Every debtor who files for an individual bankruptcy has to attend a creditor’s meeting. This holds true for Chapter 7 and Chapter 13 bankruptcies. The creditor’s meeting will be scheduled the Bankruptcy Trustee after all the initial paperwork is filed. The main purposes of the meeting are to give the trustee and the creditors a chance to question the debtor.
In most cases, 7 and 13, only the trustee, debtor and the debtor’s attorney appear. Creditors in routine Chapter 7 and 13 bankruptcies usually leave it to the trustee to represent their interest. For this reason, debtors shouldn’t be too nervous about the meeting. Even when a creditor appears, a good debtor’s attorney will make sure the debtor is prepared for any questions.
The trustee works on behalf of the creditor’s but he/she is obligated to be fair to the debtor and to report to the Bankruptcy Judge. The trustee will determine many things during his administration of the case.
The trustee will make sure the debtor qualifies for bankruptcy and files all the correct paperwork. The trustee will set aside any property of the debtor that is protected by state or federal exemptions. The trustee will collect and sell the nonexempt property. The sales proceeds will ultimately be distributed to the right creditors in the correct amounts.
To make sure the trustee has all the correct information, the trustee holds a creditor’s meeting. This meeting is also called a 341 meeting because the federal statute that authorizes the meeting has 341 in its title.
When and Where is the Meeting?
The meeting will be set by the trustee between 3 weeks and 40 days after the original petition is filed. The meeting is conducted by the trustee and not the judge. It usually takes place in a room (but not a formal courtroom) in the nearest federal courthouse.
Before the meeting, the trustee will review all the debtor’s debts, income and financial picture so he/she can have a full picture of the debtor’s situation.
What Do You Need for the 341 Creditor’s Meeting?
Your bankruptcy lawyer should prepare your for the meeting. This includes telling you what to bring.
Debtors should bring some form of identification such as a driver’s license and your social security card or number. In a Chapter 7 bankruptcy, most of the assets are sold and the debts are discharged.
Unlike a Chapter 13, the bankruptcy discharge usually takes place within a few months after the meeting. The trustee will tell your attorney or you what else to bring besides identification. Some of the documents you might need are real property deeds, mortgage papers, car titles, tax returns, bank statements, and pay stubs.
What Happens at the 341 Meeting?
The meeting will begin by questions from the trustee even if creditors are there. The trustee will review any transfers you made to other creditors or anyone else before you filed for bankruptcy or before the meeting. Some transfers may be improper and the trustee might go after the person who got the transfer to give it back. The trustee will review the items you claim are exempt to make sure the right value is being placed on them.
Each trustee is different which means the questions can be different. Still, many of the questions run along these lines:
- Why did you file for bankruptcy?
- Are the debts and income listed in your financial affairs up to date?
- Have you given any money creditors in the months before you filed your Chapter 7 or Chapter 13 bankruptcy petition?
- Did you give any money or objects to relatives or friends before you filed your Chapter 7 or Chapter 13 bankruptcy petition?
- Do you own a business by yourself or with anyone else? If so, provide the details about the business such as whether it’s a corporation, partnership or sole-proprietorship? Are there tax returns and profit and loss statements for the business?
- How did you determine the value of each of the items you listed – home, cars, tools, etc?
- Are each of your monthly expenses really necessary and are they reasonable?
There will also be questions to make sure you still meet the means test for filing a Chapter 7 and not filing a Chapter 13 bankruptcy – if, in fact, you filed a Chapter 7 case. There will be questions about your family such as whether you have any dependents, whether you own child support or spousal alimony and what your marital status is.
What Do Creditors Do at the 341 Creditor’s Meeting?
As mentioned, in many cases the creditors will trust that the trustee will represent their interests at the meeting. If creditors do show up, they may ask whether you’d like to enter into a reaffirmation agreement to try to keep the asset, such as a car, and continue the monthly payments.
In rare cases, the creditors may take a more aggressive stand if they think there was fraud or dishonesty involved in getting the loan or handling your assets.
What Happens after the Meeting?
In most Chapter 7 cases, the Trustee will recommend that the Chapter 7 petition be approved for discharge. If there is something unusual, the trustee will notify your lawyer or you (if you don’t have a lawyer). On some occasions, the Trustee may just want additional paperwork or small details.
In most Chapter 13 cases, the Trustee will recommend that the Chapter 13 plan to make the payments be approved. The payments will be made to the Trustee until the length of the plan is over. On completion of the plan payments, the debtor will be formally discharged.
Is Life Really That Bad After Filing for Bankruptcy?
Over the last few years it has been common to see neighbors, friends and family members filing for bankruptcy to eliminate their debt. For most of us it is a blessing to get out from under a mountain of bills. The only people that really get upset about a person filing for bankruptcy are creditors. […]