By Ryan C. Wood
When filing bankruptcy one of the requirements is to attend the meeting of the creditors pursuant to Section 341 of the Bankruptcy Code. You may hear it called the 341 hearing also. You must have your valid identification and proof of your social security number to verify you are the person listed in the bankruptcy petition. In a Chapter 7 case the 341 hearing is administered by the trustee assigned to the case. Chapter 7 trustees are independent contractors of the United States Trustees Office, which is part of the Department of Justice. In a Chapter 13 case the hearing is administered by the standing Chapter 13 Trustee or their attorney. While the meetings of the creditors are similar whether filing under Chapter 7 or Chapter 13 there are a few difference that are noteworthy.
The Truth The Whole Truth and Nothing But The Truth
The bottom line is you have to tell the truth and nothing but the truth. The meeting of the creditors is recorded and you will be sworn in under penalty of perjury. If you cannot tell the truth about your assets, income, expenses and debts then do not bother filing for bankruptcy protection. Only an honest debtor is entitled to a discharge of their eligible debts. Bankruptcy crimes are punishable with fines and prison time. Just Google Lenny Dykstra (Ex-Professional Baseball Player), Joe Giudice (Real Housewives of New Jersey) or Teresa Giudice (Real Housewives of New Jersey) and bankruptcy fraud the read about how real bankruptcy crimes are. Do not put yourself in the same position.
Consumer Bankruptcy Cases Under Chapter 7 and Chapter 13
In most consumer bankruptcy cases it is rare for a creditor to show up and ask questions or hire a bankruptcy attorney to show up and ask questions. A creditor showing up in a Chapter 7 consumer bankruptcy case is a little more likely than in a Chapter 13 case given that in a Chapter 7 you are seeking a complete discharge of your eligible debts. That means creditors with claims that are dischargeable will not get a penny, so sometimes creditors want to fight more because they getting nothing. In a chapter 7 case the trustee assigned to your case is primarily concerned with your assets being listed properly. That means all of your assets are listed and with accurate values. The Chapter 7 trustee makes more money by liquidating assets that cannot be protected by exemptions. Exemptions protect your assets from liquidation. California state law provides for generous exemptions, but there is a limit of the amount of your assets that can be protected. If the trustee determines you do not have any assets available (unprotected or unexempt) then after the conclusion of the 341 hearing they will file their report of no distribution to creditors. This means there are no assets to liquidate and their job is done.
In a Chapter 13 case the trustee is more concerned with whether your proposed Chapter 13 plan meets the requirements under Section 1325 of the Bankruptcy Code so that he/she can recommend confirmation/approval of the proposed Chapter 13 Plan to the court. Section 1325 has many requirements and it is beyond the scope of this article.
Tell the truth, stop talking and act like you are getting on an airplane.
Yes, Creditors Can Ask You Questions
Yes, creditors to have a right to ask you questions about the petition filed, your income, assets or ability to pay or not pay back your debts at the 341 hearing. If there are allegations of fraud involved with obtaining credit or incurring a debt then an attorney may show up to ask questions. The meeting of the creditors is still a limited forum and a creditor usually will only be given around 3 minutes to ask questions unless the trustee knows the creditor attorney is on to something that is relevant to their duties. If that is the case the trustee may take over the questioning from the creditor attorney and who knows how long it could go. If a creditor’s attorney is asking improper questions or wasting time the trustee will usually stop the questioning and tell the attorney if they can file a Rule 2004 examination of the debtor to obtain additional information.
Creditor Attorneys Showing Up That Are Fish Out of Water
Every now and then, or too often, attorneys come to 341 hearings that do not practice creditors’ rights law or represent debtors in bankruptcy. They are a fish out of water and it shows immediately. They usually think they have all kinds of time to ask whatever questions they want. I do not know how much these attorneys charge the creditors, but it has to be too much money. The creditor usually has no grounds to do anything, but the attorney just does not know that so they show up at the meeting of creditors and waste time.
Why Are You Still Talking?
If you can answer yes, answer yes. If you can answer no, answer no. If the answer to the question requires a response other than yes or no fine, but you can answer the question honestly and stop talking at some point right? Some people will just keep talking and talking for no apparent reason and provide information that has nothing to do with the question asked. As the former attorney for a Chapter 13 trustee that questioned debtors, sometimes the trustee or their attorney just wants to move on to the next question but the debtor will just not stop talking. Everyone who files bankruptcy has had something bad happen them in one way or another. Listen to the question asked and only answer the question asked then stop talking. If there is an awkward silence that is perfectly fine.
Going Through Security – Worse Than Getting On An Airplane
It amazes me why people have to wear every piece of metal they own when attending a meeting of the creditors hearing. You have to go through security to get into the building. Please make it simple for yourself and everyone else. Act like you are getting on an airplane and prepare accordingly. No food or drinks. No metal on you except for what is in your shoes or a belt (okay car keys are probably normal too). Otherwise leave it at home. You do not want to arrive a little early for the hearing just to wait in line for 30 minutes and miss the hearing because it took too long to get through security. It has happened and it is a bad day. Bankruptcy attorneys, please prepare your clients for this part of the process and do us all a favor. Please!!!
Timing of 341 Hearings and Length
The meeting of the creditors will be schedule around 30 days after the date the petition for bankruptcy protection was filed with the court. You will receive notice of the hearing directly from the bankruptcy court in the mail and hopefully your bankruptcy lawyer follows up with you about the date and time also. Like anything meetings of the creditors can be time consuming depending upon the circumstances. You need to plan on being there for at least an hour past the time scheduled for your meeting of the creditors. For most Chapter 7 hearings there will be 5 cases scheduled each half hour. That means an average of 6 minutes per case. In Chapter 13 cases there are usually around 10 cases for each hour, the same average 6 minutes per case. Some cases re more complicated than others and require more questions to be asked. Other times there are so many problems in a case that more questions need to be asked. Either way, sometimes the trustee will get behind and you will have to wait longer for your case to be called. Hopefully your case is not complicated case or the case that has the problems because you will then be answering a lot of questions and you do not want that. You want have the six minutes or less case.
Interpreters
If English is your second language then you will most likely want an interpreter. The trustee will have to call an interpreter service via speaker phone. While this is a necessary part of the process and every debtor needs to understand the questions they are being asked, it causes delay and makes the process take longer. It is frustrating to have to wait for a long time when case after case requires an interpreter and clearly the person speaks and understands English just fine. I blame this problem on the attorney. Your attorney does not speak Spanish, Chinese, Japanese or Russian, so how did they communicate with you all this time?
