Demystifying the Meeting of Creditors

As a consumer bankruptcy attorney, I try to make the process of bankruptcy - from filing to discharge - as easy as possible for my clients. It really can be a simple process, especially for those filing bankruptcy whose only major asset is their car. These clients rent or have a home with little or no equity, earn an average income (or less), or have high expenses because of a mortgage, kids, or aging parents, and are simply overwhelmed by credit card or personal debt. The bankruptcy process for this kind of client is relatively painless. However, even after my clients are feeling confident about the bankruptcy itself, when I meet with the clients to be questioned by the trustee, I hear, over and over again, "I am so nervous! I couldn't sleep last night." This doesn't have to be so!

Part of the problem is the official name of the meeting: the First Meeting of Creditors, or 341a meeting as we lawyers call it, because of the section of the code where the meeting is described. It is true that the meeting of creditors is just that - a meeting. Creditors are allowed to appear and ask the bankruptcy filer a limited number of questions. (Should a case be on the complicated side and require more in-depth questions, creditors may ask the Court for permission to examine the Debtor under oath in a deposition like setting.) This may sound scary, but guess what? Creditors rarely show up, especially in the case of Chapter 7. So the only one asking questions is the bankruptcy trustee.

In my experience, when a case is a simple one, the only creditors who show up are: 1. confused creditors who aren't experienced in bankruptcy matters and think they must appear; or 2. in a Chapter 13 in which the bankruptcy filer is behind on their mortgage, the mortgage lender will sometimes (certainly not always) show up. How do you know if your case is simple one? Hire an experienced attorney and ask!

For the vast majority of bankruptcy cases, the client and his or her attorney will meet with the trustee for less than five minutes and be asked a series of simple questions that are already answered in the bankruptcy papers. These questions are answered under the penalty of perjury and recorded ("on the record") in order to try to uncover bankruptcy fraud. If you have filled out the papers fully and truthfully, there is rarely anything to worry about. The trustee asks if the bankruptcy filer has listed all his debts and assets, read and understood the bankruptcy papers before he signed them, if he has sold or transferred any property in the last few years, if he owes child or spousal support, and whether or not he has filed bankruptcy before. Then it's over, and I hear, over and over again, "That was easy! I shouldn't have been so nervous." This one I love to hear!