Do I Need to Go to Court If I File for Bankruptcy in Pennsylvania?

If you are contemplating filing for bankruptcy in Pennsylvania, you do not have to worry that going to court will consume much of your time. Laws of civil procedure govern bankruptcy filings in different ways than traditional civil cases. The U.S. Bankruptcy Code provides a structure where court appearances are situation-specific. Hearings requiring a client’s presence usually occur when there are concerns legal rights at stake can be violated without proper judicial review. Since bankruptcy filings can involve individualized plans or payment schedules, the U.S. Bankruptcy Code does not require you to go to court every time there is a modification of no real consequence to the rights of either party. Moreover, if a court hearing is needed and you are required to attend, you will be notified well in advance; this will depend mostly on issues related to the type of bankruptcy you file or if there is a dispute requiring judicial review. Also, every district in Pennsylvania implements its own rules when it comes to court hearings.

Here the attorneys of Young Marr and Associates explain the nuances of a frequently asked question: do clients need to go to court in Pennsylvania after filing a bankruptcy petition? As seasoned bankruptcy practitioners with a track record of 30 years and 10,000 successful filings, we understand that having to go to court is a major concern for individuals seeking bankruptcy protection.

If you have any questions regarding bankruptcy procedure or the process in general, contact our Philadelphia bankruptcy lawyers at (215) 701-6519.

When is a Court Attendance for Bankruptcy in Pennsylvania?

Whether you will have to attend court or not usually depends on the type, or chapter, of bankruptcy you filed. Chapter 7 cases are typically quick without any unnecessary frills. In nearly every Chapter 7 case, a debtor will only have to attend a 341 Meeting – which is not usually conducted in a courtroom or in front of a judge. On the other hand, you are more likely to see the inside of a courtroom if you file a Chapter 13 case. However, a good deal of that depends on you. Nonetheless, you will have to attend a 341 Meeting. In any meeting or court appearance where your presence is required, one of our Pennsylvania bankruptcy lawyers will also be present.

A detailed description of the 341 Meeting and some common court hearings are discussed below.

The 341 Meeting

The Bankruptcy Code specifies that a 341 Meeting must be held and that the debtor must provide a valid excuse–such as an illness or hospitalization–if they unable to attend. And considering the consequences of the 341 Meeting, you may not want to miss this conference. The term 341 Meeting stems from the section of U.S. bankruptcy code governing this conference. There are limited circumstances when participation by telephone appearance is allowed. Most attorneys will review debt documents before the 341 Meeting. You are also required to bring proof of income, including tax returns, copied bank statements and other relevant information. Often, court hearings are held based on the information provided in these 341 Meetings and important issues are discussed.

There are multiple reasons why attending the 341 Meeting is required since it serves to protect the debtor’s best interest. While creditors rarely appear in the 341 Meeting, when they do, is usually because they want to claim a disputed security interest or because there is disagreement about an amount owed. Attendance to the meeting can ensure that the U.S. Trustee hears your side.

If you filed Chapter 13, an attorney from the Standing Chapter 13 Trustee’s office will conduct the meeting. Chapter 7 debtors will meet with an attorney who was appointed as a Chapter 7 trustee. In many cases, these attorneys are current bankruptcy lawyers practicing for other firms in the area. In either case, the trustee’s role is to ensure there are no U.S. Bankruptcy Code violations in the decisions regarding debt “discharge” or elimination—essentially lawfully deciding what will be sold and distributed to pay your debts. The trustee generally leads this meeting. The information learned in the 341 Meeting serves many purposes. For example, everyone who files bankruptcy has to “pass” the “Means Test.” The Means Test is the legal analysis used to determine eligibility to file for bankruptcy and if the petition corresponds to the appropriate Chapter of the U.S. Bankruptcy Code. Your attorney will likely discuss the details of the Means Test at the onset of the case.

Moreover, at the 341 Meeting, the bankruptcy trustee orally examines debtors to ensure that they are competent and understands the consequences of filing for bankruptcy and will typically as the following questions:

  • The potential consequences of seeking a bankruptcy discharge and the effects on credit history.
  • The reasons for filing under a particular chapter of the U.S. Bankruptcy Code.
  • The result of reaffirming debts that will have to be paid even after discharge under the U.S. Bankruptcy Code.

The information provided in the 341 Meeting is usually of great benefit to debtors. For example, this is an opportunity to learn about the “automatic stay” and what collection attempts are prohibited. The “automatic” stay is the provision that protects debtors against collection attempts during the pendency of bankruptcy.

Court-Requested Hearings In Pennsylvania

Depending on the Chapter and circumstances of your case, a number of court hearings could be scheduled.

Confirmation Hearing

Your attorney will usually be able to advocate on your behalf in most court appearances—without your presence being necessary. For example, in a Chapter 13 case, there is a scheduled “confirmation hearing” where the trustee recommends that the court confirms your bankruptcy plan. If all your documents are in order and your trustee payments are current, this hearing is a mere formality, and you will not have to attend.

Status Hearings

However, every case is different. Courts monitor bankruptcy filings and will be concerned for a debtor if a lawyer is making costly modifications to the payment schedule or if there is an important right at stake. When this happens, the bankruptcy judge will ask the debtor to be present at a hearing—this is typically intended to ensure that the debtor is aware of the consequences of a particular decision. In these instances, you will receive an appearance notice.

When the bankruptcy court determines that the debtor’s presence is needed, you will receive a letter with a notice to appear in court. The notice will provide the date and time when the meeting will take place.

Reaffirmation Hearings

While most hearings are scheduled in a Chapter 13 case, there is one type of hearing that occurs in some Chapter 7 bankruptcies. If you file a Chapter 7 case and have secured debt, such as a car loan, you might be required to reaffirm the debt to keep the car. When you reaffirm a debt, you sign a new contract that makes you liable for any default or obligation despite your pending discharge.

Typically, a reaffirmation agreement is signed by both parties and entered into the court record. However, this presupposes that your monthly budget permits you to make the required payments. If your bankruptcy documents do not indicate that the payment under the reaffirmation agreement is possible, a hearing will be scheduled before a bankruptcy judge. At the hearing, the burden will fall onto you to explain why the vehicle is necessary and how you will be able to afford the monthly payments. After hearing your testimony and reviewing your financial records, the judge will decide to approve the reaffirmation agreement or not. Our Upper Darby bankruptcy lawyers review any reaffirmation agreement that is presented.

Trustee Hearings in Pennsylvania

The Chapter 13 trustee manages the case for the bankruptcy court and ensures that debtors, and their counsel, adhere to the Bankruptcy Code. If there are issues with the case, the trustee might file a motion and request a hearing.

The most common motion filed in a Chapter 13 case is a motion to dismiss for failure to make bankruptcy plan payments. If you are unable to bring your payments current by the date of a scheduled hearing, you might be required to present the reasons why before a judge. However, if you provide proof of payment before the hearing date, one of our Berks County bankruptcy lawyers will handle the hearing.

Some cases run into other problems. For instance, a debtor might fail to provide a copy of a required tax return or business questionnaire. To move the case along, the trustee might schedule a hearing for the debtor to appear and provide the required documents. If you provide the documents or address the trustee’s concerns before the hearing date, you will likely not have to attend.

Motions Requested by Debtor’s Attorney in Pennsylvania

There are instances when our West Chester bankruptcy attorneys will request a hearing on your behalf. For instance, if you were refilling after a previous bankruptcy was dismissed, our office will have to file a motion to extend the automatic stay. This motion and subsequent hearing are critical because the stay that protects you from your creditors is only in effect for thirty days. While the motion will detail the reasons why the court should extend the stay, including the changes in your financial circumstances, you will likely have to testify to these changes in front of the bankruptcy judge.

Another common motion filed by debtor’s attorneys is a motion to modify a confirmed plan. In some cases, circumstances change that impact a debtor’s ability to pay their required monthly trustee payments. In some situations, it might be possible to address these situations by modifying or amending a confirmed bankruptcy plan. Depending on the case, this could mean increasing the payments to make up missed payments or decreasing payments if the debtor’s situation changed.

When timing is of the essence, debtors can file a motion to schedule an “Expedited Hearing” in instances where the creditor has violated the automatic stay or if some issues require judicial review.

Creditor Hearings in Pennsylvania

Creditors and their attorneys often play a role in a bankruptcy case. This is especially the case if the debtor filed because they were behind on their mortgage or had a car payment. If a debtor misses a mortgage or car payment while in bankruptcy, the lender is still prohibited by the automatic stay from taking any action directly against the debtor. Under the Bankruptcy Code, they are required to file a motion requesting relief from the stay. If our Bensalem bankruptcy attorneys are unable to work out an agreement with the lender’s counsel, the debtor will have to attend the hearing.

Adversary Proceedings in Pennsylvania Bankruptcy Court

An adversary proceeding is not an ordinary bankruptcy hearing. It is a lawsuit that is filed in your case that will be heard by a bankruptcy judge. An adversary complaint could be filed by a creditor that believes you purposefully incurred debt before filing for bankruptcy or have lied to the bankruptcy court. A trustee could also file an adversary complaint if there is suspicion of fraud.

A debtor could also file an adversary complaint. For example, our Pennsylvania bankruptcy lawyers might file a motion to strip a second mortgage.

Other common adversary proceedings include actions by the trustee to recover preferential transfers, creditors contending their debt is non-dischargeable, and certain objections to discharge.

If an adversary proceeding goes to trial, all parties must be present.

Call Pennsylvania Bankruptcy Attorneys You Can Trust

In troubled economic times, the last thing you need is to commit to a situation that will consume a significant amount of your time. When you are struggling to keep afloat, you can file for bankruptcy without having to lose valuable time. To learn more about frequent court appearances upon filing for bankruptcy, contact the attorneys of Young Marr and Associates for a free and confidential consultation. Call (215) 701-6519 to schedule a meeting.