After you file your bankruptcy petition, the next step is usually a meeting of creditors that takes place at the US Trustee’s Office about 30 days after your petition is filed. The purpose of the meeting is for the Trustee assigned to your case to make sure that you physically signed the documents, that everything is true and accurate, and to ask you any questions that he or she may have about your petition.

Many people who I talk to get very nervous when they hear they have to go to a meeting of creditors. The mention of such a meeting tends to conjure up images of Chase or Bank of America showing up to interrogate you on your reasons for filing bankruptcy. Relax, it is actually very rare for creditors to show up at your meeting of creditors and if they do, they get about five minutes to ask questions related to your financial situation.

When your name is called, you go up and hand your driver’s license and social security card to the trustee so he or she can verify your identity. Then, you will sit at the table to the left or right of the trustee (depending on the trustee). After being sworn in, the trustee will generally ask a few brief questions regarding the documents you filed and make sure that there is no clarification needed. At the end, he or she will ask if there are any creditors present in your case. If not (and about 99% of the time, there are not any creditors), he or she will usually wish you good luck and you are free to leave.

I try to fully prepare every client for the meeting of creditors so there are not any big surprises and clients tend to feel relieved after it is over. If I can help you with your financial problems, please feel free to contact me to schedule an appointment.

This is just a basic overview and is not legal advice specific to your situation. If you are considering bankruptcy or are facing foreclosure, you should speak with an attorney in your area for legal advice. To speak with me regarding your situation, please email me at [email protected] or call 925-586-6738.

This is the third in a series of posts regarding the alternatives to bankruptcy. The series will discuss debt consolidation, debt settlement, mortgage modification, and debt management programs.

What is Debt Settlement?

Debt settlement involves negotiating with your creditors to accept a lump-sum payment that is less than the total you owe. For example, if you owe a credit card company $8,000 and are not making payments, the company may agree to accept 50% of what you owe in order to recover some of the owed money. Debt settlement can only be used on unsecured debts like credit cards or medical bills.

There are a few different approaches to debt settlement. First, you (as the consumer) could take the time to come up with a budget and call each creditor as you have money to pay to see if you can come to an agreement regarding settlement. Second, there are attorneys that you can hire to assist in making those calls and negotiating with the creditors. Finally, there are debt settlement companies who create a plan for you and negotiate with creditors on your behalf.

Who Should Consider Debt Settlement?

Debt settlement may be an option if you have some cash available, but not enough to pay off everything you owe. Bankruptcy may not be able to protect all of your assets in this situation, so negotiating with your unsecured creditors may result in paying a smaller percentage than the bankruptcy court would require in a Chapter 13 repayment plan.

Because debt settlement usually requires a lump sum payment, it is often not a good option for those with little or no cash available. There are some debt settlement companies who will assist you in establishing an account to accumulate money towards lump sum payments, however be very careful to find out how much the service is going to cost you and what happens if the debt is not settled.

This is just a basic overview of debt settlement and is not legal advice specific to your situation. If you are considering bankruptcy or alternatives to bankruptcy, you should speak with an attorney in your area for legal advice.

Many people have heard of the terms Chapter 7 and Chapter 13, but don’t know exactly what the differences are between the two.

In a Chapter 7, you are asking the bankruptcy court to get rid of most of the debts you owe. However, the trustee may have to take some of your property in order to sell it and distribute the sale proceeds to your creditors. Some of your property may be exempt, which means that the trustee cannot take the property and sell it. The property that you can exempt varies based on the state you are filing in and can sometimes be affected by where you have previously lived.

In a Chapter 13, you are establishing a payment plan for paying some or all of your debts over the next 3 to 5 years. The payment plan is based on your monthly income, how much you owe, and the types of property involved. At the end of your payment plan and assuming you made all of your payments on time, the bankruptcy court grants a discharge of your debts. Usually, unsecured creditors (for example, a credit card) receive a small percentage of the actual amount owed and then the rest of the debt is discharged as part of the bankruptcy.

There are some debts that survive bankruptcy and it doesn’t matter whether you have filed a Chapter 7 or a Chapter 13. Child support, most tax debts, and student loans are, for the most part, nondischargable in bankruptcy – meaning, the bankruptcy court will not eliminate these debts as part of your bankruptcy filing and you will still owe them.

This is just a general overview of the differences between Chapter 7 and Chapter 13. There are many other differences that affect your decision to file bankruptcy and you should contact an attorney or read the U.S. Bankruptcy Court website for further information.

People who are considering bankruptcy often wonder just how much it is going to cost them to actually file bankruptcy.  While attorneys charge a range of fees for Chapter 7 and 13 bankruptcies, the court filing fees are established and set by the U.S. Bankruptcy Court.

In the Northern District of California, the Bankruptcy Court has a website outlining the fee schedule for filing and changes.

For a Chapter 7, the court fee to file the petition is $299.  This amount is due to the court on the day your bankruptcy petition is filed.  There are some circumstances that allow for payment of the court fee in installments and an application has to be filled out an approved by the court.  After the installment application is approved, the court sets a fee payment schedule for the balance of the fees.  If you cannot afford to pay the filing fee at all in a Chapter 7, there are special procedures to follow to receive a waiver of the filing fee.  I’ll cover these special procedures in a future blog post.

The court filing fee in a Chapter 13 is currently $274.  There is not a waiver of the filing fee available in a Chapter 13 bankruptcy.  Again, the entire fee must be paid when your petition is filed.

This is just a general overview of the basic fees involved with a consumer bankruptcy.  There are other fees that may apply to your individual situation and you should contact an attorney or read the U.S. Bankruptcy Court website for further information.