Bankruptcy:
Consumer Bankruptcy
[1] Introduction
[2] General Information
[3] Limitations on Filing
[4] The Automatic Stay
[5] Debt Treatment under Chapter 7
[6] Debt Treatment under Chapter 13
[7] Asset Treatment under Chapter 7 and 13
[8] Choosing Between the Alternatives
[9] Case Summary and Outline
[10] Getting Started
[11] Typical Pre-Filing Problem Areas
[12] Filing
[13] Typical Post Filing Issues
[14] The First Meeting of Creditors
[15] Chapter 7 Interim Administration
[16] Chapter 13 Interim Administration
[17] Chapter 7 Discharge
[18] Chapter 13 Discharge
[19] Typical Post Discharge Issues
[20] Fees and Costs
[21] Bankruptcy Reform

Booklet One
Booklet Two

Client Page

Bankruptcy Packet

Fees and Costs

Power Point
[1] Introduction & Priority Debt
[2] Secured Debt
[3] Executory Contracts & Unsecured Debt
[4] The Bankruptcy Estate
[5] Chapter 7
[6] Chapter 13
[7] Final Matters

Other Areas:
Arbitration
Business Formation
Agreement Writing
Small Claims
Radio Show
Paralegal Training


Practice Areas:
Bankruptcy
Wills & Trusts


Home:
Resume
Office Hours
Location
Emergencies
Fees
Disclaimer
Omphalos






































































 


Chapter 14

The First Meeting of Creditors

1.0 In General

The bankruptcy code and rules require the attendance at a first meeting of creditors of both the attorney and the debtor. Failure of either to attend will result in dismissal of the case. The first meeting, often called a 341 hearing by attorneys, provides the trustee and creditors an opportunity to examine the debtor and obtain clarification regarding the statements and schedules that have been filed with the court as well as the bankruptcy estate. The trustee is an experienced attorney appointed by the court to manage the case for the court. The trustee generally has a separate legal practice. In a chapter 7 the trustee is paid by receiving a portion of your filing fee and a percentage of any assets from your estate that can be used to pay the claims of creditors. In a 13 he is paid by receiving a percentage of your monthly payments.

2.0 Notice of Hearing

Within two to three weeks of your Bankruptcy filing, the Court will send out notice of the time and date of your First Meeting of Creditors. This notice is sometimes called the 341 Hearing Notice. These notices are sent to each of your creditors, to your attorney, and to you. Everyone tends to receive them about the same time except for your attorney who will often receive them up to a week after you do. Once you have received the notice of your First Meeting of Creditors, you should call the attorneys office and make an appointment to come in for a “Hearing Prep”. At this appointment, the attorney will give you specific instructions as to what to expect at the hearing. Each Trustee handles the hearings a little differently. As a result, the attorney will not be able to tell you what to expect until he knows who your Trustee will be.

As soon as the attorney receives notice of the hearing he will send you a letter reminding you of your court date and asking you to make an appointment to come in and see him if you have not already done so. The letter will also list various items that you may be required to bring with you to the first meeting of creditors, such as your Drivers License and Social Security Card. The trustee may also send you a letter requesting that you bring items to the hearing.

3.0 Changing the Hearing Date

The Court will not change the date of your hearing. You must appear at the time and date scheduled. If you do not appear, your case will be dismissed. If you are married and are filing jointly, the failure of one spouse to appear will result in their part of the case being dismissed, while the case will go forward for the party who does appear.

In the event that you know you will be in the hospital on the date of your hearing or you are currently under a doctors’ care, and he has ordered you not to appear, you should immediately provide that information (in writing) to your attorney. In limited situations, the attorney may be able to excuse your appearance at the hearing and have it re-scheduled. However, any motion to excuse your appearance must be filed with the court prior to your hearing and will require a written, signed statement from a medical provider indicating that you are not able to attend the hearing. The unwillingness of your employer to allow you to appear at the hearing or the fact that you will be out of town is not an excuse that the Court will accept. You should also be aware that filing a motion to excuse your appearance will result in an additional charge.

4.0 Meeting With the Attorney

Adequate preparation for the first meeting of creditors can mean the difference between a swift and easy hearing (usually under 40 seconds of actual questioning) and a protracted, embarrassing one for both the attorney and the client. Proper preparation of the original bankruptcy pleadings is a good start, but there is more that should be done. This includes meeting with the attorney prior to the hearing.

When you meet with the attorney, he will go over a map with you, telling you how to find the hearing room where your first meeting of creditors will occur. The attorney will also review with you the personality of the trustee who has been appointed to your case and how he or she typically run their hearings. The first meeting is rather informal in nature and the judge is not allowed to be present. Even so, the meeting follows a regular format. The Attorney will walk you through the hearing process and will review with you each of the questions, which the Trustee is likely to ask. He will also indicate what the Trustee means by each of his questions, so that you can answer them properly. Finally, as part of your meeting, the attorney will review each page of your pleadings one more time, to ensure there are no errors or problems with your paperwork. If there are errors in your paperwork and you meet with the attorney early enough, corrections can be made to your paperwork prior to the hearing.

5.0 Financial Management Class

New sections 727(a)(11) and 1328(g) require you to attend “an instructional course concerning personal financial management” after the filing of your case. Once you have completed your meeting with the attorney one of the paralegal’s will provide you with any additional log in codes so you can complete this course over the internet. By this time you should also have received in the mail a manual that you must read before taking the class. Reading the book and completing the internet class takes about two hours. Upon completion you will receive a certificate. This document must be filed with the Court prior to your first meeting of creditors. Be sure to give it to a member of the attorney’s staff.

6.0 The Actual Hearing

6.1 Chapter 7

6.11 In General

When you arrive for the hearing you should first check in with your attorney. He may have final questions or items for you (such as an amendment or reaffirmation that needs to be signed). You should hand him your identification (drivers license and/or social security card) which he will place in your file. He will check that your documentation is complete and will then direct you to enter the actual hearing room.

All of the debtors on the hourly calendar, usually nine to twenty, meet in a small room. In Provo at the head of the room is a table. Some trustees like a square table, some a long narrow table. The trustee sits at the head of the table and on the remaining sides of the table are chairs for the attorney, the debtors, and creditors.

The trustee will begin the hearing by making a statement on how the hearing will be handled. This statement will also include information about Court deadlines and procedures, as well as an encouragement to cooperate with any requests made by the trustee or court. It takes about 2 to 5 minutes.

After this introduction, the cases will be called one at a time. When the name of a debtor is called, the debtor and their attorney will come forward and sit at the table. The trustee will then swear in the debtor. While this is happening the attorney will hand his clients identification and other documents to the trustee. The trustee will then ask a number of questions.

6.12 The Questions

All questions should be answered in a clear audible voice since the proceedings are being recorded. If you do not understand a question, you should not guess; but should either indicate you do not understand or turn to your attorney for additional instructions. Listen carefully and keep your answers short and to the point. The trustee is generally not interested in (nor does he have the time to listen to) your personal feelings or life history. He is primarily interested in determining the facts regarding your financial affairs as quickly as possible. The trustee is encouraged by the OUST to ask the following questions:

State your name and address for the record.

Have you read (and did you understand) the Bankruptcy Information Sheet provided by the United States Trustee?

Did you sign the petition, schedules, statements and related documents you (or your attorney) filed with the court?

Did you read the petition, schedules, statements and related documents before you signed them and is the signature your own?

Please provide your picture ID and social security number card for review.

Are you personally familiar with the information contained in the petition, schedules, statements and related documents?

To the best of your knowledge, is the information contained in your petition, schedules, statements and related documents true and correct?

Are there any errors or omissions to bring to my, or the court’s, attention at this time?

Are all of your assets identified on the schedules?

Have you listed all of your creditors on the schedules”

Have you previously filed bankruptcy?

What is the address of your current employer?

Is the copy of the tax return you provided a true copy of the most recent tax return you filed?

Do you have a domestic support obligation?

It is rare for these questions to be asked exactly as indicated above. Each trustee has their own set of questions they tend to ask in every case.

Other common questions include the following:

Have there been any changes in your income or financial circumstances since the date of filing?

Do you currently have an ownership interest in Real Property?
When did you buy your [home]?
What was the original purchase price?

Have you made any substantial improvements to the property since you purchased it?
What do you think the [home] is worth?
How did you arrive at that value?
How is the [home] Titled?
What is your Intent with regard to the [home] ?

(If you have a Second Mortgage or recently Refinanced)
When did you get the loan?
How much did you receive at closing?
What happened to those funds?
Were the creditors paid direct by the title company or did you receive the money and then pay the creditors?

(If you have no property now)
Have you ever had an interest in land or real property?
Are you now or will you in the future be entitled to any money from the sale or disposition of that property?

(If a motor vehicle is listed)
What do you think the .... is worth?
What is its current condition?
What is your intent with regard to the ... ?

(If no vehicles are listed)
What do you do for transportation?

Were you employed on the date of filing?

Do you have a Retirement Plan, 401K, stock options, or investments of any kind?

Do you have (or have you had in the last 8 years) an ownership interest in any business?

Have you filed your tax returns?
Did you receive a refund?
How much did you receive?
When was it received?

(If no home is listed)
Are you renting?
Are you related to your landlord?
Are you current on your rent?

Often the trustee will inquire as to any values on the schedules that may appear to be questionable. If the property is sufficient to bring a dividend to creditors, the trustee may ask that the debtor turn over the property to an agent of the trustee (such as an auctioneer). In complex cases, the trustee may need additional time to examine the financial affairs of the debtor. In such cases the hearing may be continued.

After the trustee is finished, he will usually ask if any creditors are present with questions. Usually there are few, if any, creditors present; but if so, they may ask questions or give information to the trustee regarding your bankruptcy estate. The questions that the creditors may ask are severely limited. They may not ask abusive or irrelevant questions. Most often the only creditors which appear are those that wish you to reaffirm on their debts or who have information for the trustee on additional property of the estate. Sometimes the creditors questions will prompt additional questions by the trustee. When all of the parties are finished, the debtors and their attorneys are dismissed and the next case is called.

6.13 After the Examination

When your case is finished you and your attorney will go out in the hall and speak to any creditors who may have appeared who have a secured interest in any of your property. Arrangements may then made regarding surrender, reaffirmation, or redemption. The attorney will also answer any questions you may have.

6.14 The Trustee’s Concerns

Upon appointment, which occurs when the case is filed, the trustee will examine the papers that were filed with the court on your behalf. In a chapter 7 the trustee is particularly concerned with the schedules of your assets, any voluntary transfers or sales of property during the last year, payments on debts exceeding $600 in the last three months, the status of your secured debts, your exemptions, and any unusual debt. After examining your schedules the trustee will typically note any enquiries to be made at the first meeting of creditors on a form. He uses this form during the hearing to ask questions.

The trustee may also make an initial analysis of your bankruptcy estate to determine if you have any property that could be available to pay the claims of your creditors. This determination is made roughly as follows:

The Bankruptcy Estate
- Secured Debts
- Exemptions
= Trustee’s Gross Estate
- Nominal or Burdensome Property (which is abandoned)
- Projected Costs of Sale (about 7-15% depending on the asset)
= Trustee’s Net Estate

If the Net Estate is more than a $1,000 the trustee will likely convert some of your assets to case so a dividend can be paid to your unsecured creditors. For more detailed analysis of your own case you should consult with the attorney.

6.2 Chapter 13

6.21 In General

When you arrive for the hearing you should first check in with your attorney. He may have final questions or items for you (such as an amendment that needs to be signed). You should hand him your identification (drivers license and/or social security card) and your first payment which he will place in your file. He will review that your documentation is complete and will then direct you to enter the actual hearing room.

All of the debtors on the hourly calendar, usually nine to twenty, meet in a large room. In Salt Lake at the head of the room is a large table. The trustee sits at the head of the table and on the remaining sides of the table are chairs for the attorney, the debtors, the IRS, the USTC, and other creditors.

The trustee will begin the hearing by making a statement on how the hearing will be handled and a few suggestions for being successful in your chapter 13. It takes about 2 to 5 minutes. Mr. Anderson uses a power point presentation.

After this introduction, the cases will be called one at a time. When the name of a debtor is called, the debtor and their attorney will come forward and sit at the table. The trustee will then swear in the debtor. While this is happening the attorney will hand his clients identification, first plan payment, and other appropriate documents to the trustee. The trustee will then ask a number of questions.

6.22 The Questions

All questions should be answered in a clear audible voice since the proceedings are being recorded. If you do not understand a question, you should not guess; but should either indicate you do not understand or turn to your attorney for additional instructions. Listen carefully and keep your answers short and to the point. The trustee is generally not interested in (nor does he have the time to listen to) your personal feelings or life history. He is primarily interested in determining the facts regarding your financial affairs as quickly as possible. He may ask the following questions:

State your name and address for the record.

Please provide your picture ID and social security number card for review.

Did you sign the petition, schedules, statements and related documents you filed with the court and is the signature your own?

Did you read the petition, schedules, statements and related documents before you signed them?

Are you personally familiar with the information contained in the petition, schedules, statements and related documents?

To the best of your knowledge, is the information contained in your petition, schedules, statements and related documents true and correct?

Are there any errors or omissions to bring to my attention at this time?

Are all of your assets identified on the schedules?

Have you listed all of your creditors on the schedules?

Have you previously filed bankruptcy?

What is the address of your current employer?

Is the copy of the tax return you provided a true copy of the most recent tax return you filed?

Do you have a domestic support obligation?

Have you filed all required tax returns for the past four years?

It is rare for these questions to be asked exactly as indicated above. Each trustee has their own set of questions they ask in every case.

Other common questions include the value of your home, if you regularly receive tax refunds, if any older children are contributing to the family budget, or if you anticipate any changes in income or expenses in the next three years.

After the trustee is finished, he will usually ask if any creditors are present with questions. The representatives of the IRS and USTC will indicate if you are current on your tax filings and may ask questions about your tax status. Secured creditors may be present to ask about stipulations regarding the value of collateral or their interest rate. When all of the parties are finished, the debtors and their attorneys are dismissed and the next case is called.

6.23 After the Examination

When your case is finished you and your attorney will go out in the hall and he will answer any questions you may have. He will also provide you with a number of documents that were given to him by the trustees assistant. They will include address labels and case number labels to place on future payments. In the past a trustee’s directive (a list of things which must be done before the case can be confirmed) was also provided. That document is now filed with the court and sent electronically to the attorney.

6.24 The Trustee’s Concerns

Upon appointment, which occurs when the case is filed, the trustee will examine the papers that were filed with the court on your behalf. In a chapter 13 the trustee is particularly concerned with your ability to pay, that your monthly expenses are reasonable, that your debts have been properly identified, that your repayment plan meets all the legal requirements, and that your attorney has used the proper forms. After examining your schedules the trustee will typically note any enquiries to be made at the first meeting of creditors on the pleadings themselves. He uses these notes during the hearing to ask questions.