by: Baran Bulkat, Attorney
Whether you file for Chapter 7 or Chapter 13 bankruptcy, the court will appoint a trustee to administer and oversee your case. Depending on your specific circumstances and the type of bankruptcy you file, you will also be required to attend certain hearings before your case is completed. Read on to learn more about the bankruptcy trustee and the different types of bankruptcy hearings you may have to attend.
As discussed, the bankruptcy trustee is an individual appointed by the court to administer your case. The trustee reviews your bankruptcy paperwork and supporting documentation (such as paystubs and tax returns) to make sure everything in your petition is accurate. The trustee also presides over the meeting of creditors (discussed below).
In a Chapter 7 bankruptcy filing, the trustee’s primary responsibility is to find and sell your nonexempt property to pay back your creditors. In a Chapter 13, the trustee does not sell your nonexempt assets but reviews your repayment plan to make sure it is feasible and that it treats all creditors fairly. If your repayment plan is approved by the trustee and the court, the trustee distributes your monthly payments to your creditors according to the terms of your plan.
The types of bankruptcy hearings you may have to attend depend on whether you filed for Chapter 7 or Chapter 13 bankruptcy as well as your specific circumstances. The following are some of the most common hearings you may have to attend during bankruptcy:
If you file for Chapter 7 or Chapter 13 bankruptcy, you must attend a mandatory hearing called the meeting of creditors (also called the 341 hearing). When you file your case, the court will notify you and your creditors of the time and location of your 341 hearing. If you don’t appear at your meeting of creditors, the trustee will typically dismiss your bankruptcy without a discharge of your debts.
The purpose of the meeting of creditors is to allow the trustee and your creditors to ask you questions under oath about the information contained in your bankruptcy papers and your financial affairs. Because bankruptcy is a financial proceeding, the majority of questions will involve your income, assets, debts, and expenses.
In Chapter 13 bankruptcy, the trustee will review and question you about your proposed repayment plan at the meeting of creditors. However, your plan must ultimately be confirmed (approved) by the bankruptcy judge at a confirmation hearing. If the trustee does not have any problems with your bankruptcy plan, this will be a simple hearing where the trustee will tell the judge that your plan should be confirmed (in some jurisdictions, you may not even have to attend the confirmation hearing if the trustee approves your plan at the 341 hearing). But if the trustee objects to your plan, you will have to explain to the judge at the confirmation hearing why the trustee is wrong and your plan should be confirmed.
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 essentially 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 and you will typically be required to attend a reaffirmation hearing in front of the judge. At the hearing, you have to explain to the judge why you need the car (or any other asset you are trying to keep) and how you can afford it. Based on your explanation and other factors such as the value of the asset, the amount of debt, and the interest rate, the judge will decide whether to approve or deny the reaffirmation.
If you have secured debts (such as a car loan or mortgage) and you want to keep the house, car, or any other collateral securing those debts, you must continue to make your ongoing payments during bankruptcy unless the entire loan is being off through your Chapter 13 repayment plan. If you fail to make your payments, your lender can file a motion for relief from the stay and ask for court permission to foreclose on or repossess your property. When a motion for relief is filed, you have the right to oppose it and ask the court to hold a hearing. At the hearing, you will need to explain to the judge how you can afford the payments and make a plan to catch up on any payments you missed since your case was filed.
If you fail to make your Chapter 13 plan payments, the trustee will file a motion to dismiss your case. If you oppose the motion, the court will hold a hearing to determine whether your bankruptcy case should be dismissed. At the hearing, you will need to show the judge that you can afford your monthly payments and propose a plan to catch up on your arrears.
An adversary proceeding is essentially a lawsuit filed in your bankruptcy case. 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 a complaint is filed, you will have a certain amount of time to answer or oppose it. In that case, the court will normally set the matter for trial or an evidentiary hearing and give each party an opportunity to present its case.
The most common types of adversary proceedings include: