Afraid of courtrooms? Most bankruptcies do not require you to be in one

You may already be aware that bankruptcy is a legal proceeding. Because of this, you may assume that you have to go to court in order to get relief from your debts. You may be among the many that find going to court undesirable and delay getting the help you need. Fortunately, the truth is that the majority of people that file bankruptcy do not ever have to go to court during the entire bankruptcy process.

Meeting of creditors

The only thing that comes close to resembling a courtroom proceeding for bankruptcy filers is the meeting of creditors, which is also called a 341 meeting. This is the only courtroom-like event that all bankruptcy filers have to go through. During this meeting, the bankruptcy trustee (not a judge) and the creditors holding your debts (they usually do not attend) ask you questions. Although this sounds like a stressful adversarial event, in most cases it is not. In the majority of instances, your creditors do not bother showing up, as it is not a good use of their time. If you are unsure how to answer a question at any time during the meeting, your attorney can advise you.

What happens during the meeting depends on the type of bankruptcy you filed. If you filed Chapter 7, the goal of the meeting is for the trustee to determine whether you own any nonexempt property that he or she can sell to pay your debts (the majority of Chapter 7 filers have little or none of this type of property). During the meeting, you will answer questions while under oath about the value of your property, your monthly expenses, whether you truthfully disclosed your income and assets in your bankruptcy petition, and other related questions.

If, on the other hand, you filed Chapter 13, the primary purpose of the meeting is to ensure that all of your creditors are treated equally under the repayment plan. As such, most of the questions revolve around your income and expenses such as:

  • Whether you have dependents
  • The stability of your employment
  • Your sources of income (e.g. wages, alimony, Social Security, etc.)
  • The accuracy of your income, debts and expenses as listed in your bankruptcy petition
  • The reasonableness of your monthly expenses

After the meeting of creditors, the court will hold a confirmation hearing that determines whether it should approve your proposed repayment plan. However, in most cases, your attorney attends this hearing rather than you.

Exceptions are few

For most filers, the meeting of creditors is the closest they get to a courtroom. However, the main exception when you may have to attend a courtroom proceeding is if there is an adversarial proceeding. These are rare and most often occur if a creditor accuses you of attempting to defraud your creditors or lying on your bankruptcy petition. If this occurs, a court proceeding is needed to determine the truth of the allegations.

In addition, you may have to go to court if a creditor objects to an exemption you claimed or if you are otherwise ordered by the court to do so. However, such situations are very rare. Although some of your bankruptcy may require attendance at court (such as hearings on motions), your attorney can appear on your behalf in most cases.

Don't delay! Get help

Unless you are untruthful during the bankruptcy process, it is likely that you will never see a courtroom during the entire process. Therefore, you should not let a fear of courtrooms prevent you from getting the help you need. An experienced bankruptcy attorney can consider your situation and ensure that the entire process goes as smoothly as possible.