What should I Expect at my 341 Hearing, aka “Creditors’ Meeting”?

Every consumer bankruptcy case requires at least one trip to the courthouse for something called a Section 341 Hearing, or more commonly, a “Meeting of Creditors” or “Creditors’ Meeting.”  Early in my career, I had a problem with several clients in a short span of time simply not showing up for this hearing, which is required for Debtors.  It was a simple fix, though – the answer I got was that they didn’t think they needed to attend since it was a “Meeting of Creditors” and the debtor is clearly not a creditor.  Makes sense, yes, but the debtor must attend.  Even more ironic, though, is the fact that creditors rarely attend the “Meeting of Creditors” in consumer cases.  It should probably be re-named something like the “Meeting of Debtor and Trustee” because that’s who normally shows up.  The creditors have a right to show up at the meeting and question the debtor, but I’d say 95% of the time, there is no creditor present.  The reason is because it is generally not economical for the creditor to send a representative to these meetings.

How long do these meetings last?  These meetings are actually run by the United States Trustee’s office in each district.  They are scheduled through the bankruptcy court, but they are the responsibility of the US Trustee to conduct.  In Missouri, the US Trustee has 60 minutes long Creditors’ Meetings for Chapter 7 cases in which, generally, 10 cases are scheduled for hearing.  In Kansas, the Chapter 7 meetings are only 30 minutes long, but only 6 cases are scheduled.  If you do the math, that means each case is allotted approximately 5 minutes for a hearing.  If one case’s hearing is going to take longer than about 20 minutes to complete, such as a complicated case or one involving a business, those cases may get a special hearing time.  Chapter 13 cases are similar, but they are conducted by the Chapter 13 Trustee for the district.  In Kansas, Chapter 13 cerditors’ meetings are 60 minutes long and are assigned 10 cases.  For Missouri, the trustee’s office schedules them for either an hour or 90 minutes.  There may be as many as 30 cases on a Missouri Chapter 13 creditors’ meeting docket, but they are conducted using 2 rooms simultaneously.  Regardless of whether it is Chapter 7 or Chapter 13, in either Kansas or Missouri, a typical consumer bankruptcy case’s Meeting of Creditors will only take 5 to 10 minutes – they are not particularly in depth.

So, what exactly happens at a Meeting of Creditors?  At every Creditors’ Meeting, the trustee will check the photo identification of the debtor and a second piece of identification that shows the complete Social Security Number of the Debtor (think Social Security Card or W-2 form issued by an employer).  The trustee will swear-in the Debtor under oath.  Then the trustee typically asks a set a standard questions.  In Kansas, those questions are actually asked by the Debtor’s attorney rather than the trustee.  Some of the questions are:

  • State your name for the record
  • Are you still located at the same address listed in your petition?
  • Did you sign the documents that were filed with the court?
  • Did you read the documents before you signed them?
  • Are you personally familiar with the information contained in the documents?
  • Is that information true and correct to the best of your knowledge and belief?

There are several more standard questions asked of all debtors, but they are simple questions.

After the standard questions, the trustee may have some questions to ask about the case in particular.  For example, if the Debtor owns a piece of property that cannot be protected by the Debtor with an exemption, the trustee may inquire as to its condition or value to determination of that property to see if it is worth trying to sell to recover some money for the creditors.  An example would be an old ski boat.  If the boat is 20 years old and hasn’t been used in 10 years, and the trailer has flat tires and it has been exposed to the weather so it is in horrible condition, the trustee may simply “abandon” the boat because it doesn’t make economic sense to try to sell it.

Once the trustee is done asking questions, the trustee will ask if there are any creditors that wish to come forward to ask questions of the Debtor.  As stated previously, 95% of the time, there is no creditor present.  However, if there is, then that creditor can take a few minutes to ask questions.  If the creditor takes more than about 10 minutes, the trustee will generally stop the questioning and advise the creditor to schedule a separate deposition, called a “Rule 2004 Examination.”  Once all of the questioning is complete, the trustee will “conclude” the hearing.  In some cases, the trustee will finish by “continuing” the creditors’ meeting, meaning that another meeting will be scheduled for the near future (generally 2 to 4 weeks from then).  Oftentimes this is done when the trustee has requested additional documents from the debtor because the trustee may have more questions to ask one the trustee reviews the additional documents.  The good news is that probably 75% of the time, those meetings are not required, especially when the Debtor is diligent about providing the additional documents right away so that the trustee has ample time to review them before the date of the continued hearing.

At WM Law, we always appear at the Creditors’ Meetings with our clients.  Generally, we ask our clients to arrive 10 minutes early so that we can brief them prior to the meeting.  Then, we meet with them again immediately after the meeting to debrief the meeting and answer any questions.  Also, we will call a day or two before the meeting to remind you that it is coming up, to let you know what to bring and to answer any questions that you may have.  Although these meetings may sound scary, the vast majority of the time, the Meeting of Creditors is simply a formality that our clients must complete and the most common comment we get afterwards is “That wasn’t so bad after all.”

By Jeff Wagoner, W M Law President