After a Chapter 7 or Chapter 13 bankruptcy case is filed, the first event that takes place is something called a “First Meeting of Creditors.” It’s also usually the last event that takes place in the bankruptcy. The meeting is sometimes called the “341 hearing” because it’s required by Section 341 of the Bankruptcy Code. The meeting name is misleading because no creditors usually attend. It’s just a meeting where the Chapter 7 or Chapter 13 bankruptcy trustee asks debtors questions about their case. The meeting often lasts no longer than five minutes. Debtors are required to produce a picture id and a document showing their Social Security number. Before the meeting, debtors must provide the trustee their most recent federal and state tax returns and copies of any paystub and bank statement with the date of the filing of their bankruptcy case included.
At the meeting, the trustee primarily asks debtors about their property and any past transfers of property. Trustees generally don’t care about the circumstances that lead to the bankruptcy filing so debtors usually don’t have to worry about explaining why they’re filing bankruptcy.
At a Chapter 7 meeting of creditors the trustee will make sure all the debtor’s property is listed in the bankruptcy schedules and that the fair market value is correctly used. The trustee is looking for property that’s not “exempted” under state or federal law and could be sold and the proceeds distributed to creditors. In the majority of Chapter 7 cases, there’s no property available to a trustee and most debtors never pay anything to keep all their property. The Chapter 7 trustee also asks whether debtors have sold or transferred property in the last four years for less than fair market value. If these transfers occurred a Chapter 7 trustee might be able to “void” the transfer so the money could be recovered and distributed to creditors. Debtors will also be asked about any payments they made to creditors prior to filing bankruptcy, especially payments to family members. These payments can also result in the trustee recovering money for distribution to all creditors.
At a Chapter 13 meeting of creditors, debtors will be asked many of the same kinds of questions as a debtor in Chapter 7, but the Chapter 13 trustee will focus more on the proposed “plan” filed by debtors. That plan describes how much Chapter 13 debtors are proposing to pay and to which creditors.
The bottom line is that this “first meeting of creditors” is nothing for debtors to fear. If questions are answered completely and honestly it will likely be the only event debtors ever need to attend in their bankruptcy case.