COVID-19 put many people in a position they have never been in before—saddled with debt that they can no longer afford to pay off. This has led to numerous individuals filing for Chapter 7 bankruptcy. Bankruptcy gives people an opportunity to erase most of their debt, while holding on to their tax credits, child credits and stimulus checks. This option also allows the person filing for Chapter 7 to keep retirement accounts untouched for the most part. In a situation where an individual files for Chapter 7, a trustee gathers all of the nonexempt assets a debtor owns and sells them off to pay off the debt. This is supposed to give the individual a blank slate. This article will take a deep dive into what happens when the individual filing and his or her assigned trustee has a meeting of creditors, also known as a 341 hearing, when attempting to file for chapter 7 bankruptcy.
To begin the process, the person considering a chapter 7 bankruptcy should meet with a bankruptcy lawyer. Have the attorney review your case (debt amounts, income, assets, etc) to confirm that chapter 7, is in fact, your best option. Once the attorney reviews your case, including all assets and debts you may have, and suggests a chapter 7 bankruptcy filing, they will ask you a series of questions to help them fill out your bankruptcy petition. They will also need documentation, including a 521 Bankruptcy Document Form, or 521 documents to submit with the petition to supplement the argument that chapter 7 really is the petitioner’s best option. The 521 documents are documents required under section 521 of the United States code. These documents include forms such as your last two paystubs (60 days’ worth, last year’s tax documents, last month’s bank statements for all of your bank accounts, as well as additional documents such as marital settlement agreements, deeds to any property you may own, and vehicle loan documents, if applicable).
Following this, the court will send the notice of your 341 hearing to the address listed on your documentation. A 341 hearing is really just a meeting in which your assigned trustee and creditors meet and verify the information which is written on the documentation you submitted when you filed. You are asked questions, under oath, but there is no judge present. You will bring an identification card and a copy of your social security card (or two other acceptable forms of identification) and answer any questions your creditors ask about the state of your financial affairs. Usually, these meetings are short as creditors tend not to ask any questions.
Once the 341 meeting is over, you will need to stay on track with the requirements given to you by the bankruptcy court. For individuals who do stay on track, the court generally grants a bankruptcy discharge. This process takes an additional 60-90 days. If individual has no assets, the case is closed shortly after the discharge.
Has COVID-19 overwhelmed you with debt? Do you think Chapter 7 may help you get a fresh start? Call us today at (Phone number) for a free consultation and let us guide you. At Dsouza and Strachan law, you will find a team of well-versed attorneys who can help you walk through options when contemplating bankruptcy. When faced with such a situation it is best to consult an attorney who can review your case in detail and help you choose to understand the best possible steps to ensure the best outcome for your company.