Chapter 13, or Chapter 11, you do have
to appear in bankruptcy court.
Well, that is what we call it, even though there is no judge present, as pointed out by my friend California bankruptcy attorney Cathy Moran in her post on the same subject.
The picture shows one of the bankruptcy hearing rooms in Detroit.
The Chapter 7 or Chapter 13 trustee, or the Chapter 13 trustee’s attorney, preside over the 341 hearings, or, creditor meetings, as they are called.
The U. S. Trustee handles Chapter 11 creditor meetings.
How Many of My Creditors Will Be There?
First, it is good money after bad, for them.
They can find all your information, that is, everything you filed, online through the bankruptcy court’s PACER system.
If you have a mortgage, they know the house is not going anywhere.
Like any creditor, if they have questions, they can contact your attorney, whose information is on the bankruptcy notice.
Car creditors, same deal.
If you keep paying on your house and car, that is what they want.
In Detroit bankruptcy cases, car creditors, especially credit unions, do show up for the hearings.
Their attorneys ask for proof of insurance, and, if you want to sign a reaffirmation agreement, which makes you personally liable again for the debt.
Student loan creditors are in good shape, you have to pay them unless you file a separate lawsuit in the bankruptcy court. No reason for them to show up.
What About Credit Card Creditors?
Well, believe it or not, virtually all Visas, Mastercard and Discover creditors sell that account as soon as they get the bankruptcy notice.
They have forward flow agreements, contracts by which debt buying companies agree to pay a set amount per dollar for accounts that go into Chapter 7 or Chapter 13 bankruptcies.
The credit card companies made a business decision that it is more efficient for them to dump these claims and cut their losses than spend more money chasing debtors.
Conversely, the debt buying companies are betting that they will get more than what they paid from your bankruptcy trustee, either through your voluntary payments through a Chapter 13 bankruptcy, or, that your Chapter 7 bankruptcy trustee will recover enough assets that they will come out ahead.
Probably none of your creditors will show, and you will only have to answer the questions of the trustee, who has copies of everything you filed, plus all the documents you gave your attorney for her.
If your attorney is well prepared, the actual hearing will not take more than 5 minutes or so.