Most consumer bankruptcy petitioners never appear in court or speak to a judge. In the typical Chapter 7 or Chapter 13 bankruptcy case, most of the work takes place in your attorneys office, where your bankruptcy lawyer prepares petitions, schedules, and other documents based on the information you provide.
However, there is at least one required personal appearance: the bankruptcy petitioner is required to appear at a meeting of creditors. You may also hear this meeting described as a “341 hearing,” after the section of the U.S. Bankruptcy Code that mandates it.
The creditor’s meeting may take place in the federal courthouse where the U.S. Bankruptcy Court is located, but may be in a different location. You will receive a notice with the date, time, and location of the meeting. The U.S. Bankruptcy Court for the Central District of California also publishes a list of 341 meeting locations on its website. There are locations in Los Angeles, Riverside, Santa Ana, San Fernando Valley, and Santa Barbara.
About the 341 Hearing
When Does the Creditor’s Meeting Take Place?
The exact timing of the 341 hearing will vary somewhat, depending on things like how busy the bankruptcy court is, the trustee’s schedule, and the location of your meeting. However, you can generally expect a hearing date within three to six weeks of filing. While you may not be looking forward to this hearing, getting an early date is often beneficial, since the meeting date starts the clock ticking on deadlines for proofs of claim and creditor objections, moving you closer to discharge.
Who Attends the 341 Hearing?
The bankruptcy trustee presides over the meeting of creditors, and the bankruptcy petitioner must attend. If he or she is represented by a bankruptcy attorney, the attorney will also be present. If you don’t show up for the 341 hearing, your bankruptcy case may be dismissed. So, if there is a problem that makes it impossible for you to attend at the scheduled time, you must let your bankruptcy attorney know as soon as possible. If you are filing jointly with your spouse, you must both attend the meeting.
At many 341 hearings, the trustee, petitioner, and petitioner’s attorney are the only people present. This is especially common in no-asset or low-asset Chapter 7 bankruptcy cases. However, creditors are notified of the hearing and have the opportunity to attend and ask questions if they choose.
What Happens at the Meeting of Creditors?
Your bankruptcy attorney will prepare you more specifically for the 341 hearing, but this general overview will give you an idea of what to expect when you appear for a creditor’s meeting.
First, the bankruptcy trustee will check your identification and will “swear you in.” Although this hearing is relatively informal, doesn’t take place in a courtroom, and isn’t before a judge, you will be answering questions under oath.
Typically, before asking questions about your debts and income, the trustee will ask some questions to ensure that you understand the process, that your attorney has provided you with adequate information, and that you have reviewed the petitions and schedules filed with the court.
If there are no creditors present at the meeting and the trustee hasn’t noticed any red flags in the petition and schedules, the rest of the meeting often goes very quickly. The trustee will likely ask a few questions to confirm income and other financial details, and then may ask additional questions for purposes such as:
- Clarifying information in the petition or schedules
- Gathering more information about transfers of property over the preceding two years
- Learning more about your assets
- Asking how you arrived at the values stated for some of your assets
In most cases, this questioning is low-key, and your attorney will have advised you of the type of questions you’ll likely be asked so that you can review any relevant documents and be prepared for the hearing. Often, the meeting of creditors lasts less than 15 minutes, and this may be the only live appearance a bankruptcy petitioner has to make.
When Creditors Appear at the 341 Hearing
Many people filing bankruptcy are nervous about the possibility that creditors will appear at the 341 hearing. That’s understandable, since being in debt is uncomfortable and creditors will likely be unhappy about the bankruptcy filing. But, don’t worry. The bankruptcy trustee and your attorney will be there to keep the proceedings moving forward appropriately, and creditors are limited in the types of questions they can ask you.
Occasionally, an individual who is listed as a creditor or a very small business creditor will appear at the 341 hearing simply because they received notice and think it may be necessary to protect their rights. Often, these creditors don’t ask any questions, but simply observe the proceedings.
Other reasons a creditor might attend the 341 hearing include:
- Suspicion that you are hiding assets or have misstated your income
- Belief that you may have transferred property to protect it from creditors
- Concern that your filing is in some other way fraudulent
In addition, secured creditors will sometimes appear at the meeting of creditors simply to inquire as to your plans. For example, in a Chapter 7 case the creditor who holds your car loan may come to the 341 meeting to ask you and your attorney whether you are planning to surrender the car, redeem if for value (meaning that you may be able to “pay off” your loan for less than the full balance), or reaffirm your contract and continue making payments.
While anticipating the creditor’s meeting is stressful for many bankruptcy petitioners, the meeting itself is often quick and easy. A conversation with your bankruptcy attorney in advance of the meeting can help set your mind at ease and make sure that you are prepared to provide the information the trustee needs to move your case forward.
M. Erik Clark is the Managing Partner of Borowitz & Clark, LLP, a leading consumer bankruptcy law firm with offices located throughout Southern California. Mr. Clark is Board Certified in Consumer Bankruptcy by the American Board of Certification and a member of the State Bar in California, New York, and Connecticut. View his full profile here.