Understanding the Meeting of Creditors

Bankruptcy Meeting of Creditors

In a typical bankruptcy case, the only thing the debtor has to “go and do” is attend the Meeting of Creditors, known among attorneys as the “341 hearing.”  Attorneys have the annoying habit of naming things after code sections; it’s what makes us special.

The first thing you should understand about this meeting is that it is a misnomer: it is very unlikely that any of your creditors will attend.  They were all invited, but unless they have specific questions, they usually rely on the trustee to make an examination.

While there is some variety among districts and individual trustees, most Meetings of Creditors take between three and five minutes.  The trustee will swear in the debtors, check their photo identification and social security card, and ask two types of questions.

The first type of question is highly-scripted, and is asked of every debtor.  If you have the opportunity to observe any hearings before yours, you will already have heard them.  “Did you read and sign the bankruptcy petition and schedules?  Was all the information in those schedules true, complete, and accurate?  Did you list everything you own?  Did you list everyone to whom you owe money?”  There are approximately twenty such questions asked of all petitioners.

The second type of questions vary from case to case, and are those asked by the trustee to clarify or investigate specific items from the petitions.  Remember, the trustee has already made an initial review of the bankruptcy petition, the schedules, and the tax return and pay stub information provided in advance of the hearing (aka “the 521 documents:”  see, attorneys are weird).

There are two primary reasons for holding this meeting.  The first is to get you on the record stating that all the information you submitted to the Court is true.  The second is to investigate potential assets or issues raised by your filing.  For the majority of filers, this will be the one and only time they need to attend any hearing; it is very rare for a chapter 7 bankruptcy debtor to meet their assigned judge.

At the end of the brief hearing, one of three things can happen.  Most commonly, the meeting is concluded.  The trustee will then issue a report, and the debtors are not required to return.  In some cases, the trustee will “continue” the hearing, setting a new date.  If this happens because the trustee wants additional documents or records, most of the time debtors are not required to attend this later hearing date; it is simply set up as a back-stop, in case the documents or records are not provided, or in case the trustee has additional questions.  The trustee will later let the debtor know, through their bankruptcy attorney if they have one, whether or not they need to attend.

Finally, in relatively rare cases, the trustee will have significant issues or problems with the filing, and will continue the meeting and require an appearance.   Generally, this is due to fraud, major asset issues, or undisclosed assets; you probably will know (or your attorney will tell you!) if you are at risk of this outcome.

Generally, the Meeting of Creditors is a relatively painless requirement in the bankruptcy process.  The most common thing my clients say to me as we walk out of the hearing room is “that was it?”

~Andrew

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