Hearings and Motions
There are a number of possible hearings and meetings possible depending on the issues uncovered in your bankruptcy filing; however, below are a few mandatory and common meetings, motions and hearings:
§341 MEETING
After you file your bankruptcy petition, under either Chapter 7 or Chapter 13, you will be required to attend a meeting of your creditors. This meeting is called a 341 meeting after section 341 of the bankruptcy code that requires it. The meeting is usually scheduled about 20 to 40 days after you file for bankruptcy. The 341 meeting is informal, short and often the only meeting you'll need to attend.
| Purpose: | The purpose of the meeting is to ensure that you have fairly and honestly represented your assets, income and debts in your bankruptcy filing. The trustee who was appointed to your case can ask you questions, under oath, concerning all of your property and your financial situation. Creditors may also ask you questions. You will not be asked to justify filing bankruptcy. It's strictly a fact-finding meeting. |
| Attendance: | You must appear at the meeting and answer questions under oath about your assets and liabilities. Failure to appear may result in dismissal of your case. If you hired an attorney to represent you, your attorney will be present with you at the meeting. |
| Creditors: | Creditors are invited to the meeting but they don't have to attend. Creditors do not need to be at the 341 meeting to challenge the discharge in a Chapter 7 bankruptcy or to object to a payment plan in Chapter 13, so generally they do not attend. |
| Questions: | The 341 meeting is essentially a meeting between you and your bankruptcy trustee. There isn't a judge at a 341meeting. The meeting is presided over by a trustee. You'll be asked to take an oath to tell the truth. The meeting will either be tape recorded or recorded by a court reporter. The entire meeting is generally over within 15 minutes. The trustee will ask you questions. The meeting is mostly a chance for the trustee assigned to your case to verify the information you have provided and find out if anything is missing from the paperwork. You may ask the trustee any questions you want at any time. |
BANKRUPTCY CODE §554: ABANDONMENT OF PROPERTY OF THE ESTATE
After notice and possibly a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate.
| Purpose: | In a Chapter 7 case, the trustee may abandon (release) property if the property is inconsequential or if the property falls within an exemption. In Colorado, the Homestead Exemption allows the debtor to retain up to $60,000 in equity in the home. If the property under contract to be sold contemporaneously with the bankruptcy filing, and the property has less than $60,000 in equity, the property must be released prior to the sale…otherwise the property remains in the bankruptcy estate and the sale must wait until the property is discharged with the other debts. |
BANKRUPTCY CODE §522(f): JUDICIAL LIEN AVOIDANCE
Bankruptcy Code Section 522(f) permits a debtor to set aside a judicial lien to the extent that it impairs the debtor’s homestead exemption.
| Purpose: | Certain liens can be avoided with a Chapter 13 bankruptcy filing. Section 255(f) states that a debtor may exempt judicial liens and non-possessory, non-purchase-money security interests in certain exempted items. If a lien is avoided, the secured creditor will be treated as unsecured. Only exempt liens can be avoided. A lien can be avoided if it impairs a debtor’s exemption. This is calculated by taking the sum of the lien to be avoided, all other liens and the amount of the exemption and subtracting the value of the item. If you are seeking to avoid a $5,000 lien and all other liens and mortgages equal $250,000, and the value of the real property is $240,000, the impairment of your exemption is $10,000. Because the impairment of the exemption would be $10,000, which exceeds the lien of $5,000, the lien could be avoided. Once you demonstrate a lien impairs your exemption, you still need to ascertain wither it can be avoided. Under section 522(f), there are three requirements to avoid a lien: (1) it must be a judicial lien; (2) it must be against the interest of the debtor in the property; and (3) the debtor must be able to exempt the property. Whether the lien is a judicial lien will depend on the origin of the lien. The bankruptcy code, however, specifically provides that this exemption does not apply to judgments from mortgage foreclosures. See 11 USC 522(f)(2)(C). If you satisfy these requirements, you may be able to avoid the lien and have a greater chance of successfully emerging from bankruptcy with more of your assets. |
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