Bankruptcy Attorney Salt Lake City
You’ll need to attend a hearing or two when you file for bankruptcy. For instance, in both Chapter 7 and 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.
Bankruptcy Court and Trustee Responsibilities
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.
Bankruptcy Court and the 341 Meeting of 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.
Bankruptcy Court and the Chapter 13 Confirmation Hearing
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.
Additional Bankruptcy Court Hearings
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:
• enough equity exists to protect the lender from financial harm—often referred to as an “equity cushion,” or
• you can afford the monthly payments and to catch up on any missed payments.
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.
Chapter 7 Reaffirmation Hearing in Bankruptcy Court
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.
Trustee’s Motion to Dismiss Hearing
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.
Adversary Proceedings in Bankruptcy Court
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:
• actions by the trustee to recover fraudulent or preferential transfers
• complaints by creditors to have their debts declared nondischargeable because of fraud
• objections to your entire discharge filed by the trustee or creditors as a result of bankruptcy fraud, and
• complaints to strip junior liens from a house (only certain bankruptcy jurisdictions require an adversary proceeding to strip junior liens–others require a motion).
Proof of Claim in Bankruptcy
A proof of claim is the paperwork that a creditor must file before getting paid in a bankruptcy case. Under the bankruptcy payment system, some debts—like income tax and domestic support obligations have “priority” status and are paid before other claims. The proof of claim tells the bankruptcy trustee about the type of claim, as well as how much a creditor is owed, so the trustee can determine the amount to pay the creditor if anything.
Who Must File a Proof of Claim
All creditors who wish to be paid out of bankruptcy funds must file a proof of claim. Of course, if funds aren’t available for distribution—such as in a Chapter 7 “no-asset” case—a creditor won’t be told to file a proof of claim. That status will change if the trustee finds undisclosed assets during the review period. Then the trustee will instruct creditors to file a proof of claim.
Secured Creditors and Liens
Like all creditors, a secured creditor; such as a mortgage or vehicle lender must file a claim in order to receive money through the bankruptcy estate (with a few exceptions). However, even if the secured creditor doesn’t file a proof of claim, the creditor won’t lose its lien. When a lien is in place, the debtor can keep the property securing the debt only if the debtor remains current on the loan. If the debtor doesn’t pay as agreed, the creditor will be able to take back the property, sell it at auction, and use the funds to pay down the loan.
As a practical matter, if a secured lender doesn’t file a proof of claim in a Chapter 12 or 13 case (and won’t receive monthly plan payments), a debtor who wants to keep the property securing the claim (such as a house or car) has a couple of options.
• Pay outside of the plan. The debtor can make the payments directly to the creditor (instead of through the plan). However, if the debtor arranged to make the payment directly, it likely won’t be possible. Most of the debtor’s funds go into the plan leaving nothing left for a hefty payment.
• File a proof of claim for the creditor. The debtor can file a proof of claim on behalf of the creditor. Doing so will allow the trustee to use bankruptcy plan payments to maintain the secured payment.
When Must a Proof of Claim Be Filed in Chapter 7, 12, and 13 Bankruptcy Cases?
The deadline for filing a proof of claim for non-governmental creditors in a Chapter 7, 12, or Chapter 13 bankruptcy case is 70 days after the petition filing date. The first notice sent to creditors includes the deadline for filing proofs of claim. This notice informs creditors that a petition has been filed and indicates the date set for the meeting of creditors. This notice also sets the last date on which they can file objections to the discharge. Although the court doesn’t usually permit extensions once the deadline has passed, the court has the power to extend the filing time if a creditor shows extenuating circumstances.
What Must the Creditor Include in a Proof of Claim?
Here’s what the creditor must include in its proof of claim;
Formal Proof of Claim
A proof of claim must conform substantially with the official bankruptcy form, Proof of Claim (Form 410). You can download all of the official bankruptcy forms, including Form 410 from the U.S. Courts Bankruptcy Forms page.
The information a creditor will need to include is as follows:
• the debtor’s name and the bankruptcy case number
• the creditor’s information, including a mailing address
• the amount owed as of the petition date
• the basis for the claim (such as goods or services purchased, a loan or credit card balance, a personal injury or wrongful death award), and
• the type of claim (secured or unsecured).
The creditor should attach supporting documentation, such as the contract, as evidence of the claim. Official attachment forms are available. Also, the creditor or an authorized representative must sign the proof of claim.
Informal Proof of Claim
Some courts will accept an informal proof of claim from a creditor if it meets five requirements:
1. the proof is in writing
2. the writing includes a demand against the bankruptcy estate
3. the writing demonstrates the intent to hold the estate liable
4. the writing is filed with the bankruptcy court, and
5. allowing the claim would be fair under the circumstances of the case.
Although a bankruptcy judge will consider these requirements, the decision about whether an informal proof of claim will be allowed is ultimately within the discretion of the bankruptcy judge.
Objecting to a Proof of Claim
The court usually accepts the proof of claim and its stated amount unless the debtor, trustee, or another interested party objects. Some of the most common reasons that someone might object to a claim include:
• the amount is incorrect
• the claim includes improper interest or other penalty charges
• the claim indicates that it is a priority or secured claim when it is not
• the creditor filed the claim for the purpose of harassing the debtor, or
• the creditor did not attach supporting documentation.
What Should I Expect from a Bankruptcy Attorney?
Bankruptcy, like most legal matters, is a process and the safest route is to have an attorney guide you through the process if you want to succeed. A good bankruptcy attorney will give you peace of mind if they provide at least these four things:
1. An initial consultation – usually free! – to get an overview of your case
2. Advice on options available, including what type of bankruptcy to file
3. Completed paperwork necessary for filing bankruptcy
4. Representation when the case goes to court.
