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In every bankruptcy case, a trustee is assigned to the person who filed bankruptcy. The trustee’s job is to make sure the bankruptcy filing accurately reflects the filer’s assets and that the creditors get their fair share of the payment. In a Chapter 7 or Chapter 13 bankruptcy, the trustee is required to meet with the debtor. This is called a 341 hearing (named after the section of the Bankruptcy Code that requires it), or a meeting of creditors. As the name suggests, creditors may also attend the meeting, but they rarely do so. Usually, the meeting is fairly brief, lasting under 10 minutes.

What Is A Meeting Of Creditors?

A meeting of creditors is a brief hearing to verify the accuracy of the bankruptcy filing and make sure the creditors receive their fair share of the proceeds from selling the bankruptcy assets in accordance with the code. The trustee checks the debtor’s income and assets to make sure everything was reported accurately in the filing. Although the meeting of creditors is a hearing, it usually won’t be held in a courtroom and a judge will not be present. The exact location of the meeting depends on the court where the bankruptcy petition was filed.

In a Chapter 7 bankruptcy, the trustee makes sure all non-exempt assets are sold and the proceeds are fairly distributed amongst the creditors. In a Chapter 13 bankruptcy, the trustee makes sure all income is accurately reported and that the repayment plan is feasible.

What Does A Meeting Of Creditors Look Like?

The meeting is usually only a few minutes and it typically only involves the trustee, the debtor, and the debtor’s attorney. Although creditors are allowed to attend, they very rarely do so. Ordinarily, creditors will only attend if they have a personal relationship to the debtor (like a former spouse or business partner) or if information the debtor presented on the filing is different than information the debtor gave to the creditor. The meeting generally takes place in a conference room at a courthouse, not in a courtroom. The trustee usually schedules meetings with multiple debtors at a time slot; debtors wait outside until they are called in.

At the meeting, the trustee first verifies the debtor’s identity. The debtor must show a photo ID and proof of his/her social security number. After the debtor’s identity has been verified, the trustee asks the debtor a few questions, which the debtor must answer truthfully. An accidental false statement may require the debtor to file an amendment, delaying the process. An intentional false statement is grounds for denying the discharge of debt and can lead to felony charges. Given the importance of this meeting, it’s usually a good idea for a debtor to be represented by an attorney who can ensure the accuracy of the filings before the meeting starts.

The trustee is required to ask the following questions:

• Whether the debtor has reviewed his/her bankruptcy schedules
• Whether the information on the schedules is true and accurate
• If any changes need to be made to the schedules
• Whether all debts and assets were listed on the bankruptcy filing

 The trustee may also ask additional questions, such as:

• How the debtor valued his/her home or car
• Whether the debtor has recently transferred any assets
• Whether the debtor is expecting an inheritance
• Whether the debtor has made any recent luxury purchases. 

A trustee asks these questions to make sure the debtor’s filing accurately reflects his/her assets. In some cases, courts have refused to discharge a filer’s debts because the filer had tried to hide assets by transferring them. Even something as small as giving a car to one’s child can cause issues. Anyone with questions about what transfers might prevent a discharge of debt should consult an attorney before attending their 341 hearing.

Luxury purchases can also cause issues at a meeting of creditors. A luxury purchase is any good or service over $725 that isn’t reasonably necessary for a person to live. This can include fur coats, jewelry, gifts to family members, gambling expenses, rugs, and many other things. Anyone with questions about whether recent spending was a luxury purchase should consult an attorney before the meeting.

Once the trustee has finished asking questions, the meeting ends. 

What Do I Need To Do To Prepare For My Meeting Of Creditors?

First, a debtor at a 341 hearing must bring photo ID and proof of social security number. If the trustee cannot verify the debtor’s identity, the meeting will need to be postponed for another time, delaying the bankruptcy process. Second, it’s very important for the debtor to check over his/her bankruptcy schedules for accuracy before attending the meeting. 

If anything changed between the filing and the meeting, it’s vital to file an amendment. A bankruptcy attorney can provide more detailed advice on successfully navigating this process based on the debtor’s specific financial circumstances.

If you’re considering filing for bankruptcy or you’re preparing for your meeting of creditors, contact Rosenblum Law today. Our experienced bankruptcy attorneys can help you navigate the complex bankruptcy process and make sure you get through it with as much of your assets as possible. Email us or call 888-815-3649.