The prospect of having to go to court can be intimidating and often deters people from filing for bankruptcy, despite the fact that it can bring them tremendous relief from their creditors. Just the thought of having to appear in front of a judge to explain one’s situation and request relief from bankruptcy court from one’s personal debts can seem like a daunting endeavor. The good news is that this scenario is extremely rare, and nowadays, a person can file for bankruptcy, and receive a discharge of their debts, without even having to physically set foot in a courtroom!
Yes, it’s true. Now, thanks in particular to the coronavirus pandemic, most official bankruptcy proceedings are conducted “virtually” by a Zoom call or via telephone conference call. Conducting these proceedings virtually, rather than in person, made sense due to the need for social distancing during the pandemic. However, even now that the pandemic is essentially over, most bankruptcy proceedings still occur virtually due to the fact that virtual proceedings are more efficient and convenient for all involved. Virtual bankruptcy proceedings eliminates unnecessary time and expenses of everyone having to physically travel to the proceeding.
The two primary types of bankruptcy proceedings are 341 meetings (aka “creditor’s meetings”) and court hearings. The good news is that actual court hearings, wherein the debtor (what you call a person who files bankruptcy) must go in front of a judge, are relatively rare. Most bankruptcy cases are pretty straightforward, and progress relatively, smoothly, with very little supervision or intervention required by the bankruptcy judge. This is because it is actually the bankruptcy “trustee” who is tasked with actually conducting the normal proceedings in a bankruptcy case. The bankruptcy trustee’s job in a chapter 7 bankruptcy case is to review the debtor’s case and ensure any property that is “nonexempt” (not protected from creditors), if any, is taken to pay towards the debtor’s debts in order for the debtor to get their discharge. In a chapter 13 case, the trustee must also review the debtor’s case, but instead of taking property to pay debts, they are responsible for ensuring the debtor’s three to five year repayment plan is fair to the creditors and meets the legal requirements to be confirmed, or officially approved, by the bankruptcy court. Only in the uncommon situation where there is a substantial disagreement between the debtor and the trustee that the parties cannot resolve on their own, will an actual court hearing be necessary, so that the bankruptcy judge may resolve the conflict. An example of this would be if the debtor and trustee cannot agree on whether an asset of the debtor’s is nonexempt and must be turned over to pay creditors. Even when court hearings in front of a judge do happen, they are most typically conducted by phone or Zoom call.
In every chapter 13 and chapter 7 case, the trustee is required to conduct a 341 meeting, which may be attended by creditors, but typically is not. Some trustees in Minnesota prefer conducting the 341 by Zoom, and others, by telephone conference call. All the Trustee’s in Minnesota conduct the 341 meetings virtually though. At this meeting, the trustees place the debtor under oath and ask them basic questions regarding the petition they filed with the court and about their basic financial circumstances. The questions are not designed to trick or chastise the debtor, but rather, to gain basic information to ensure the debtor is complying with the requirements under law in order to successfully complete their case and receive their discharge. These meetings are typically quite civil and usually proceed with little-to-no issues. Having an attorney who understands how these meetings work and can adequately prepare the debtor for the trustee’s questions is the best way to ensure this meeting goes smoothly without any significant issues.
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When considering filing for bankruptcy, a person is always well advised to first consult with an experienced bankruptcy attorney. LifeBack Law Firm now has an office located at 370 Selby Ave, Suite 224, Saint Paul, MN 55102 in the beautiful historic Cathedral Hill neighborhood. Come visit us there or online at lifebacklaw.com!
