The Bankruptcy and Trustee Systems Defined
The federal government established bankruptcy as a debt relief procedure. The United States Bankruptcy Code and the Federal Rules of Bankruptcy Procedure govern bankruptcy. In addition to protecting debtors from their creditors, bankruptcy safeguards creditor rights. In the majority of instances, debts will be discharged without any additional payments.
The only debt relief program that creditors are required to implement is bankruptcy. If you engage in debt consolidation or credit counseling, you may spend tens of thousands of dollars over the course of months or years, and creditors may disregard your efforts. Insolvency cannot be ignored by creditors. Once you file for bankruptcy, your creditors are required to cease harassment. Once you receive your bankruptcy discharge, your creditors may never again attempt to collect the discharged debts.
Those unfamiliar with bankruptcy may find the trustee system to be perplexing. The United States Trustee and the panel trustees are the two types of trustees.
The United States Trustee and his or her attorneys are United States Department of Justice employees. They supervise the entire bankruptcy system and ensure that cases are handled in accordance with the law. The bankruptcy judge has the final say, but the United States Trustee is responsible for supervising all bankruptcy cases. If there is a problem with a case, the United States Trustee will submit a motion with the court. You have the right to respond and object to the motion. Regarding any motions in your case, you should contact your bankruptcy attorney as motion practice is relatively complex.
In chapter 7 and chapter 13 cases, the United States Trustee appoints a council of private attorneys to act as """"panel trustees"""". Chapter 7 trustees and chapter 13 trustees are the names of the panel trustees. Individual case administration is delegated by the United States Trustee to the chapter 7 and chapter 13 trustees. This panel trustee represents all of your unsecured creditors' interests. These trustees are designated randomly to cases and are compensated with a flat fee plus a portion of the plan payment in chapter 13 or a portion of any property recovered in chapter 7. This individual will be present at the 341 meeting.
The 341 meeting is mandatory for all bankruptcy debtors. It is officially known as the initial creditors' meeting. There are two factors to remember: 1) It is the only meeting of creditors, and 2) creditors rarely attend. The panel trustee conducts meeting 341. Two forms of identification are required: 1) a photo ID and 2) evidence of your social security number. The trustee will ask you a series of forthright questions, such as """"did you sign the bankruptcy petition with the assistance of your attorney?"""" Your bankruptcy attorney should be able to anticipate whether the trustee will have any concerns about your case or will ask any specific questions. The magistrate is not in attendance at meeting 341. You have been placed under oath, and it is imperative that you tell the truth. It is always preferable to reveal the truth rather than lie or provide evasive responses.
The Automatic Stay and Discharge are the benefits of bankruptcy.
Insolvency ends creditor harassment. As soon as you register for bankruptcy, you receive something known as the automatic stay. The automatic stay halts all attempts to collect any of your bankruptcy-related debts. This includes telephone messages, letters, legal proceedings, and garnishments. If a creditor wishes to continue collecting a debt from you, they must request permission from the court and demonstrate just cause. Unsecured creditors, such as credit card companies, debt collectors, and medical billings, cannot obtain relief from the stay and are prohibited from continuing to collect from you. You may be eligible for damages if a creditor violates the automatic stay.In addition, declaring bankruptcy prevents a garnishment.
In addition, bankruptcy prevents foreclosures. Even if you want to sell your home, filing for bankruptcy can buy you additional time. If you have multiple mortgages or your home is insolvent, bankruptcy protects you from a deficiency judgment.
Additionally, bankruptcy allows you to save your home. Chapter 13 enables you to catch up on your mortgage payments and save your home from foreclosure. If you suspect problems with your mortgage or wish to eliminate a second or third mortgage, chapter 13 also allows you to do so.
The bankruptcy discharge is an order from the United States Bankruptcy Court stating that you are no longer obligated to pay any of the debts you included in your bankruptcy petition and that your bankruptcy creditors may never again attempt to collect these debts. It is included at the conclusion of your case.
In the majority of cases, all debts are discharged in bankruptcy. There are exceptions for delinquent child support/alimony, certain delinquent taxes, student loans, criminal penalties, speeding citations, and fraudulent debts. These discharge exceptions are evaluated on a case-by-case basis. After the initial consultation, your bankruptcy attorney will be able to elaborate. However, you should not be concerned, as the majority of bankruptcies result in total discharges.
To Sum It All Up
This was a brief summary of the bankruptcy procedure. Hopefully, you now comprehend what bankruptcy is and how it operates. This is not intended as a guide for individuals filing on their own. Bankruptcy is extremely complex, so it is always advisable to hire an experienced bankruptcy attorney.
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