Meeting of the Creditors
Perhaps the most intimidating aspect of the bankruptcy process for a debtor is the required attendance at the meeting of the creditors. At this meeting, the trustee places the debtor under oath, with the penalty of perjury, crimes of which are investigated by the FBI, and asks specific and pointed questions of the debtor with the goal of finding non-exempt assets to seize from the debtor for payment to their creditors.
Creditors can also attend this meeting (thus the name), and have wide latitude to ask the debtor all manner of questions about the debtor's income, assets, intentions, past statements, representations, and actions, and on and on.
While the meeting is a formal, federal procedure, in practice the process is usually quick, uneventful, and almost friendly, for the properly informed debtor using a properly prepared petition. It is therefore important that the debtor's attorney take great care in discussing the meeting with the debtor beforehand, and in preparing the petition at the beginning of the case.
It is also important that the same attorney who has met with the debtor initially and has helped the debtor with their questions, attend the meeting with the debtor to assist with answering any trustee questions about issues that may not be fully explainable in the petition.
Despite the name, creditors rarely attend the meeting. The process is also referred to as a "341 meeting," named after the bankruptcy code section that proscribes it, or the "trustee meeting," given that the trustee is always there and conducts the meeting.
Even when creditors do attend, all they can do is ask questions. They can not make arguments or accusations, nor do they have the power to force the debtor to sign or agree to do anything at the meeting.
The trustee will be there, and will ask a series of standard questions and also questions specific to the debtor's finances. The trustees act professionally and do their job well, but are rather courteous and friendly in the process. The questioning of many debtors lasts only three to five minutes, after which the trustee either concludes the meeting or continues it to a future date if more information is required.
Some of the standard questions the trustee will ask are:
Did you read, understand, and sign your petition?
Have you listed all of your assets and liabilities?
Have you ever filed bankruptcy before?
Have you transferred any property in the last two years?
Does anyone owe you money for any reason?
Do you have a potential claim against anyone?
Are you the beneficiary of an open will, trust, or estate?
Have your financial circumstances changed since the filing of your petition?
Is anyone holding any money or property on your behalf?
The trustee will then likely ask for clarification or restatement of specific items in the debtor's petition, and may ask that additional documentation be provided or changes made to the petition. Most debtors only have to attend once, after which the debtor has little left to do in the case, other than complete a course in financial management, the certificate for which the attorney then files with the court.
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