When a person files for bankruptcy, they can create a plan to pay back their debts over time. Regardless of which type of bankruptcy a debtor files, they are required to attend a meeting of creditors, also known as the Section 341 meeting. While this step of the bankruptcy process may seem intimidating, these meetings can allow debtors a fresh start and give them the chance to create a plan for their future. A meeting of creditors has the potential to end with a promising outlook for the debtor’s financial state.
During the meeting of creditors, a debtor is given the opportunity to explain their financial situation. This is done to those they owe money to and the Bankruptcy Court. In the meeting, the debtor will be asked a series of questions regarding their finances as well as why they were unable to pay their debts. Answers to these questions may consist of a previous bankruptcy claim, an obligation to child or spousal support, in addition to several other factors.
While the meeting takes place, the debtor is required to outline their plan to restructure their finances. This includes how they intend to pay back the debts they owe. Once the plan is discussed, it must be approved by the Bankruptcy Court so that the debtor may move forward with the process. A judge must make a decision within 45 days if the payment plan is approved. After the plan is set, the debtor should begin making payments within 30 days.
The Automatic Stay
As soon as a debtor’s bankruptcy paperwork is filed, the Bankruptcy Court enforces the Automatic Stay. The Automatic Stay prohibits any banks and creditors from taking part in any lawsuits, collection activities, or contact with the debtor. A violation of the Automatic Stay can include calls/letters, bank restraints, foreclosures, repossessions, or lawsuits. Enforcing this system allows debtors to rebuild their financial state and pay their debts without worrying about being harassed by banks or creditors.
Once the meeting is over, debtors should not experience any contact from those they owe money to. The Automatic Stay goes into effect immediately after the bankruptcy paperwork is filed. This gives debtors a sense of ease while they begin the road ahead. With this assistance, they are able to create their plan and pay back their debts without being bothered by collectors.
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If you or someone you know believes they are in a situation in which they may have to file for bankruptcy, contact The Radol Law Firm today.
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