What Happens At A Bankruptcy Meeting Of Creditors
The 341 Meeting is held in a courtroom or meeting room, and administrated by the bankruptcy trustee, outside of the hearing of a judge. What happens in a 341 Meeting begins with your arrival at the federal courthouse or other designated building. Once you arrive, you will check a list for your case caption and/or name. The trustee will call between 10-12 cases within the hour, including yours, from the list. You and your attorney will greet the trustee, sit with the trustee and their assistants, if any, and provide documents to verify your identity.
Next, the trustee will ask questions for about 15 minutes to confirm the veracity of the documents you filed with the court such as your petition and schedules. The trustee will try to see if you have assets that should not be protected by the exemptions available in the State of Texas, and to parse any other potential challenges to granting you your bankruptcy. This will be done through a series of questions asked by the trustee and answered by you under oath.
What If The Trustee Didnt Say Anything Like That
In some cases, the trustee wonât yet know whether theyâll be treating your case as a no-asset case at your creditorsâ meeting. If the trustee asked for more documents or another meeting was scheduled, youâll need to provide the trustee the documents they requested and attend the meeting unless you receive confirmation that the meeting was canceled.
Otherwise, they will still conclude the meeting but they will not be filing a report of no distribution with the court. Instead, theyâll continue working on your case until they know which way to go with it.
If the trustee determines at any point after your 341 meeting that you donât have any unprotected property that they could use to pay your creditors, theyâll file the âno distributionâ report with the court. If your discharge has already been granted when that happens, the only thing left in the case is for the court to close it.
The First Meeting Of Creditors
The court schedules a meeting of creditors in each case, usually about 30 days after the filing. The meeting is nick-named the 341 meeting after the section of the bankruptcy code that requires it.
The trustee assigned to the case presides and asks questions of the debtor about the contents of the bankruptcy schedules.
In cases where there are assets with value greater than the available exemptions, the trustee tries to gather information to aid in his liquidation of those assets for payment to creditors.
He may ask for the business records or other documents concerning the assets or the debtors financial history.
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What Is A 341 Meeting Of Creditors
The meeting of creditors is a hearing all debtors must attend in any bankruptcy proceeding. The meeting of creditors is held outside of the presence of the judge and, depending upon the case chapter, usually occurs between 21 and 50 days after the filing of the petition. In chapter 7, 12, and 13 cases, the trustee assigned to the case conducts the meeting. In a chapter 11 case, a representative of the United States Trustee conducts the meeting.
The meeting permits the trustee or the representative of the United States Trustee to review the debtor’s petition and schedules with the debtor. The debtor is required to answer questions under penalty of perjury about the debtor’s conduct, property, liabilities, financial condition, and any other matter that may affect the administration of the case or the debtor’s right to discharge. In addition, the trustee or United States Trustee representative will ask questions to ensure that the debtor understands the bankruptcy process.
If the debtor fails to appear and provide the information requested, the trustee or United States Trustee representative may request that the case be dismissed, or may seek other relief against the debtor for failure to cooperate. If the case involves spouses filing jointly, both spouses must appear at the meeting of creditors.
What Are Commonly Asked Questions During A Meeting Of Creditors In A Chapter 7 Or Chapter 13 Bankruptcy
At Modestas Law Offices, our bankruptcy clients frequently ask what to expect at the meeting of creditors that takes place after the bankruptcy filing. Often, clients are nervous or worried about the process, but in most cases the meeting goes smoothly and quickly. Understanding what the meeting is and knowing what to expect will alleviate a lot of the concern you feel ahead of time.
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What Happens During The Meeting Of Creditors
The trustee will likely schedule several meetings of creditors for each hour. In most cases, you will wait in the meeting room with other debtors until the trustee calls your name. Once called, you’ll go up to the trustee’s desk, show your identification, and take an oath to be truthful. Keep in mind that these are public hearings, so other debtors will be observing your hearing while waiting for their turn. But you’ll likely be able to observe a few debtors’ cases yourself, so you’ll know what to expect when it’s your turn. Each case averages less than ten minutes.
Trustee Questions at the 341 Meeting
Each trustee must ask every debtor a series of questions at the meeting of creditors. Here is a slightly simplified version of the questions you can expect to answer at the meeting of creditors :
- Did you review and sign your bankruptcy paperwork?
- Is everything in your bankruptcy papers correct to the best of your knowledge?
- Did you list all your property and assets?
- Did you list all of your obligations?
- Have you filed for bankruptcy before?
- Any changes since you filed the case?
- Do you have an obligation to pay alimony or child support?
- Have you filed all required tax returns?
- Have you made any property transfers before filing your case?
- Did you put new charges on any credit cards in the last year?
- How did you come up with the value of your assets?
- Do you own a business or partnership?
- Are your cars insured?
Why Would Creditors Request A Meeting
If your creditors dont agree with your proposal or would like some of the terms of your proposal to be modified, they may request a meeting.
Before your proposal is approved, creditors are required to vote on whether or not they accept it.
If they want to oppose your proposal, they can only do this by calling a creditors meeting.
However, not any creditor can insist that a meeting is called.
The request must be made by a creditor or creditors that are owed at least 25% of your overall debt in order for it to trigger a meeting.
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Preparing For The Meeting Of Creditors
Before the meeting of creditors, you’ll want to review your bankruptcy petition carefully. If you find that you’ve missed something or see an inaccurate entry, you should:
- file an amendment before the hearing, if possible, or
- be prepared to bring the problem to the trustee’s attention at the hearing.
A common issue that can occur is failing to list your name exactly as it appears on your license, passport, or government identification card. You’ll provide one of these forms of identification along with proof of your Social Security card number at the beginning of the hearing. If they don’t match, you’ll have to amend your petition and will likely have to come back a second time.
Learn what might raise a red flag at the meeting of creditors.
Will Other People In The Courthouse Hear What Happens In My Meeting
There will be several other meetings of creditors scheduled at the same time as your meeting. Cases will be called one-by-one according to a schedule.
Whether others are present during your meeting depends on the location of your meeting. At some locations, no one else is present. At other locations, other people will be present. But most likely, they will not be paying much attention. They just want things to go quickly, so their case can be called and they can leave.
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How Will Bankruptcy Affect Your Credit Score
A bankruptcy filing will lower your credit score and may stay on your credit report and in public records for some time. Bankruptcy will stay on your credit for 10 years if you filed for Chapter 7 and seven years if it is a Chapter 13 bankruptcy.
However, exactly how much a bankruptcy will affect your credit score will depend largely on your financial situation before filing bankruptcy.
You can take steps to rebuild your credit such as:
- Staying current on your bills
- Getting a new credit card or a secured credit card
- Trying not to borrow more than you can repay
Keep in mind that filing for bankruptcy might do more to help your credit than harm it. Consider what will happen if you continue to hold the debt and miss payments.
Why Its Important Not To Ignore The Trustee
If the trustee needs something from you and you ignore them or otherwise refuse to cooperate with them, you can lose your discharge.
So, while youâre out enjoying your fresh start, having left your debts in the rearview mirror, make sure to open and read all mail you receive from your trustee and, if youâre not sure if theyâre asking you to do something, call their office.
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How Do Creditors Indicate Acceptance Or Rejection Of A Consumer Proposal
You may imagine a meeting of creditors around a table as they discuss the details of your consumer proposal and ask you questions. This is an uncomfortable image, but take heart it rarely happens!
Each creditor has a vote for each dollar of their claim . Creditors have 45 days from the filing of the consumer proposal to accept or reject it. They can respond in one of these four ways:
What Questions Can A Trustee Ask In A 341 Meeting
The questions asked by the trustee are mostly standard for all debtors. The trustee is required to ask at a minimum the following questions:
- Did you review your bankruptcy schedules prior to signing?
- Are your bankruptcy schedules true and accurate?
- Do you have any changes to your schedules?
- Did you list all your assets?
- Did you list all your debts?
The trustee may also ask discretionary questions related to the value of your home, your car, whether you have legal claims outstanding against any individuals or businesses, whether you are anticipating an inheritance, and if you have transferred or gifted any assets recently. The trustee may ask if you have alimony or child support payments due and owing. The trustee may ask if you have properly and completely filed your state and federal tax returns each year.
These questions are not intended to trip you up or trick you, but it is essential that the answers you provide are truthful and match what your filed pleadings say.
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Who Will Attend The Meeting Of Creditors
A judge will not be present at your meeting of creditors. Instead, your bankruptcy trustee and any creditors who wish to attend will join you and your attorney in a meeting room. The trustee will guide the hearing, asking questions and presenting information. Creditors, who do not usually attend, may make statements and ask questions as well. Its not common for creditors to attend unless they suspect fraud or wrongdoing.
Although your trustee will do most of the talking, the creditors will also have an opportunity to examine you. They may ask you about your financial information, such as the location and nature of your assets. They may ask questions about your purpose when accruing debt with their company and your intent. Their goal is to prove that their debt should be paid. If they say anything unnecessary, your attorney can step in and give you advice.
Its likely that many other bankruptcy filers will be scheduled for a 341 meeting of creditors within the same time period that you are scheduled. The goal of the bankruptcy court is to complete as many meetings as possible as quickly as possible. You should review the court calendar to determine where you fall in the lineup so you know how many other people will be near the meeting room. Its possible you will be able to view other meetings before it is time for yours. Most bankruptcy trustees follow the same process, so you can see how things will take place before your meeting.
How 341 Meetings Work
The 341 meeting is one of many stages involved in declaring bankruptcy in the United States. Its primary purpose is to establish the facts of the bankruptcy in question, and to ensure that all the paperwork necessary to carry out the bankruptcy proceedings are in order. Although the attorneys of the debtor and creditor are welcome to attend, the only parties whose presence at the 341 meeting is legally required are the debtor in question and the court-appointed trustee.
Prior to the 341 meeting, the trustee would have already reviewed the bankruptcy paperwork and financial records submitted by the debtor. The purpose of the 341 meeting, therefore, is principally for the trustee to confirm the facts stated by the debtor and to collect any additional paperwork that may be required. In the event that the debtor is attempting bankruptcy fraud, this would likely be detected by the trustee during or prior to the 341 meeting.
Typically, discussion at 341 meetings will center on how the debtor plans to eventually repay their obligations.
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Where Will The Meeting Of Creditors Take Place
Once you file your case, the court will mail you notice regarding the time and location of your meeting of creditors. A judge won’t be at the 341 hearing, and it won’t be held in a courtroom. Instead, the bankruptcy trustee appointed to your case will conduct the 341 hearing in a meeting room at the courthouse or an offsite office building.
What Happens If Any Creditors Reject My Proposal
Importantly, if a creditor indicates that they reject the proposal but does not request a creditors meeting, their rejection has no effect.
If creditors whose combined votes are less than 25% of total votes indicate that they reject the proposal and request a creditors meeting, your proposal is still accepted.
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Meeting Of Creditors Question List
Heres are some typical questions the trustee might ask:
1. State your name and current address for the record.
2. Please provide your picture ID and Social Security number card for review.
3. Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?
4. Are you personally familiar with the information contained in the petition, schedules, statements and related documents?
5. To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct?
6. Are there any errors or omissions to bring to my attention at this time?
7. Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?
8. Have you previously filed bankruptcy?
9. What is the address of your current employer?
10. Is the copy of the tax return you provided a true copy of the most recent tax return you filed?
11. Are you expecting a tax refund?
12. Do you have a domestic support obligation? To whom? Are you current on your post-petition domestic support obligations?
13. Have you filed all required tax returns for the past four years?
14. Do you own or have any interest whatsoever in any real estate?
If renting: Have you ever owned the property in which you live and/or is its owner in any way related to you?
23. When you filed your petition, did you have:
Can You File A Second Consumer Proposal
If your first consumer proposal filing is not successful , and if you do not decide to file for bankruptcy, you may file a new consumer proposal at any time. The best reason to do this is a change in your circumstances, such as a new job that will allow you to propose a more robust payment plan.
Most LITs recommend waiting for six months from the initial filing, before filing for a consumer proposal again. If you make a new consumer proposal filing within six months of your first filing, the second filing will not invoke the same protections from creditors .
It is interesting to note that if your consumer proposal filing is successful, and you complete the terms of your proposal and receive your Certificate of Completion, under Canadian law you can file a new consumer proposal at any time in the future should you become insolvent again. Unlike bankruptcy, in which second and third bankruptcies are subject to increasingly stringent conditions, each consumer proposal will be subject to the same rules as the first .
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There Will Be Several Meetings Of Creditors Scheduled At The Same Time As Your 341 Meeting
The time set for the meeting of creditors will be used for a number of individual meetings of creditors. It is not unusual for ten or twelve meetings to be scheduled for the same time. Cases are called one by one, and the parties and their bankruptcy lawyer will sit at a table with the bankruptcy trustee.
It is a public meeting, with maybe twenty-five or thirty debtors and attorneys in attendance. Everyone is there for the same reason, and everyone shares the same concerns and apprehension, but the 341 meetings are conducted quickly, and with respect and courtesy.