Interviewer: Does this mean that if I file for chapter 13, then I’m going to have to go to court?
James Logan: If you file a chapter 13 or a chapter 7, you will definitely have to go to what’s called the meeting of creditors. Despite the name, the only creditors that ever show up are IRS will show up if you have un-filed tax returns and sometimes friends or family will show up to yell at you if you borrowed money from your friends or family. Creditors rarely ever show up on these things. Basically if a creditor wants to get paid in a bankruptcy, in chapter 7, they can file what’s called an adversary proceeding to try to force you to pay the debt. In the chapter 13, they just file a claim with the court to get money that way.
If You’re in Chapter 7 or In Chapter 13, You Will Definitely Have to Go to a Meeting of Creditors
In chapter 7, that’s the only time you’ll ever have to go to the courthouse and chapter 7 meeting of creditors is not in front of the judge, it’s in front of a trustee who is someone who is appointed by the court. Same thing with the chapter 13; it’s in front of the trustee and not in front of a judge. In chapter 13, there is a second hearing that you may have to go to and it’s called a Confirmation Hearing, and that’s just where the court will approve your plan or if there’s problems with it, tell you what you need to do to make sure to fix it and to make sure your plan goes through.
Alternative Options to Filing Bankruptcy in the State of Maryland
Interviewer: Are there any sort of alternatives to bankruptcy?
James Logan: Basically, when you get in a debt, the real alternative is to settle the debt and that’s for a common one that we will help people with. As a rule of thumb, if you owe less than $10,000, it’s probably not worth it to file a chapter 7 bankruptcy so sometimes we get people come in and they’ll just have one debt or two debts and total of few thousand dollars, and in that case, you’re probably better up to settling the debt. If you’re behind in your mortgage, you definitely want to pursue the loan modification or other options before you file a chapter 13 but once they’ve set an auction date, then really your only option is to file a chapter 13.
Depending Upon the Circumstances Either settling the Debt or Filing Bankruptcy are the 2 Best Options for a Debtor
In either case, the sooner you go to your bankruptcy attorney or someone experienced in debt consolidation and debt settlement, the more likely are we able to work on a solution that’s best for you. Sometimes, settling a debt’s better for you and sometimes filing a bankruptcy, and you may think you want to settle one debt but if you have $30,000 in other debts, why bother, just do the chapter 7 and clean everything up at once. So, the best piece of advice is to start the process early and get all your options available because as time goes on, you’ve fewer and fewer options.
The Role of Co-Signers of a Debt in a Bankruptcy Proceeding
Interviewer: What happens to the cosigners of debt in my bankruptcy?
James Logan: In those cases, the cosigner, if they do not file with you, would still be liable on the debt and depending on whether the debt’s been paid or not, a creditor could go after your cosigner. It’s a fairly common situation and in a chapter 13, if you wanted to protect your cosigner, you can continue to pay on the debt to protect the cosigner. In chapter 7, you may be able to continue paying the debt and you may or may not protect the cosigner depending on the creditor because they may feel like, “Well, you’re no longer liable on it, so I’m going to try to collect from the cosigner”. On the other hands, sometimes people have gone through a divorce and they don’t really care what happens to the co-debtor, so we can file for you and even if there is a co-debtor on a debt, you personally will no longer be liable on it.