When I meet with people about filing for bankruptcy, a lot of them are worried about the thought of having to go to court. The truth is, it is usually not necessary for a first-time bankrupt to go to court for a bankruptcy.
I met with a man last week who had this worry. He was just recovering from an illness that prevented him from working. He had returned to work but was making less money than before, and was having trouble keeping up with the payments on his bills and his credit cards, on which he owed $25,000.
When I spoke with him he was considering bankruptcy, but he was hesitant because he didn’t want to have to go to court. He just wanted his debts to be taken care of so he could get his fresh start.
I explained to him how bankruptcy works, what his rights and responsibilities are, and reassured him that as a first-time bankrupt, he would not have to go to court unless something prevented his trustee from giving him an automatic discharge at the end of his bankruptcy, which would mean he would no longer be bankrupt and all of his debts would be forgiven.
I told him that if he had never been bankrupt before, federal law has set a minimum period of 9 months plus one day to be in bankruptcy. During the 9-month period, he would have certain duties and responsibilities to complete in order to get his discharge, such as submitting monthly income and expenses statements, attending two counselling sessions, and providing his trustee with any tax information necessary to file all of his tax returns up to the date of his bankruptcy. After this time, he would be, as a first-time bankrupt, eligible for an automatic discharge from his debts, resulting in his fresh start.
If he had to go to court, it would mean that there was something preventing his trustee from giving him his automatic discharge, and he would have to be discharged through a hearing. Some of the reasons that would result in him going to court would be as follows:
-Â If he had been bankrupt before, because as a second time bankrupt he is not eligible for an automatic discharge in 9 months plus one day;
-Â If one of his creditors opposed his discharge from bankruptcy, which would be because of a specific reason;
- If he didn’t complete the duties required of him during the 9-month period during which he was bankrupt.
Once I explained to him that he probably wouldn’t have to go to court to declare bankruptcy, he felt better about his options and the possibility of a bright financial future.
If you have any questions about going to court for your bankruptcy, contact me at 310-PLAN for a free consultation. You can also email me any questions you might have about bankruptcy or other options. Also, check out my next blog entry where I’ll talk about going to court because of a second bankruptcy.
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