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.