The Meeting of Creditors: What really happens at your Bankruptcy 341?
When any Debtor files bankruptcy, the court schedules a Meeting of Creditors. This hearing is also called a 341. The name is due to the law that requires the meeting; Section 341 of the Bankruptcy Code requires every Debtor to attend a Meeting of Creditors. During the meeting the debtor receives an examination under oath. No judges attend the 341.
Across the country, the meeting is often in a conference room inside of the courthouse. In northern Virginia, the meetings are in a separate office building in Old Town Alexandria. The location of the Meeting of Creditors for most of our clients is at:
Office of the U.S. Trustee, 1725 Duke Street, Suite 520, Alexandria, VA 22314
This office suite is approximately one mile away from the bankruptcy courthouse. Since it is not the federal courthouse, you can bring in cell phone and other electronics. However, firearms and other weapons are prohibited. If you ever must attend a hearing at the bankruptcy courthouse in Alexandria, you will need to store your electronics in your car. Cell phones, tablet, laptops, and other electronics are only permitted inside the federal courthouse with prior permission from a judge.
Usually the Debtor, the person who files bankruptcy, attends the meeting in person. Conversely, if it is a business that files bankruptcy, an appointed represented must attend the meeting. The representative is someone familiar with day-to-day operations of the business, such as owner, president, managing member, etc. This Meeting allows the trustee to get a better understanding of the situation. The hearing is scheduled for an hour block with 8 to 15 other cases. The average Debtor will only have about 3 to 5 minutes worth of questions.
At the Hearing
At the hearing, the bankruptcy trustee, the person appointed by the court to oversee your case, will verify your identity and ask questions about your bankruptcy filing under oath. Debtors must provide proof of identity, like a driver’s license or ID card, and proof of social security number, such as a Social Security Card or W2 at the meeting. Your creditors may appear to ask you questions about your financial affairs and bankruptcy petition, but they rarely do. The Trustee will also confirm that the Debtor read the Bankruptcy Information Sheet.
Reviewing Documents
The trustee verifies everything in your petition is correct, and he/she determines you are complying with the bankruptcy law. Prior to the meeting the trustee would also review any documents submitted to them. These documents often include bank statements, tax returns, pay stubs, retirement account statements, property deeds, and mortgage documents. Additionally, Debtors may have to provide information about any other asset with substantial value.
The law requires these documents to be submitted to the trustee a week before the meeting; if the Debtors or their attorney do not submit documents prior to the hearing, the trustee may continue the meeting to a future date to allow time to review the documents. These documents help the trustee determine if the petition is accurate and if he/she has any additional questions for the Debtor. For most Debtors, the Meeting of Creditors is the only time that the Debtor has contact with the trustee.
Questions
At the start of the meeting, your bankruptcy trustee will ask you some basic questions. These questions often include whether you have any dependents; your current marital status; if you owe any alimony or child support; whether your petition accurately reflects your income, debts and expenses; and how much your property is worth. The trustee may have other questions depending on your situation.
In a Chapter 7, the other focus of the trustee is to determine if you have any assets that may be liquidated for the benefit of creditors. Similarly, the Chapter 7 trustee does not usually care about why you are in debt, but more about what assets you have. The trustee has to determine what assets you have and what assets are not exempt. The most common assets we see administered by trustees are equity in homes or excess cash in bank accounts.
In a Chapter 13, the trustee reviews your plan to determine if the Debtor’s Plan meets all the requirements. These requirements include making sure you are paying in sufficient money as calculated under the Means Test, if you are providing for enough funding based on your non-exempt assets (Liquidation Test), and you are not taking excessive expenses in your budget. Additionally, the Chapter 13 trustee focuses his/her inquiry more about making sure you are paying the appropriate amount of money into the plan and whether the plan is reasonable given your current economic situation.
Creditors
If any creditors attended the meeting, they would be allowed to ask questions after the trustee is done with his/her examination. However, it is very rare for creditors to appear. Usually, your attorney can anticipate if it is likely to happen or not. If a creditor does appear, they must ask questions limited in scope as to the bankruptcy petition, assets, and related information.
Creditors often do not attend the hearings because they have limited options. A creditor cannot object to a bankruptcy just because they do not want the Debtor to discharge the debt. They must prove that their objection qualifies under the law, 11 U.S.C. § 523. The most common objections to discharge include recent credit card charges, recent cash advances, fraud, or lying on your bankruptcy petition.
Your Meeting of Creditors is an important step in your bankruptcy process. Many people are very intimidated by having to speak with the trustee, but it is not too difficult. The questions are usually very straightforward; the most important way to prepare for a hearing is to prepare an accurate petition and provide the proper documents beforehand. Having an experienced bankruptcy attorney can make the difference in having the proceeding go smoothly vs. having potential issues.
Attorney Ashley F. Morgan is a Virginia licensed attorney. She has helped hundreds of individuals file for bankruptcy during her career. It is important for her that her clients understand the bankruptcy process. She also ensures they make the right choices for their specific situation. If you are considering filing bankruptcy in Virginia, please set up a free consultation with her.