What to Expect at the "Meeting of Creditors"
Once you've filed you bankruptcy paperwork with the court, you must attend a meeting with the bankruptcy trustee to confirm the information in your petition as well as answer any additional questions he or she may have.
This hearing, commonly called a "meeting of creditors" or "341 meeting," does not take place in the actual courtroom, but rather in a hearing room which is a little less intimidating for those filing bankruptcy. This guide will cover what to expect, the questions you will likely be asked and how to prepare for it.
How the Hearing Will Work
Once you get to the courthouse, you will need to go through a security gate similar to an airport. After that, you will be directed to the hearing room with other people whose cases will be heard along with yours. The bankruptcy trustee will likely be sitting at a table at the front of the room, so it may be beneficial for you to sit as close to the front as possible so you can listen to the questions asked by the trustee.
Depending on how many people are in front of you, it may take a couple hours to get your turn, but once your name is called it is generally over in five to ten minutes.
General Tips
Here are a few things to remember before you go to the hearing.
- Have a Valid ID: It's surprising how many people show up to their hearing with an expired drivers license or ineligible form of identification. If your identity cannot be adequately shown, then your hearing is over before it even starts.
- Bring a Document with Your Social Security Number: It is best to have a social security card, but an official document with your social security number will suffice.
- Plan to Arrive Early: The best way to ensure you're not caught in traffic and wind up late is to come to the hearing early. If you're scheduled for 9 a.m., plan to arrive at 8:30.
- Dress Appropriately: You should show your respect for the trustee by dressing business casual. You do not need to wear a suit, but you should wear slacks/skirt and a buttoned shirt. Shorts and flip flops are definitely inappropriate.
Who Will Be at Your Hearing
Even though it's often called the "meeting of creditors," creditors rarely show up, unless they want to dispute the dischargeability of their claim or they have a secured interest. Generally, it will just be you, your attorney and the bankruptcy trustee. Of course, there will also be other "fellow debtors" there for other cases. If any of your creditors do show up to the hearing, they will take a seat at the table with you, your attorney and the bankruptcy trustee when your case is called.
Once Your Case Is Called
When it's your turn, you will take your place at the trustee's table and go through a few procedural steps:
- First, your identity must be confirmed. The trustee will check your ID, as well as you proof of Social Security number.
- You will be sworn in. Much like you've seen on TV, you must raise your right hand and swear that the information you've provided regarding your identity and your bankruptcy case is true to the best of your knowledge.
At this point, the trustee will ask a series of questions that are common to most bankruptcy cases.
Understanding the Trustee: Compensation & Motivation
It's beneficial for you to understand how the trustee is motivated and compensated. The trustee is paid a relatively small fixed fee for administering bankruptcy cases. However, to make up for the small amount of pay, he or she is also paid a percentage of the funds distributed to the creditors involved in the case.
This compensation arrangement motivates the trustee to try to ensure that the creditors involved are paid as much as is allowed by law. For the debtor, this effectively means the trustee will make an effort to find non-exempt assets to liquidate in a chapter 7, or uncover more available income in a chapter 13.
Questions to Expect from the Trustee
1. About Your Petition
The trustee will ask you whether you are personally familiar with all the information on your bankruptcy petition and the required schedules. Of course, whether you completed the paperwork yourself, or your attorney completed it for/with you, then you can safely tell him that you are. He or she will then ask if everything on the petition is accurate, honest and complete. He or she will also ask if you've personally signed the petition of your own free will.
2. About Your Property
The trustee will likely have a few detailed questions about your property and assets. Here are some standard questions you should expect:
- Are all of your assets accurately listed on the appropriate schedules?
- Do you own any real estate?
- Are you expecting an inheritance in the next 90 days?
- Are you expecting any abnormal income in the next 90 days?
- Is anyone holding property that belongs to you?
- Does anyone owe you money?
3. About Recent Transactions and Bankruptcies
The trustee will also want to find out if any of your creditors has been unfairly paid outside of the bankruptcy estate in the past 90 days, as well as be made aware of any large purchases made recently. You should expect questions like the following:
- Have you made any payments over $100 to a creditor in the past 90 days?
- Have you purchased anything over $100 on credit in the past 90 days?
- Have you given any money to family members in the past 90 days?
- Have you filed for and received a chapter 7 discharge in the past 8 years?
- Have you filed for and received a chapter 13 discharge in the past 6 years?
- When you completed your petition, did you have any cash in your bank account(s)? If so, how much do you have now?
This whole process takes less than 10 minutes for the majority of cases, and at this point, if everything goes smoothly, you're pretty much done. If you've filed a chapter 13, you have to wait for the confirmation of your proposed repayment plan, and then you will begin with the monthly payments to the bankruptcy trustee. If you've filed for chapter 7, you will receive a notice of discharge in the mail in a month or two.
Creditor Objections
In some cases, certain creditors may object to the dischargeability of their claims against you. This is not common, but can occur when the claims are large and the creditor believes a case can be made that you borrowed the money fraudulently, or without any intention of ever repaying it.
Common Grounds for an Objection of Dischargeability
1. You Intentionally Falsified Information to Obtain a Loan or Credit
If you provided any false or inaccurate information in order to obtain a line of credit or a loan, this can be held as fraud and the creditor will likely be awarded relief from bankruptcy discharge.
2. You Made a Large Purchase that is "Out of Character" Just Prior to Filing Bankruptcy
If a creditor believes that you made a large purchase on credit knowing that you intend to file bankruptcy before repaying it, then the debt may be held non-dischargeable. To do this, the creditor will have to show evidence that the purchase date was recent and out of character, meaning it's not something that your past purchase history would suggest you would buy.
For example, if you've never spent much money on things like clothes or luxury personal items, then five months before your case you buy a $10,000 watch, you're probably in trouble.
3. You Deliberately Concealed or Failed to Record Your Financials
If the creditor can show that you intentionally concealed records of your spending or income from the court in an effort to show a favorable financial situation for your bankruptcy case, then the court may deny your discharge all together.
Adversary Proceedings
If any creditor makes a valid objection and has some evidence to support it, then you will need to go to another hearing, called an adversary proceeding. In an adversary proceeding, the bankruptcy court judge will be present and will be the one deciding the outcome of the case. Your creditor will make his or her case and you must be prepared to argue that the grounds for objection to your discharge are false or do not adequately prove the creditor's claim.
The Trustee Can Also File for an Adversary Proceeding
Also uncommon but possible, the bankruptcy trustee can file for a motion to dismiss you case, or convert the case to a chapter 13 if he or she believes some fraud has taken place or you filed bankruptcy in bad faith. Bad faith implies that you filed bankruptcy after intentionally making financial decisions with a future bankruptcy in mind. Alternatively, you may be forced into an adversary proceeding if the trustee thinks you filed your petition incorrectly, failed to comply with any court terms, or failed to file some required paperwork in time.
What YOU Should Expect
If you filed your paperwork accurately, haven't been dishonest or deceitful, haven't purchased a $10,000 watch recently and are generally just someone that needs help getting out of debt, then the case should go without a hitch. It can be intimidating having to deal with a lot of legal issues, but your attorney should ensure everything is done correctly and to your best interest, so you won't have to worry about any complications with your case.
Next Steps
10. Your Credit After Bankruptcy
11. Bankruptcy Questions and Answers
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