Many people can be terrified about the prospect of having to enter Court meetings, so it can be welcome news for people intending to file bankruptcy to learn that they will not have to spend as much time in the courthouse as they might have feared. The truth is that many people who file for bankruptcy do not need to appear for any court proceedings.
There are certainly exceptions in some cases, as bankruptcy cases can turn into litigation rather easily. It is possible that a person could be required to appear in court if a trustee objects to an exemption or a judge orders the person to appear and show cause.
The 341 Court Meeting of Creditors
All people will be required to attend a meeting of creditors or section 341 meeting, which is a proceeding at which a person testifies under oath that the information contained in their bankruptcy filing is accurate. The 341 meeting often occurs in a place other than a courthouse, such as some location near the federal court.
A bankruptcy trustee presides over a meeting of creditors, and the meeting typically only lasts a couple of minutes. A trustee will ask a person multiple questions about their property, debts, and financial history.
An attorney can attend the 341 meeting with a person, and their assets will be administered if they filed for Chapter 7 or their disposable income will be verified if they filed for Chapter 13. Testimony will be under oath and a person will be asked if all of their financial documents are in order and accurate.
No assets are found in a majority of Chapter 7 cases. There could be additional verification of income or expenses in Chapter 13 cases..
When Court Meeting Appearances Could Be Required
There are a few situations in which court meeting appearances may become necessary. Some of the possible scenarios may include
Objections to Exemptions
Bankruptcy exemptions allow people to keep certain assets or property after bankruptcy is filed and are defined by statute. Exemptions cannot be seized or sold to satisfy the debts of a person filing for bankruptcy.
A trustee or creditor may object to any of the property exemptions a person claims in their bankruptcy filing. Objections to exemptions must be filed within 30 days after the meeting of the creditors or after filing an amendment to the exemption list.
If an objection is not filed before the end of the 30-day period, the court cannot consider the objection. Many objections to exemptions relate to the value of the property being exempted.
Show Cause Orders
An order to show cause is a court order requiring a person to justify, explain, or prove something. It will require a person to appear in court and provide reasons to why a requested order should not be made.
An order to show cause hearing is intended to bring a request for relief by one party in front of the court. At a show cause hearing, a court will require a respondent to appear and explain to the court why it should not grant the relief that is requested.
A show cause penalty can apply when a person committed a major violation of a bankruptcy rule. If a person receives a show cause letter, they have the opportunity to dispute the allegations being made and state their case.
Show cause orders in bankruptcy cases typically relate to issues of contempt, for which people could go to jail. People who have lied to the court, or forgot steps during their bankruptcy such as not disclosing assets or not providing documents to the bankruptcy trustee will have to show the court why their bankruptcy discharge should not be denied.
Adversary Proceedings
Adversary proceedings are the bankruptcy court’s version of civil actions or lawsuits. They are opened by filing complaints asking courts to rule on issues related to bankruptcy cases.
Under Rule 7001 of the Federal Rules of Bankruptcy Procedure, adversary proceedings may include:
- proceedings to recover money or property, other than proceedings to compel debtors to deliver property to trustees, or proceedings under United States Bankruptcy Code § 554(b) or § 725, Rule 2017, or Rule 6002
- proceedings to determine the validity, priority, or extent of a lien or other interest in property, but not a proceeding under Rule 3012 or Rule 4003(d)
- proceedings to obtain approval under United States Bankruptcy Code § 363(h) for the sale of both the interest of the estate and of a co-owner in property
- proceedings to object to or revoke a discharge, other than an objection to discharge under United States Bankruptcy Code §§727(a)(8),1 (a)(9), or 1328(f)
- proceedings to revoke orders of confirmation of chapter 11, chapter 12, or chapter 13 plans
- proceedings to determine dischargeability of a debt
- proceedings to obtain injunctions or other equitable relief, except when chapter 9, chapter 11, chapter 12, or chapter 13 plans provide for the relief
- proceedings to subordinate allowed claims or interest, except when chapter 9, chapter 11, chapter 12, or chapter 13 plans provide for the subordination
- proceedings to obtain a declaratory judgment relating to any of the foregoing; or
- proceedings to determine claims or causes of action removed under 28 U.S.C. §1452
The most common kinds of adversarial proceedings relate to lien stripping, dischargeability of a debt, joint property sales, objections to discharges, fraudulent transfers, preferential transfers, preference actions concerning avoidable preferences, and debtor adversary proceedings.
Contact Our Arizona Bankruptcy Law Firm
Are you thinking about filing for Chapter 7 or Chapter 13 bankruptcy in Arizona, but have concerns about appearing in court? You will want to be sure you are working with DebtBusters because we completely understand why people are so nervous about going into court and we can do everything in our power to limit the number of appearances you will have to make.
Our firm is all about making the bankruptcy process as painless as possible for you, so we will take the lead and be your voice inside the courtroom. Call (866) 223-4395 or contact us online to arrange a free consultation with our Arizona bankruptcy law firm.
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