Will I Face My Bankruptcy Creditors?

Will my creditors come to the court if I file bankruptcy?

What many of my bankruptcy clients worry about is that their bankruptcy creditors will be at the banker’s meeting if they file bankruptcy in San Diego and it will be embarrassing for them. The good news is, bankruptcy creditors rarely attend bankruptcy meetings of creditors (also called 341 hearings).  However, this does not mean that your bankers are giving up their right to object to your bankruptcy discharge.

Bankruptcy Bankers are not required to go to the  meeting of bankers

When you file for bankruptcy in San Diego, your creditors receive notice of the date and time of your meeting of bankers. But this does not mean that they will show up. Your creditors are invited, but not required, to attend your hearing. In 98 percent off all bankruptcy cases, no creditors will appear at the meeting of creditors. If a creditor does show up, your attorney will usually know about it and so will you.

Most Bankruptcy Lenders will not appear at the meeting of bankers

Creditors are not allowed to conduct an extensive examination of you and your situation at the meeting of bankers. Mostly creditor questions are limited to the nature and location of the debtor’s assets. In San Diego most creditor meetings are very short over in 5 to 10 minutes so, the bankruptcy trustee only has a few minutes to devote to each case.

As a result, unless a creditor believes that you are committing fraud or hiding assets, it will not benefit from taking the time to come to your hearing. However, even if a creditor does not attend your meeting of creditors, it can still object to your discharge

What Factors Determine Whether I Must Appear Before the Bankruptcy Court Judge?

Court appearances are fairly rare in most bankruptcy cases. But whether you must face a judge depends partly on which Chapter your cased is filed under. It also depends on whether you are reaffirming a debt. It can also depend on what your creditors do. A very small minority of bankruptcy cases wind up looking like – and sometimes are just like – litigation.

Most cases (still about 72%) are Chapter 7. Here is how an ordinary timeline would look IF a the judge is going to require you to appear before her or him. If the case is well planned and prepared, there should be no disagreement with the Chapter 7 Trustee nor with the U.S. Trustee about the bedrock fundamentals of your case. i.e., you filed the correct chapter, you’re not concealing property or income and have given the Court a complete picture of your financial situation.

You also have personal property which is encumbered. That means there is a lender who has a lien on the property. That property is usually a car. It could be almost anything on which a lien can be taken, though. You want to keep the property, keep making the payments on the debt and you indicate you are willing to “reaffirm” the debt.

What Does Reaffirmation Have to Do With Seeing the Bankruptcy Court Judge?

A reaffirmation is the most common event which occasions a court hearing in an ordinary “no asset” Chapter 7. Of course, COVID has driven court appearances online, but let’s not get bogged down with geography. In our hypothetical car loan, the debtor and her counsel have checked the box in the first-filed forms that say the debtor wants to reaffirm. That sets in motion the sequence of events that ends with a hearing on the reaffirmation. (Other pages discuss reaffirmations greater detail.)

Other than for reaffirmation or redemption motions, a “garden variety? Chapter 7 should not involve a hearing in front of the judge. Even most reaffirmations and redemption motions are now processed entirely without court appearances. The judge either grants or denies the motions based on written motion(s), evidence and argument.

paul staley bankruptcy lawyer
The Law Office Of Paul Staley provides legal advice and representation for residents of San Diego County. The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.
Paul Staley
Bankruptcy Attorney
1901 1st Ave., FLR 1 San Diego, CA 92101
Phone: +619 235 40 95
Email: pstaley@paulstaley.com

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