Bankrupcy Tips - Notice To The Creditors And Meeting - Part #3

After filing your petition for bankruptcy under Chapter 7, paying the necessary fees, and complying with the legal requirements, an “automatic stay” is granted to you by operation of law. This stay will effectively stop most collection actions against you and your properties (11 U.S.C. 362). This means that as long as the stay is in effect, creditors cannot initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments.

But note that there are certain types of actions listed under 11 U.S.C. 362(b) that'are not stayed when you file the petition. In some situations even, the stay is only'for a short period of time. So this should serve as warning.

After the bankruptcy case has been filed, the bankrupcy clerk will give notice to all creditors whose names and addresses you provided. Then, the case trustee willhold a meeting of creditors between 20 and 40 days after you filed your petition.This meeting is otherwise known as the 343 meeting, after the codal provision 11 U.S.C. 343 that provides for such.

In a 343, the debtor will be put under oath and both the trustee and the creditors will ask questions regarding your financial affairs and property. Your attendance is a must. Within 10 days of the creditors’ meeting, the trustee will then report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. 704(b).

=== Cooperate with the trustee ===

The case trustee has a very important role in a bankruptcy case. His primary responsibility is to liquidate your nonexempt assets in a manner that maximizes the return to your unsecured creditors. He does this by selling your property, if it is free and clear of liens and as long as it is not exempt, or if it worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property.

In addition to having the authority to sell your nonexempt property, he also has the power to recovery money or property. This is called the trustee’s “avoiding powers,” which necessarily includes the power to:

• Set aside preferential transfers made to creditors made within 90 days before the petition

• Undo security interests and other prepetition transfers of property that were not properly perfected under nonbankruptcy law at the time of the petition

• Pursue nonbankuptcy claims such as fraudulent conveyance and bulk transfer remedies available under state law

In view of the broadness of a trustee’s power, it is important therefore that you cooperate with the trustee. Provide any financial records or documents that the trustee requests and answer questions, which the trustee is required to ask at the meeting of creditors under the bankrupcy Code.

This is to ensure that you are aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on your credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt.

=== After the discharge ===

If all goes well with your bankruptcy case under Chapter 7 – that is, no one files a complaint objecting to the discharge or a motion to extend the time to object – the bankruptcy court will issue a discharge order relatively early in the case, about 60 to 90 days after the date first set for the meeting of creditors (Fed. R. Bankr. P. 4004(c)).

A discharge order is an order issued by the bankruptcy court, releasing you from personal liability for most debts and preventing your creditors from taking any collection actions against you. As previously mentioned, there are certain types of debts that will never be discharged (see Step #1). As a rule, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of Chapter 7 cases.

For someone filing under Chapter 7, a discharge of almost all of your debts is the ultimate goal. With the release of all your debts and creditors stopped from pursuing any further collection actions against you, the opportunity for a fresh start is apparent.