While all bankruptcy cases are overseen by a bankruptcy judge, few people who file for Chapter 7 bankruptcy ever actually have to go to court. One thing that everyone who files for bankruptcy must go through, however, is a meeting of creditors. Creditors’ meetings are often called “341 meetings” because they are governed by Section 341 of the United States Bankruptcy Code.
The primary purpose of a meeting of creditors is to give the Chapter 7 Trustee an opportunity to examine the debtor (the person who filed the case) and ask questions about the debtor’s valuable property that Trustee might want to sell to help pay creditors. Creditors are the people the debtor owes money to. In the vast majority of Chapter 7 cases, Trustees do not take possession of any of the debtor’s property, but in some cases they do. As you might expect, creditors are also allowed to attend the meeting of creditors and ask questions about the debtor’s financial affairs.
The creditors’ meeting is an important event in every bankruptcy case. Most debtors have at least some degree of anxiety about the meeting, but the majority of creditors’ meetings are short and uneventful, especially for honest and well-prepared debtors.
Here’s what to expect at a typical meeting of creditors:
When Will The Section 341 Meeting Of Creditors Take Place?
The date and time of the creditors’ meeting is set at the time a bankruptcy case is filed, so the information should be available immediately. The meeting of creditors typically takes place about 20 to 40 days after the case is filed.
Who Will Be At The Section 341 Meeting Of Creditors?
The debtor, their attorney (if they have one), and the Chapter 7 Trustee are required to be present for the meeting of creditors. Creditors, creditors’ attorneys, and other parties in interest are also allowed to attend. Most of the time creditors do not attend the meetings, but sometimes they do. The bankruptcy judge will not be there. Section 341 of the Bankruptcy Code expressly forbids bankruptcy judges from attending creditors’ meetings.
How Do Creditors Find Out About The Section 341 Meeting Of Creditors?
A few days after a bankruptcy case is filed, the clerk of the bankruptcy court mails a notice to all creditors listed in the bankruptcy filing. The notice contains information about the bankruptcy case, including the date, time, and location of the creditors’ meeting.
Where Does The Section 341 Meeting Of Creditors Take Place?
Nearly all creditors’ meetings are conducted remotely by Zoom. In-person attendance is seldom required.
What Should A Debtor Do To Prepare For The Section 341 Meeting Of Creditors?
The debtor’s bankruptcy attorney will help prepare them for the meeting of creditors. At the very least, a debtor will want to review their bankruptcy petition, bankruptcy schedules, statement of financial affairs, and any other documents they filed in their bankruptcy case. Debtors are allowed to have these documents in hand and can refer to them during the meeting, so it is not necessary to memorize them, but it is a good idea to be generally familiar with them.
In the weeks leading up to the creditors meeting, the debtor’s attorney will provide the Chapter 7 Trustee with copies of the debtor’s Social Security card, government-issued photo ID, tax returns, and recent pay stubs. The debtor will want to confirm that these things have all been sent to the Trustee.
The debtor will also want to spend some additional time preparing for any specific issues that the debtor and their attorney determine are likely to come up at the creditors’ meeting, such as any property that they think the Trustee may want to sell.
Will The Section 341 Meeting Of Creditors Be Recorded?
Yes, the Chapter 7 Trustee is required to record the creditors’ meeting, pursuant to Rule 2003(c) of the Federal Rules of Bankruptcy Procedure.
How Many Section 341 Meetings Are Scheduled On The Same Day?
It’s very common for Chapter 7 Trustees to have a number of creditors’ meetings scheduled for a single day, sometimes several dozen. Often, multiple meetings are scheduled for the same time slot and the Trustee will call them one at a time until they are done. Trustees are often able to stay on schedule, but sometimes they get backed up if prior meetings take longer than expected.
What Does The Trustee Do At The Section 341 Meeting Of Creditors?
The Chapter 7 Trustee is in charge of the meeting. They will begin the Zoom meeting by:
- Identifying themself.
- Taking the attendance of everyone present for the meeting.
- Confirming whether the person appearing as the debtor is the one who filed the bankruptcy case.
- Swearing the debtor in, under oath.
- Asking the debtor to verify that they are familiar with the bankruptcy documents they filed and that the documents are complete and accurate.
- Confirming that the debtor reviewed the required Bankruptcy Information Sheet.
- Asking the debtor about the tax returns and pay information they submitted.
Then the Trustee will ask the debtor questions about their bankruptcy documents. The Trustee is free to ask questions about anything disclosed in the bankruptcy documents, including assets, debts, employment, other income, expenses, money or property transferred to other persons, and so on. Chapter 7 trustees will almost always ask for more details about real estate, vehicles, business interests, and other assets that may have substantial value.
Chapter 7 Trustees often ask probing questions to determine whether the debtor has failed to disclose anything or underreported the value of any assets.
Although the Trustee is mainly interested in determining whether the debtor has any valuable property the Trustee could sell for the benefit of creditors, they may inquire into additional matters, such as issues regarding the debtor’s eligibility for relief under Chapter 7 and questions about whether problems with the debtor’s circumstances or bankruptcy documents may provide grounds for an objection to discharge.
What Do Creditors Do At The Section 341 Meeting Of Creditors?
Creditors do not actually show up for creditors’ meetings in most bankruptcy cases. When creditors do show up, sometimes it’s just to observe the meeting. When creditors actively participate in the meeting, it’s often for one of the following reasons:
- A secured creditor, such as an auto lender, wants to determine the location and condition of the collateral and whether the debtor intends to make payments or surrender it.
- A creditor is investigating potential grounds to object to the debtor’s discharge of their claim, such as allegations of fraud.
The Chapter 7 Trustee controls the meeting of creditors. The Trustee will usually give creditors a short amount of time and leeway to ask questions, but the Trustee can stop creditors from continuing their questions at any time, especially if their questions stray too far from the main purpose of the meeting.
How Does The Trustee Act At A Section 341 Meeting Of Creditors?
There are many different Chapter 7 Trustees and each has their own personality. Some are kind and patient, while others are sterner and more demanding. Regardless of the Trustee’s personality, it’s important for debtors to treat Trustees with respect during creditors’ meetings.
How Long Will The Section 341 Meeting Of Creditors Last?
Many creditors’ meetings last five minutes or less, especially in straightforward cases where creditors do not attend and it is apparent from the documents filed in the case that the debtor does not have valuable assets that the Trustee could sell for the benefit of creditors. Meetings may take longer if the Chapter 7 Trustee has a lot of questions for the debtor, or if creditors participate. Meetings seldom go longer than 15 or 20 minutes, but the Trustee controls the meeting, and it can go longer at the Trustee’s discretion.
What Happens At The End Of The Section 341 Meeting Of Creditors?
The Chapter 7 Trustee determines how the meeting of creditors concludes. In the majority of cases, the Trustee will state that the meeting is over and no further appearance or information is required. In some cases, the Trustee will request additional documentation from the debtor and set a follow-up date for a further creditors’ meeting.
In Conclusion
Most Section 341 meetings of creditors are short, uneventful, and conclude without any follow-up required. Attorneys for debtors should make sure their clients are well prepared, however, for the possibility that the Chapter 7 Trustee or a creditor will conduct a more thorough examination of the debtor.