My bankruptcy clients in the Lexington and Columbia, South Carolina often fret about having to attend their bankruptcy hearing. It’s understandable to feel stress about what is probably the only appearance you will need to make during your bankruptcy case. But when it’s over, you will probably realize the worry was unnecessary.
Everyone who files bankruptcy must attend a meeting of creditors, also known as a Section 341 meeting, about a month after the case is filed. The purpose of this meeting is to permit the bankruptcy trustee, and any creditors who wish to attend, a chance to ask you a few questions about your property, debts, and financial affairs.
Despite the name of this meeting, creditors rarely attend. Typically the participants are the trustee, the debtor, and the debtor’s attorney. The trustee asks most of the questions; the debtor answers; and the attorney for the most part just stands by for clarification.
For consumer debtors, the meeting is usually very short. On the average, 7-8 cases are scheduled each half hour. You may have to wait a while until your case is called, but once it begins, it should not last long.
Trustees are mostly trying to figure out whether you have any assets they can sell to pay your creditors. They tend to ask a fairly standard set of questions, for example:
- Did you read over the schedules and statements your lawyer filed for you?
- Is the information in those documents honest and correct?
- Has any of the information changed?
- Have you transferred anything to a friend or family member in the last six years?
- Did you read over the bankruptcy information sheet? (This is a sheet your lawyer must show you, usually on the day you sign your documents for filing. It discusses the various types of bankruptcy, bankruptcy crimes, and so on.)
Each trustee also asks a few different questions from other trustees. One always asks if your car is insured, and another asks if you have set up any trusts in the last 10 years. And each trustee will ask you a few different questions than the other debtors appearing that day. This doesn’t mean anything is wrong in your case; it just means the trustee wants to clear up something in your documents. After all, no two cases are exactly alike.
If your income is above average, a representative of the United States Trustee may attend. This is an agency of the Justice Department that polices the bankruptcy system, and they review every Chapter 7 case to see if it represents an abuse of the system. If an assistant United States Trustee appears, he or she may ask you about changes to your income, any unusual expenses you have, or when your debts were incurred. You should answer all such questions directly and honestly but answer only what you are asked.