When bankruptcy is filed, individuals often create a plan on how to pay back their debt. This requires certain steps to be completed. Regardless of whether it is an individual or a business claiming bankruptcy, they will have to attend a meeting of creditors, sometimes referred to as the Section 341 meeting. These meetings often bring individuals stress, as they are required to face the creditors whom they owe money to. However, it should be seen as a fresh start, as it allows individuals to create a plan for their financial future. With the help of an experienced attorney, a meeting of creditors can go over smoothly with a promising outlook.
The meeting of creditors allows the debtor the opportunity to explain their situation to the creditors they owe money to as well as a representative of the Bankruptcy Court. It may consist of questions about the individual’s financial situation as well as why they have not paid their debts. This may include previous bankruptcy, an obligation to child or spousal support, as well as several other factors.
It is during this meeting that the debtor must also outline their reorganization plan for their finances and how they intend to pay back the money they owe. This plan must be approved by the Bankruptcy Court in order for the process to move forward. A judge will decide within 45 days if the payment plan is approved and cleared by the Court. After the repayment plan is filed, the payments should begin within 30 days.
The Automatic Stay
Once the bankruptcy paperwork is filed, the Bankruptcy Court enforced what is known as the Automatic Stay. The Automatic Stay prohibits banks and creditors from participating in any lawsuits, collection activities, and contact with the debtor. Collection activities can include calls/letters, bank restraints, foreclosures, repossessions, or lawsuits. This allows debtors to work on rebuilding their finances without worrying about banks or creditors collecting their assets.
Once the meeting of creditors is over, debtors should not experience any contact or harassment from those they owe money to. The Automatic Stay is enforced immediately after the paperwork is completed and filed. This gives debtors a sense of ease as they start to restructure their finances and pay back creditors. They are then able to create a plan without collectors bothering them. Debtors can then plan for their future without being overwhelmed with stress.
Contact our Firm
If you or someone you know believes they are in a situation in which they may have to file for bankruptcy, contact the Law Offices of Allen A. Kolber, Esq. today.
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.