When a bankruptcy is filed, the court appoints a Trustee to administer the case. In Chapter 13 cases, the Trustee often focuses on the debtor’s available income because a Chapter 13 is designed to pay creditors through a plan. Chapter 7 Trustees are usually more concerned with assets that might be liquidated.
In both Chapters, the Trustee is required to set a meeting called the “Meeting of Creditors.” It is also called a 341(a) meeting because that is the code section that sets forth the requirement for the meeting. Ironically, creditors rarely appear at the meeting of creditors. The Trustee and the debtor(s) are required to appear, but creditors are not.
The purpose of the meeting in Chapter 7 cases is to determine the financial situation of the debtor and see whether there are any assets for the Trustee to acquire and distribute to creditors. Unless a creditor believes a debtor has assets that were not disclosed in the bankruptcy schedules, or is misleading the Trustee in some way, there is usually no reason for a creditor to appear. Also, if a creditor wants to ask a lot of questions (in a deposition format) because they suspect fraud or deceit, they can schedule a different type of exam (Rule 2004) that will give them more time to question the debtor.
Most of the meetings are fairly simple. Each Trustee has their own style, but most of them have certain questions that are always asked and then a few additional questions depending on the particular debtor’s situation. The Trustee’s primary interest in the questioning is to see whether there are assets he/she can recover for the bankruptcy estate to pay to creditors. That can include undisclosed accounts, real or personal property, payments made to creditors or family members just before the case was filed, and fraudulent transfers of money or property.
If the bankruptcy petition and schedules are prepared carefully and completely, the meetings are generally quick and uneventful. The Trustee verifies identity with a picture ID and a Social Security card. After that, the Trustee asks about five to 10 questions to make sure the debtor did not fail to list assets or forget to include information that the Trustee would find useful. Most meetings take less than five minutes.
Using an attorney to help with the preparation and filing of the forms will often make the subsequent meeting of creditors go smoother.
For more information or a consultation, please call 661-210-5657, or e-mail mjf4bk@ca.rr.com.