The 341 meeting of creditors is a meeting where the trustee meets with the debtors, who appear and answer questions, under oath concerning their financial circumstances. The goal is to determine if there are any assets that the trustee can get to pay any creditors. It is called the 341 meeting, because Section 341 of the bankruptcy code requires it. Another name it goes by is the trustee's meeting, because the trustee that is appointed by the court runs it, and asks the debtors' questions. It is also referred to as the meeting of creditors, since that is what it was labelled in the bankruptcy code. Creditors are invited to attend, yet seldom do because the trustee is really acting on their behalf.
Yes, the 341 meeting of creditors takes place for all bankruptcies. It is a little bit different between a Chapter 7 and a Chapter 13. The goal or the duty of a Chapter 7 trustee is to liquidate assets that are not exempt, where the goal of the Chapter 13 trustee is to determine whether the proposed repayment plan meets legal requirements, one of which is called the liquidation test. Therefore, the inquiry is very similar, but not exact.
Debtors, whose debts are primarily consumer debts, are required to complete a pre-filing credit counseling session that takes place before the case can be filed, which is about a month before the 341 meeting. Debts are primarily consumer debts when more than fifty percent of the debts are incurred for consumer goods and services, such as credit cards, medical expenses, mortgages, and car payments, as opposed to a situation where the debts are primarily incurred for business purposes.
Debtors whose debts are primarily consumer debts must also complete a course in financial management provided by a nonprofit agency approved by the court system. That class and certification must be completed, and filed with the court before the debtor can get a discharge.
Discharges usually occur in a Chapter 7 about three months after the meeting of creditors. Therefore, while it is not necessary to have that certificate, and the course completed before the 341, it is a good idea to do so. Chapter 13 discharges may be three to five years down the road when payments plans are completed.
I always consider it the best practices to have debtors complete the course, and obtain the certificate in financial management before the 341 meeting, even though it is not required. It is easy to put off and to forget to do it later. If it is not done, the court cannot grant a discharge, and if a case is closed without the debtor getting a discharge, the debtors are right back to where they began.
It is a formal court proceeding of creditors that does not really feel like a formal court proceeding. The debtors are required to appear and answer the trustee's questions under oath. A record is made, but the atmosphere is less formal than one would expect going to court to testify. Typically, it is held in a conference room. The proceedings are tape recorded rather than having a court reporter present. Debtors are basically asked standard questions in an informal setting. A trustee will schedule a day or half a day for meetings with creditors. It is not unusual to have six meetings in one hour.
The questioning only last for about six to ten minutes. The trustee will call the debtors to the conference table, place the debtors under oath, examine the Debtors picture identifications, and social security cards and compared them with the information that is filed in the bankruptcy documents. The trustee then asks questions concerning the documents the debtors filed with the bankruptcy court and the documents that were provided to the trustee in advance, such as pay stubs, tax returns, and bank statements, along with a series of standard questions.
No one has to appear before a judge. A trustee is not a judge. A trustee is an officer that is appointed by the court to administer the bankruptcy estate. A Chapter 7 trustee's job is to find assets to liquidate, and to determine if the debtors are compliant with the bankruptcy codes in their filings. The Chapter 13 trustee's job is to determine if the plan for repayment that is being presented, complies with the bankruptcy code, but they are not a judge.
They usually do not offer breaks to speak with your attorneys. It depends on each trustee and their impression of the debtors. I always ask my clients to review their bankruptcy documents first as well as their bank statements, then to listen to the questions that the trustee is asking. If they do not hear the question or do not understand the question, then ask them to repeat the question. Once they understand the questions, they should answer as simply as they can, and always tell the truth. If the answer is yes, say yes, if the answer is no, say no. If the answer requires some explanation, keep it short. If the answer is I do not know, then that is the truthful answer. I typically go over anticipated questions with the Debtors before the 341 meeting so they are prepared and know what is coming.
The Debtors attorneys are present and can provide information and ask the debtors questions to clarify the Debtors testimony.
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