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I want to File a Chapter 13 Bankruptcy but do not want to go through the Meeting of Creditors. Is it required?
My wife and I have suffered horribly this last year. I’m a contractor with my own business, and we also bought two properties to renovate and sell. But then the real estate market collapsed and my business shrank. I couldn’t borrow the money I needed to fix up the properties and even if I could, no one would buy them for what I paid. We’re underwater on three mortgages, we have $45,000 in credit card debt, and I owe around $30,000 in trade debts. We’re looking to go Chapter 13, but I hear that we have to go to a “meeting of creditors.” We’ve been beaten up by our creditors—they keep calling and calling and don’t understand that we just had some bad luck. My wife is afraid to answer the phone any more. Why do we need to go to a meeting of creditors so they can beat us up more? What’s the purpose of the meeting, and is there any way to avoid it? And if I have to go, what do I need to do?
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Answers (1)
I understand completely why you’d like to avoid the meeting. Unfortunately, you can’t—it’s required under the bankruptcy laws. There is no legal way to avoid the meeting—avoiding it would doom your filing—and moreover, the meeting is really at the heart of Chapter 13 bankruptcy.
Chapter 13 is a “reorganization” bankruptcy, not a “liquidation” bankruptcy. That means, as you know, that the purpose is to allow the debtor (you) to keep you home and business while getting out from under your debts. However, that’s not the whole purpose—any bankruptcy also has the purpose of paying creditors as much as the debtor can pay. The idea is to balance the interests of both sides: the debtor gets a chance to start over, while creditors will be repaid as much of what they are owed as possible.
Hence the creditor’s meeting. That’s the creditor’s opportunity to question the debtor under oath to get a better idea of the debtor’s finances and his or her plan for repayment. It’s a chance for the creditors to see if under your proposed payment plan, you really are paying everything you can—which is basically all your money over and above basic living and business expenses. Remember: bankruptcy is not just for your benefit—it’s for the creditor’s benefit as well.
As for what you need to do: even before the creditor’s meeting, you’ll have collected and provided information regarding all your creditors, your debts, your monthly living expenses, your assets, and your income. You’ll need to be prepared at the meeting to answer questions about all these topics, and you can expect the questions to get fairly pointed—for example, do you really need $3,000 per month for food and clothing? Is your income really only $70,000 a year, or including expenses you have the business pay for you, is it really $90,000 or $100,000 per year? Etc. The creditor’s goal will be to understand everything about your finances, so they have a chance to help shape the repayment plan.
Note also that if you and your wife are filing jointly, she’ll need to attend the meeting, too.
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Posted by Steven Sweig on 22 Jan 2010
1 person found this useful
(3 Votes)