The Bankruptcy Process: Frequently Asked Questions
Even as the economy shows signs of recovery, consumer debt reached record high levels last quarter relative to disposable income. According to a study by the Federal Reserve , consumer indebtedness totaled $11.34 trillion. These figures could indicate that more people will turn to bankruptcy for debt relief.
Bankruptcy is a household term, yet most people do not understood its full meaning. To help you better understand the bankruptcy process, here are the answers to some frequently asked questions:
What is a 341 hearing and do I have to attend?
The bankruptcy process begins with a debtor filing a petition. About 40 days afterwards, the court schedules a 341 hearing – also called a meeting of creditors. The court notifies all the creditors listed on the petition about the meeting. However, the court does not require creditors to attend and, in Florida, most creditors do not appear. On the other hand, debtors must appear in order to answer questions about their petition and schedules while under oath. A bankruptcy trustee assigned to the case presides over the meeting. If you fail to attend a hearing the trustee would file a motion to dismiss your case. Most trustees will agree to reschedule the hearing if you have a valid reason for changing the date.
Should I reaffirm my debt?
Creditors may approach debtors during the bankruptcy process to reaffirm an otherwise dischargeable debt. Before you decide to reaffirm debt consider your purpose for filing bankruptcy. Also take into consideration the value of the asset. If you owe more than it is worth then you may not want to reaffirm the debt. Remember also that bankruptcy protection does not extend to reaffirmed debt. So if you reaffirm a car loan and then fall behind on your payments, the lender could repossess the car and sue you for the difference between the auction price and the amount you owe. Bankruptcy provides you a financial fresh start. You may want to seek legal advice before reaffirming any debt.
For more information and a free consultation contact knowledgeable bankruptcy attorneys.