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The First Meeting of Creditors


The following material is excerpted from material supplied to clients of our office, with supplemental notes in italics.


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 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 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 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 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.