The Bankruptcy 341 Meeting of Creditors: Nothing to Fear but Fear Itself
What Is the Bankruptcy 341 Meeting of Creditors?
The 341 Meeting of Creditors is the only formal court or court-like hearing that you must attend in a typical Chapter 7 bankruptcy and the first of at least two hearings (and sometimes the only hearing) that you must attend in a Chapter 13 bankruptcy. Although I do my best to prepare my clients for every aspect of their Chapter 7 cases from the point of our first conversation forward, many still do arrive at the 341 Meeting nervous and frightened, sometimes very nearly to the point of tears. It's just impossible for them to believe what I told them ahead of time: "Don't worry. There is nothing to be worried about." Nevertheless, it's true. The 341 Meeting of Creditors is just that: an opportunity for creditors to sit down with you and ask you a few questions on the record, after you've been sworn in under oath by your Chapter 7 Trustee. The Trustee also---and primarily---asks questions as well.
Why You Shouldn't Stress over Your 341 Meeting of Creditors
The creditors usually don't show up. That's right. There are rarely any creditors at all at the 341 Meeting of Creditors. In my district, the creditor most likely to attend is a credit union representative inquiring as to whether you plan to keep the car they loaned you money to purchase or not. That's about it. There are more unusual circumstances in which other sorts of creditors may appear, but this is not common. The Trustee largely already knows what he or she will do with your case. It is the Trustee's job to liquidate available assets from your bankruptcy case and hand the resulting proceeds over to your creditors whose debts are otherwise going to be discharged (i.e., you don't have to pay any of them back). Thus, the Trustee, while an officer of the court and a representative of the US Department of Justice, is an overall shepherd of the process at large, they really are largely concerned with whether you have anything that your attorney wasn't able to exempt and protect. Over 90% of all Chapter 7 cases are "no-asset" cases in which the Trustee cannot liquidate any asset at all. Trustees already know this for the most part from your Schedules, if they have been prepared by a competent and experienced bankruptcy attorney and you have properly and fully disclosed all of your assets and debts to your attorney ahead of time. In a Chapter 13 bankruptcy, no assets are liquidated at all, and the Trustee's representative (rarely the Trustee him- or herself in the Detroit bankruptcy court) will simply be asking questions about your petition, generally about your income and expenses since those questions inform the Trustee as to your ability to make any higher monthly Chapter 13 plan payment than you are proposing to make. The hearing doesn't last very long. For the reasons discussed above, the typical Chapter 7 341 Meeting of Creditors is only about 5 minutes long. You won't be there alone! If you have hired an attorney with a high level of customer service, the attorney you've worked with all along on your case will be there with you, to intercede if you don't understand a question asked of you or to interject if either a creditor or Trustee asks anything improper (very unlikely). One of the first questions you should ask your attorney before you retain them should be, "Will YOU be representing me at my 341 Meeting, or will it be someone I've never met or heard of before who has never seen my file prior to the 341 Meeting?" Unfortunately, a great many larger law firms use "appearance attorneys" who just show up for your hearing and then leave again and do not, typically, know anything about your case. Don't hire a name: hire good service. In my practice, I never use appearance attorneys and always represent my clients in all matters personally. It's not really "court." The 341 Meeting is an informal, administrative hearing. You don't have to wear a suit or study or prep beforehand. There will be no jury. There will be no judge. Everyone else present will be there for the same reason.
341 Meeting of Creditors & Fear: The Bottom Line
The important thing is to let your attorney know if you have questions or are experiencing a high level of stress in the 30 days or so after your petition is filed leading up to your 341 Meeting. Your attorney should be available to you to answer those questions and give you the reassurance that you need that what you are undergoing is legal, is not unusual, and is what should be happening at any given point. This underscores, again, the important of shopping for a bankruptcy not on price but on service. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
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