however, to make sure it's feasible and that it treats all creditors fairly. If the court confirms (approves) the plan, the trustee will disperse the monthly payments to creditors.
In both bankruptcy chapters, the trustee appointed to your case will review your paperwork and supporting documentation, such as pay stubs and tax returns. The trustee is responsible for ensuring the accuracy of your petition and presiding over the meeting of creditors.
When you file your case, the court will notify you and your creditors of the time and location of the 341 hearing. While the hearing might be held at the bankruptcy court, the trustee won't hold it in a courtroom. Instead, the trustee will oversee the hearing in a conference room.
At the meeting of creditors, the trustee will verify your identity and ask you questions under oath about the contents of your bankruptcy papers. Creditors will have a chance to ask questions about your financial affairs, as well, but rarely attend the meeting.
If you don't appear, the trustee will move to dismiss your bankruptcy (more below), and you won't receive a discharge, the order that wipes out qualifying debt.
Find out more in What Happens at the Meeting of Creditors?
If you file for Chapter 13, you or your attorney will have to appear at the repayment plan confirmation hearing. Before the hearing, you'll send your proposed repayment plan to the Chapter 13 trustee and creditors. Each will have an opportunity to file a written objection.
If you resolve the issue raised, the trustee or creditor will likely withdraw the objection. If not, you'll have the opportunity to respond in writing and to advocate your position to the judge at the hearing.
Unlike the 341 meeting of creditors, the judge will hold the confirmation hearing in a courtroom. The judge will consider any objections and oral argument at the confirmation hearing. If the repayment plan is approved, you'll move forward with Chapter 13. If it isn't, the judge will give you time to remedy the problem in all likelihood. If you're unable to present a confirmable plan after a few tries, the judge will dismiss your case.
Here are other hearings that occur in both Chapter 7 and 13 with some degree of frequency.
If you have a car loan or mortgage, and you want to keep the house, car, or other collateral, you must make the monthly payments during bankruptcy. If you don't, your lender can file a motion for relief from the automatic stay and ask for court permission to foreclose or repossess your property.
For instance, it isn't uncommon for a debtor to file for Chapter 7 or 13 to stop a foreclosure or repossession. A lender who stands to lose money as a result of the automatic stay can file a motion asking the court to lift the automatic stay.
You'll have the right to oppose the motion and ask the court to hold a hearing. If the Chapter 7 trustee requires the property for the bankruptcy case, the trustee will oppose the motion, as well.
At the hearing—which will be held in a courtroom in front of a bankruptcy judge—the Chapter 7 trustee will explain that creditors will benefit from the liquidation of the property. The lender holding a lien will be paid in full once the property gets sold, thereby saving the lender the time and effort of foreclosure or repossession.
If a Chapter 7 trustee doesn't intend to sell the property, to defeat the motion, you'll need to show that:
If you're in Chapter 13, you'll have to make adequate protection payments before your plan is confirmed. You also must make your monthly payment, and be able to catch up on arrearages through your Chapter 13 plan. Otherwise, you won't survive the motion.
If you file for Chapter 7 bankruptcy and have a secured debt such as a car loan, you may need to reaffirm that debt if you want to keep the car. When you reaffirm a debt, you sign a new contract with the lender that makes you personally liable on the obligation despite your bankruptcy discharge.
If your monthly budget shows that you can't afford to make the monthly payments, a presumption of undue hardship arises. You'll be required to attend a reaffirmation hearing in a courtroom in front of the judge. At the hearing, you'll have to explain why you need the car (or any other asset you are trying to keep) and how you can afford it. The judge will decide whether to approve the reaffirmation after hearing your explanation and reviewing your finances.
Learn more about the reaffirmation process.
The motion to dismiss arises in several situations. For instance, if you fail to make your Chapter 13 plan payments, the trustee will file a motion to dismiss your case. If you don't file a document or a certificate of completion for a required bankruptcy course, or if you don't show up for the 341 hearing, the trustee will likely request a dismissal.
An adversary proceeding isn't a hearing. It's a lawsuit filed in your bankruptcy case that a judge will conduct in a bankruptcy courtroom. If you incur debts shortly before filing for bankruptcy, hide assets, lie on your bankruptcy papers, commit fraud, or otherwise abuse the bankruptcy system, the trustee or your creditors can file a complaint and start an adversary proceeding in your case.
Once the plaintiff files a complaint, you will have a certain amount of time to answer or oppose it. The court will set a discovery schedule to allow each side to collect evidence. Each party will present the case at trial.
The most common types of adversary proceedings include:
Learn more in Adversary Proceedings in Bankruptcy.