Unfortunately, every consumer who files for Chapter 7 bankruptcy is required to appear and be questioned at what is called the 341 meeting of creditors. It is referred to as the 341 meeting of creditors because this hearing is mandated by section 341 of the Bankruptcy Code. While it takes place at the Federal Courthouse, it is technically not a court appearance as the judge is prohibited by law from attending this meeting. Instead of appearing before the judge, you will be questioned by a government appointed chapter 7 trustee.
The main purpose of this meeting is to help this chapter 7 trustee determine if you have any assets that may be worth taking and liquidating. This is how the trustee makes his money. He finds non-exempt assets, liquidates these assets and pays your creditors from the proceeds of this liquidation, but not before taking a sizable commission. In order to determine whether or not there are any assets worth taking, the trustee will review your bankruptcy petition along with copies of your pay stubs and tax returns, all of which we are required to provide the trustee prior to the meeting. He will then ask you a series of questions designed to determine what non-exempt assets you may have and the value of these assets. One trustee within the district where I practice jokingly calls his job at the 341 meeting a “fishing expedition”. However, instead of seafood, he is fishing for non-exempt assets. I refer to these assets as “non-exempt”, because under law we are allowed to exempt or protect certain assets up to a specific monetary amount. These exemptions keep these assets out of the clutches of the chapter 7 trustee. Therefore, the trustee will be looking for assets that are not protected by the exemption laws or assets whose value is in excess of the monetary amount we are allowed to protect.
While creditors and their attorneys are also permitted to appear at the meeting to ask questions, they rarely attend. I have represented well over 1000 clients at 341 meetings and I can honestly say that creditors have appeared in less than a dozen of my cases. But if a creditor or their attorneys do attend, it is usually as the result of a business debt rather than one incurred by a consumer. It is also possible that someone from the U.S. Trustee’s office may attend the meeting. Their purpose is totally different from that of a creditor or the chapter 7 trustee. Their reason for attending is to ask questions to determine whether or not you actually qualify to have filed for chapter 7. In order to determine whether or not you qualify, as part of the bankruptcy petition, your attorney is required to prepare, based upon your income and expenses, a specific arithmetic calculation. If you fail this calculation, you are ineligible to file for chapter 7. If someone from the U.S. Trustee’s office attends your meeting, he has most likely has reviewed your petition prior to the hearing and determined that the calculation may have been computed incorrectly. If I feel that eligibility may be an issue in your case, we will thorough discuss the issues and we will be prepared going into the meeting of creditors to explain to the U.S Trustee exactly how we prepared this calculation and have documentation in support of our calculation.
The meeting of creditors will take place approximately 1 month after the chapter 7 petition is filed. Other than your driver’s license or other government issued picture identification and your social security card, you usually do not have to bring anything with you. But it is very important that you bring these documents. It you fail to bring either one of these documents, it is likely that the trustee will not question you and adjourn the meeting to a different date where you will be instructed to return and bring both of these documents. The court calendar will consist of approximately 40 cases. You could be near the top of the court calendar and be in and out in ten minutes or you could be at the bottom of the calendar and wait around a few hours before your case is called. The specific questions the trustee will ask you will vary depending which trustee you have and what appears on your chapter 7 petition. There are currently 8 different trustees appointed to hear chapter 7 cases at the Federal Courthouse in Central Islip, NY, where all bankruptcy cases filed on Long Island are heard. Cases are randomly assigned and which particularly trustee will be delegated to your case will not be known until after your bankruptcy petition is filed. Some trustees are quick while others are deliberate. Most individual hearings take no more than five or ten minutes but it is not uncommon that you could be stuck behind a complicated case that could take much longer to conclude. The best way to prepare for the meeting is to come to the hearing early, sit down inside the room where the trustee is calling his cases and listen to the questions that the chapter 7 trustee asks other debtors. After several cases are heard, you may realize that many of the questions the trustee asks are asked in almost every case and as a result, you will be prepared to answer these questions and will be much more comfortable once your case is called.