When an individual files for bankruptcy, they create a plan on how to pay back their debt. After this is done, certain steps must be followed to complete the process. Regardless of whether individual or business bankruptcy is filed, the individual will attend a meeting of creditors. This is sometimes referred to as the Section 341 meeting. While this meeting may seem stressful, they allow individuals a fresh start, allowing them to create a financial plan for their future. With the help of an experienced attorney, a meeting of creditors can finish with a promising outlook.
During the meeting of creditors, the debtor is given the opportunity to explain their situation to those they owe money to, as well as a representative of the Bankruptcy Court. Questions about the individual’s financial situation as well as why they have not paid their debts may be asked during the meeting. Answers to these questions may include a previous bankruptcy claim, an obligation to child or spousal support, as well as several other factors.
While the meeting takes place, the debtor must outline their reorganization plan for their finances, including how they intend to pay back the debts they owe. The plan then has to be approved by the Bankruptcy Court in order for the debtor to move forward. A judge then decides within 45 days if the payment plan is approved and cleared by the Court. After the plan is set and filed, the debtor’s payments should begin within 30 days.
The Automatic Stay
Once the paperwork is filed, the Bankruptcy Court will enforce what is known as the Automatic Stay. The Automatic Stay prohibits all banks and creditors from taking part in any lawsuits, collection activities, or contact with the debtor. Collection activities that may violate the Automatic Stay can include calls/letters, bank restraints, foreclosures, repossessions, or lawsuits. Enforcing this allows debtors to rebuild their finances and pay back their debt without worrying about banks or creditors collecting their assets.
Once the meeting of creditors is done, debtors should not experience any contact or harassment from the establishments they owe money to. The Automatic Stay goes into effect immediately after the bankruptcy paperwork is completed and filed. This allows debtors a sense of ease as they start to restructure the future of their finances. With this help, they are able to create a plan without collectors contacting and harassing them. Debtors can plan for the future of their financial state without being overwhelmed.
Contact our Firm
If you or someone you know believes they are in a situation in which they may have to file for bankruptcy, contact Velasco Law Office today.
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 20 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.