The First Meeting of Creditors
The following material is excerpted
from material supplied to clients of our office, with supplemental notes in
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.
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.
At the hearing you will need
to provide the trustee with certain documents.
Most of these your attorney will have obtained from you prior to the
filing of your case. However, some items
may not have been available prior to filing.
You should bring any of the following items that apply to the meeting
with the attorney:
Copies of your most recent pay stub
Copies of the last filed state and federal tax returns
Copies of your last property tax notice
Negotiable Instruments (Stock, Savings
Bonds, CD’s, etc.)
Proof of any money owed to you
A copy of each bank account, investment account,
mutual fund, or brokerage account that includes the filing date balance.
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
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 8 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.
Please provide your picture ID and social security number
card for review.
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?
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
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
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
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?
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
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 ....
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
= 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 try to convert some of your assets to
cash so a dividend can be paid to your unsecured creditors. For more detailed
analysis of your own case you should consult with the attorney.