We tell people that despite the fact that it is called the meeting of creditors, 95% of the time there are no creditors present. The most common creditors who might attend would be the IRS if the person did not file tax returns and credit unions, because if someone belonged to a credit union, then sometimes they can show up to ask questions whether the person wanted to stay in good standing with the credit union. Friends or family can also sometimes show up if the person had borrowed money from them because they would want to get back at the person.
The main misconception would be when someone thinks that at the meeting of the creditors, they would be in a room and all the creditors would show up, ask some questions and yell at them, which is really untrue. 95 percent of the time there is nobody there and if they are, then it is still not that big a deal.
What Should Someone Know Before Attending These Hearings?
The first thing someone should know is that they would need to give answers and they would need to tell the truth, so hopefully they would have mentioned everything, answered all of the attorney’s questions truthfully and told them about everything they owned including any debts or anything like that, because anyone who did that really should not face any problems. It would also be important to know that there would be nobody there to harass the person or make them feel bad.
The whole point of the Chapter 7 trustee would be to make sure that the person did not have any assets that could be sold. I always advise clients to tell the truth, but they should only answer “yes” or “no,” and they should give true and short answer to get it over with. The meeting would not be the time to go on about the your life for 20 minutes when the trustee just ask a simple question that could be answered with “yes” or “no.” The person should also not give answers like “I think so,” or “Yes, I guess so.”
What Are Some Barriers That May Occur During These Hearings?
The main thing to worry about is anything that had not been mentioned to the attorney, because sometimes people get up there and when they are getting sworn in, they get nervous and will all of a sudden start talking about things, which the attorney would obviously find alarming.
The person should make sure they tell their attorney about everything before the case was even filed, because the meeting of creditors is not the place to suddenly remember things. It makes everybody very suspicious which can cause a lot of problems and they could even deny the person a discharge, which is the main thing the person should worry about. There should not be any problems at the meeting of creditors as long as the person had told the attorney about everything upfront.
A full disclosure is the key to getting a discharge, because if someone wanted to get a bankruptcy discharge, then they would be entitled to it. Unfortunately, I have seen people try to play games and the next thing they know the US trustee would object to their discharge, so the person would not get their discharge and all of the creditors would go after the person and there would be nothing they could do to wipe them out.
It is very important to talk about all of your assets and not try to hide anything. A lot of times the things that people try to hide, could have been protected anyway because the point of the bankruptcy would be to give a fresh start so the person would be allowed to keep a fair amount of their things. If the person talked about it upfront, then there might be a way to find a strategy to protect those assets.
What Are Some Of The Filing Deadlines To Keep In Mind?
The main deadline to keep in mind is that the creditors have 60 days from the date of the meeting of creditors to object to the discharge.
Can Some Of The Stipulations Or Payments Be Converted And Modified?
Yes. Basically, a person can always modify a Chapter 13 plan once it has been confirmed that there has been a change of circumstance, like a change in the income which would really make a big difference. The idea is that if the income is split in half, then the modification and the change in the plan would make it convert to a Chapter 7 because most cases are pretty tight to start with, even with two incomes. It would make it much more difficult to keep the Chapter 13 going if one income was cut out.
Are These Meetings Held In A Courtroom Or Is There Always A Set Location?
There are set locations for the meetings. They are held inside the courthouse, in Baltimore, but not in a courtroom. They have a meeting stage where there is a desk, a table and a trustee sitting. There are also some chairs in front, so they just call up each case and the person will sit at the table with their attorney. The aim would be to answer the questions that the trustee asks, so it is a fairly casual environment.
How Are Objections Handled And What Are Some Objections Someone May Have?
Somebody who objects to the discharge would generally have to file an “Adversary proceeding”, which would be a totally separate court case from the bankruptcy and it would be just like a regular lawsuit where they file objections and a complaint to object to the discharge of a certain debt. The main ground they state is that the person basically committed some kind of fraud to get the debt; they may have lied on the application or borrowed the money right before they filed bankruptcy. The person would need to have an attorney file an answer to the adversary.
There would be a pretrial conference and then a trial just like a regular lawsuit to determine if that debt should be wiped out or not. Fortunately, adversary proceedings are very rare, and happen in around less than 1 out of every 500 cases, although if it was filed, it would be totally separate and the person would probably need to hire their attorney or another attorney separately to represent them for that.
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