341 Hearing: What Happens?

After filing the bankruptcy petition, the US Trustee, an officer of the U.S. Department of Justice, responsible for overseeing the administration of bankruptcy cases and private trustees, or the bankruptcy court, will appoint a trustee for the case.  Some courts have full-time, while other courts have rotating trustees. Some of the trustees are also lawyers or accountants.

The Bankruptcy Trustee

The trustee examines the bankruptcy petition for mistakes or inconsistencies and ensures creditors get paid as much as possible. The trustee is especially interested in a debtor’s assets and how much the trustee can take from a debtor to give to creditors. The trustee gets paid a percentage of the assets s/he recovers from a debtor for creditors, in addition to a flat fee for each case s/he handles.

The Meeting of Creditors

After filing bankruptcy, a debtor appears at the 341 hearing, also known as a meeting of creditors. For most people the creditors’ meeting is brief, lasting less than 15 minutes. Usually, creditors do not show up. If creditors are present, they may question the debtor about circumstances under which s/he incurred debts. If a debtor commits fraud, the debts will not get discharged.

Questions Asked

At the 341 hearing, the trustee questions the debtor under oath about assets, liabilities, transfers, and income.  The trustee questions the debtor about the documents filed and any transfers made within a certain timeframe before filing bankruptcy.

The debtor must bring to the meeting:

• Social security card
• Identification card

Additional information such as checkbooks, tax returns, contracts may be requested by the trustee prior to the meeting.

During the meeting, there will be other debtors in the room.  The trustee will call each case at a time.  The debtor will go to the front of the room, where the trustee swears the debtor under penalty of perjury.  If the trustee requires a translator, s/he should inform the trustee prior to the meeting, or prior to questioning.  Only a court-approved translator may be engaged.  A debtor may not bring his/her own translator.

Everything a debtor answers needs to be true. Typical questions:

• Will you receive a tax refund this year?
• Did you read the petition and sign it prior to its filing?
• How did you value your house and your car?
• When did you purchase your home?
• Do you expect to receive any inheritance in the near future?
• Are there any liens or mortgages on the home?
• Do you own your home fully or partially?
• Did you transfer any assets, and if so, to who?
• Have you transferred any property within the last year if “yes” what was the purchase price and what did you do with the funds received?
• Did you recently make any large charges on your credit cards?
• Do you have a claim against someone or did you file a lawsuit against someone? If “yes” who is representing you and what is the estimated value of the claim?
• Does someone owe you money? What is the amount of money owed to you and can the money be collected?
• Do you have a life insurance with cash value?
• Are you in a divorce or separation proceeding?
• Do you own a business? If “yes” what are the assets of the business and how did you arrive at the estimated value of the business assets?

If there are any missing items that the trustee wants to review, those items must be submitted to the trustee.  The trustee may continue the meeting to require the debtor to appear again if the missing items are not received.

The debtor will be required to confirm s/he read the Bankruptcy Information Sheet (copies available in the waiting room at the meeting or http://www.justice.gov/ust/eo/ust_org/bky-info/index.htm).

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