Filing for bankruptcy is a very real way for Virginians to obtain debt relief. There are two types of bankruptcy available to qualified debtors: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Unlike a Chapter 7 bankruptcy, in which a debtor's assets are liquidated, a Chapter 13 bankruptcy allows individuals to retain their assets so long as they adhere to a court-ordered repayment plan that can span three to five years. At the end of that process, certain debts may be discharged. But the process can be complicated, and fully understanding it can be critical to one's successful utilization of the system.
One important aspect of the Chapter 13 process is the meeting of creditors. Shortly after filing the bankruptcy petition, the bankruptcy trustee must schedule a meeting between the debtor and his or her creditors. At the meeting, the debtor is placed under oath and creditors and the trustee can direct questions at him or her pertaining to his or her financial affairs. Depending on the information disclosed during this process, modifications may be made to the repayment plan.
What does this mean for debtors? It means that they need to be prepared for the meeting of creditors, as it can have significant ramifications for one's bankruptcy petition. A court hearing is held after this meeting where arguments can be made regarding the plan's appropriateness and viability. The outcome of this hearing could shape one's future financial stability.
Therefore, debtors need to make sure they understand how to be thorough in their bankruptcy petition and proposed plan. They also need to know how to appropriately answer questions at the meeting of creditors. An attorney who is skilled in this area of the law will know how to prepare a debtor for this process so that the best possible outcome can be achieved as fully as is possible.