Your bankruptcy petition has been filed and you just received the notice saying the 341 Meeting of Creditors is scheduled for a specific date about 30 days from now and the burning question is what to expect and how to prepare. For most individuals filing bankruptcy, this will be their one and only “hearing" so should you be nervous, and is there a way to make it go more smoothly? Read on and we’ll try to answer all these questions and more.
The Meeting of the Creditors is required by section 341 of the bankruptcy code (thus the name “341 meeting"). It’s usually scheduled about 30 days after the bankruptcy petition is filed and provides an opportunity for the Trustee (appointed by the bankruptcy court to oversee the proceedings) to verify your identity, give you a chance to attest that the petition is accurate, and give the Trustee and creditors an opportunity to make inquiries into the debtors (that’s your) assets.
But what really happens at a 341 meeting? It revolves around who’s likely to be at the meeting and what the Trustee will be looking for.
The Trustee will be at the 341 meeting. You must also be at the meeting. If you’ve had assistance from a bankruptcy attorney, they’ll also be at the meeting. And all your creditors are also invited to the meeting. There will also likely be other debtors who’ve filed bankruptcy in the same room with you waiting for their turn.
341 meetings are usually scheduled in 30 minute intervals with 8 to 12 debtors scheduled for each block. In some facilities, all debtors for the block of time are invited into the meeting room at once. In other cases, debtors come and go as they please so long as they’re in the meeting room when the Trustee is ready to “meet" with them. Usually, the setting is very informal but it is a good idea to turn your cell phone to silent or turn it off while you’re in the meeting room. Trustees don’t seem to be bothered by people coming in and out but talking and other distractions tend to irritate them.
When it is your turn, you’ll be asked to come to the Trustee’s table or desk, provide a copy of your identification (usually a copy of your social security card and driver’s license) and swear under oath that you will be truthful (raise your right hand, etc.). Then the trustee will proceed to ask a series of basic questions intended to make sure that you filed the petition and were truthful about it. If there’s one thing Trustee’s dislike, its deception. You don’t need to provide an explanation if the trustee asks a “yes" or “no" question but you want to be truthful and accurate. If you’re not sure, you’ll want to say that. Let your attorney help as well since they’ll be sitting right beside you and should be very familiar with your petition. Some of the standard questions the Trustee may ask include the following. :
Did you read and sign the petition?
Did you help prepare the petition and is it accurate to the best of your knowledge? Are there any errors or omissions that the Trustees should know about?
Have you lived in the state for the past two years? (or some other period of time)
Are all of your assets and liabilities/creditors listed on the schedules?
Have you filed bankruptcy before? If so, when?
What is the name and address of your employer?
Is the copy of the tax return you provided a true copy of the most recent tax return you filed?
Do you owe child support or spousal maintenance? If so, to whom?
Have you read the Bankruptcy Information Sheet (usually provided in the 341 meeting room)?
Have you transferred or given away any property in the last year?
Are you entitled to life insurance proceeds or an inheritance as a result of someone’s death?
A few other questions relating specifically to unusual assets or circumstances on your petition. Examples might be:
a. You’re married but you’re the only one filing – Why?
b. Does your business have any Accounts Receivables or Long-Term Contracts?
c. The truck you listed is only 5 years old but you indicated it’s only worth $1,000 – Why?
The questions your Trustee asks will largely follow a “script" and be along the same lines as questions #1 through #11 above. Whatever other specific questions the Trustee asks will probably focus on specific areas that are not answered in the petition about unique assets like, for example, a business or multiple properties. This is one of the reasons why it’s wise to have professional help in drafting the petition to start with. If all the questions are answered in the petition, the Trustee won’t have any specific questions and you’ll be done once the meeting is completed instead of having an inquisitive Trustee who’s now trying to examine all of your assets to see if there’s any value there. When a petition is done correctly, it’s not unusual for the 341 meeting to last 3-4 minutes. Remember, the Trustee has several more debtors to interview during the 30 minute interval so won’t have much time to drill down regarding assets unless there’s a good reason. Be prepared with a good petition, answer any questions directly and truthfully and the Trustee will likely be satisfied with your information.
It is rare (VERY rare) for any creditor to actually show up for a 341 meeting. The reasons are pretty simple. For a creditor to show up at the meeting would likely require them to send an employee (who they’d have to pay), or more likely, send an attorney (who they’d have to pay even more). And at the meeting, the creditor is limited to asking specific questions about assets listed on the bankruptcy petition and providing evidence of assets that are missing from the petition. So the Creditor would need some type of information prior to the 341 meeting that shows the debtor left assets off the petition. That means they probably had to hire a private investigator (who they’d also have to pay) or have conducted some other form of forensic asset tracing (which also costs money) to identify the missing assets. And in the end, if there really are missing assets, the creditor would have to share these hidden assets with all the other creditors. So there are lots of costs associated with finding out if there really are hidden assets and in the rare case that they do exist, the creditor only gets a small percentage of them.
In our experience doing bankruptcies we’ve only seen one creditor show up – an angry landlord who owned one property, rented it to the debtor who wasn’t paying rent and was upset because they couldn’t evict the debtor yet. The trustee gave the creditor 2 minutes to state her case then politely told her she’d have to pursue her arguments with the civil court after the bankruptcy was discharged but couldn’t do anything until then. Bottom line, it just isn’t cost effective for a creditor to show up for 341 meetings. So while all of your creditors are invited to your 341 meeting, don’t be surprised if none of them show up.
The Trustee has a great deal of influence over how your bankruptcy goes. They are not the ultimate decision maker (that’s the judge of the bankruptcy court) but they control the process, make inquisition where warranted, and make recommendations to the court on virtually every aspect of the proceedings. So it never makes sense to antagonize the Trustee. Think of the 341 meeting as a job interview and the Trustee is the person you’re trying to impress. You want then to perceive you as being truthful. You also don’t want to portray that you’re trying to take advantage of the bankruptcy proceeding. If you have a $15K diamond ring or a $30K Rolex watch, leave those things at home. Dress and act conservatively and respectfully. It’s unlikely that the Trustee will be on “your side" but you don’t want to give them a reason to dislike you. If the Trustee feels comfortable with the information you’ve provided, they’ll be more inclined to be done with your case and move on. And that’s what you want, so give some thought to anything that would detract from that and avoid it.
The 341 meeting experience should not be a stressful one if you’re prepared. Use a professional to prepare the petition. Review the petition before the meeting. Dress and act conservatively at the meeting. Answer the Trustee’s questions truthfully and directly. And chances are you’ll be done with your 341 meeting faster than you can order a combo meal at the local fast food restaurant.