Bankruptcy is a nerve-wracking and emotional process that usually involves significant stress. As debts pile up, you may feel overwhelmed by the situation you find yourself in. Then, if you are contemplating bankruptcy, you may find yourself worrying even more about undertaking what seems like a daunting legal process. But don’t fear. Bankruptcy can be a real and helpful solution for a lot of people. Much of what seems frightening right now may just be a lack of understanding about the process.
What is Chapter 7 bankruptcy?
Chapter 7 is basically a liquidation of your available assets which wipes out certain unsecured debts, like credit card debt and medical debt. Unlike other types of bankruptcy, you do not need to set up a repayment plan with Chapter 7. It is, therefore, a quicker process overall because those plans usually take three to five years. There are qualifications you must meet in order to be eligible to file this type of bankruptcy. Specifically, you must meet income requirements. If you are above the maximum acceptable income, you must file Chapter 13 bankruptcy instead, which involves a lengthy repayment plan.
What is a 341 meeting?
A 341 meeting is a mandatory part of filing Chapter 7 bankruptcy. It takes its name from the section of bankruptcy code that it refers to. This meeting happens about a month after you file. The purpose is to bring together the person filing, their attorney, the Chapter 7 trustee and the individual’s creditors, if they choose to attend. At this gathering, the parties present will verify that all paperwork has been filed for the bankruptcy, check that the person filing is not committing fraud and ascertain which nonexempt assets can be sold to repay their debts.
You will need to bring official documents proving your identity, assets and current income to the 341 meeting. All relevant data must be present for double-checking and validation.
The meeting also clarifies the order of debt repayment, starting with things like tax debt and child support down the line to unsecured debts.
If you’re worried about having to go to court for a Chapter 7 bankruptcy, you likely will never have to. A trustee hosts the 341 meeting in their office; it’s quite informal. Barring special circumstances or fraud, your entire bankruptcy case happens outside of a courtroom.
Understanding the process, bit by bit, can demystify legal proceedings. A 341 meeting is just one step on the road to debt recovery.