What If A Creditor Shows Up At My 341 Meeting?
When a debtor files a bankruptcy case, notices of the meeting of creditors is sent to all the creditors of the debtor. The meeting of creditors is also called the trustee’s meeting and the 341 meeting (after section 341 of the bankruptcy code which compels the meeting). This notice informs the creditor, among other things, that the debtor has filed a bankruptcy; of contact information for the debtor’s attorney and the trustee assigned to the case; and of the date, time and place of the meeting of creditors.
While notices are sent to all of your creditors the odds are that no creditor will appear at your meeting of creditors. If a creditor does show up, it is almost always a local creditor, like a local bank seeking information regarding a secured loan, or individual creditor. It is rare to see a representative of a national creditor at a meeting of creditors.
The main reason that creditors do not appear at the meeting is that creditors are not allowed much time to ask questions of the debtor. What the creditor can gain from the meeting does not justify the expense of sending a representative. The bankruptcy trustee conducts a busy docket of bankruptcy debtors and is required to question each debtor. Consequently, the trustee will only allow a few minutes for any creditor questions, and will not permit any “fishing expeditions” from a creditor. A creditor who needs more time for questioning the debtor can schedule a private examination called a “section 2004 exam.” Section 2004 exams are extremely rare.
Most individual creditors who appear at a meeting of creditors do so because they do not understand the process. Individual creditors usually believe that their attendance is important to maintain their claim against the debtor. The questions are generally inane, like: “Are you going to pay me?” or “You promised to pay me, right?” The trustee cannot give legal advice to creditors, so without an attorney the individual creditor is usually left floundering.
When a creditor is represented by an attorney, the questions generally concern the debtor’s schedules of assets, liabilities, income, and expenses. These questions may seek to uncover inconsistencies in the schedules. Questions that go beyond the schedules may be objected to by your attorney. The trustee will not permit the creditor to engage in a deposition of the debtor with the trustee acting as judge.
If you expect a creditor to attend your meeting of creditors, discuss the matter with your attorney. While the ordinary bankruptcy case will not have creditors in attendance at the meeting, every case is unique. Discussing your case with your attorney is the first step in being prepared for creditors at the meeting.
Your Bankruptcy Meeting of Creditors
The Bankruptcy Code requires every debtor to appear and submit to a bankruptcy examination under oath at a meeting with the debtor’s creditors. This meeting is presided over by the bankruptcy trustee and is an opportunity for creditors and the trustee to determine if assets have improperly been disposed of or concealed or if there are grounds for objection to discharge. At this meeting the trustee must inform the Chapter 7 debtor of the consequences of bankruptcy, the availability of relief under other chapters of the Bankruptcy Code, and the effect of receiving a discharge of debts and of reaffirming a debt.
The Meeting of Creditors (also called the “Trustee’s Meeting,” the “Creditors’ Meeting,” or the 341 Meeting (after section 341 of the bankruptcy code which requires the meeting) is held between 20 and 40 days after your bankruptcy is filed. The bankruptcy court schedules the meeting and mails notices to all of your creditors. However, the bankruptcy judge is prohibited from attending the meeting. Since there is no judge, the Meeting of Creditors is not a judicial proceeding.
The bankruptcy trustee is required examine you under oath and investigate your financial affairs. The trustee then submits a report to the bankruptcy court and Office of the U.S. Trustee. The trustee is also required to ask specific questions, including:
Did you read your schedules before signing them?
Did you list all of your assets?
Did you list all of your debts?
Are your schedules accurate or do you need to make any corrections?
Do you have a domestic support obligation?
The trustee may also have specific questions concerning your schedules which may involve your assets, income, expenses, debts, or financial transactions. Your attorney will be present with you to assist you during this examination. The trustee may also require that you provide information or documents before, during or after the meeting including bank statements, pay stubs, tax returns, vehicle titles, and land ownership and debt documents. Finally, you are required to provide proof of identity including social security number and a government issued photo I.D.
Despite the name, the Meeting of Creditors is generally a meeting that no creditors attend. For most national creditors like Ford Motor Credit or Capital One it is not cost-effective to attend these meetings. Because the trustee conducts dozens of these meetings on the same day, any creditor questions are limited to only a few minutes. If the creditor needs additional time, it can ask the bankruptcy court to order the debtor to appear for a further examination between just the creditor and the debtor at a later date.
Many bankruptcy debtors are very nervous going into the Meeting of Creditors, but soon realize that it is just a procedural formality. Your bankruptcy attorney will assist you during your meeting, and can answer any questions concerning the Meeting of Creditors or the bankruptcy process.
What Is A 341 Meeting And What Really Happens When I Go To Court?
I get this question constantly from clients. So here is a quick overview of what it is and how it works.
Whether you file a Chapter 7 or Chapter 13, you will be required to attend a 341 Meeting. A 341 Meeting is also called a Meeting of Creditors. The meeting is typically set 30 days after your case is filed. The Meetings are not held in an actual court room and the Judge is not present.
At this meeting you will meet the Trustee who has been assigned to your case. Typically the trustee sits at the head of the table and has a tape recorder to preserve the hearing for the court’s records. And you will not be alone–an attorney from O’Bryan Law Offices will be right by your side at the table. The trustee will have you raise your right hand and have you swear to tell the truth (put you under oath) just like in any court case where you will be testifying. Then the questioning begins by the Trustee.
Let me stop you right here because this is where your palms start to sweat and your heart is beating 100mph. I have never witnessed a client pass out, throw up, suffering a stroke or heart attack or any other ailment while under questioning. In fact, the response I usually get from clients after it is over is “Was that it?” That is because you are simply asked questions about the information you have provided about your financial information. Who knows the answers better than you! And the trustee is not there to shame you because you have filed bankruptcy. While they are looking at your assets to see if you have anything that could be used to pay your creditors, they are there to help you and do not pass judgment other than if you have assets, no assets, if your plan will pay out, etc.
And it wouldn’t be called a Meeting of Creditors if your creditors were not invited. All creditors have notice of the meeting but most do not appear. The majority of the cases I cover in Chapter 7 do not have any creditors appear. It is more likely in a Chapter 13 but is still a low number that actually come to the meeting. If a creditor appears, that does not mean your stomach should sink. Usually, it is a creditor on a home or vehicle which appears and will ask you information regarding insurance and your intentions as to keeping or surrendering the secured item.
The typical meeting lasts about 5 minutes or less. You spend a lot more time waiting your turn than you do actually in the meeting itself.
It is normal to be nervous of the unknown but I hope this information puts your mind at ease. Literally, if you need someone to hold your hand, we will be happy to do that too.