Appearance by Chapter 7 Debtor at Meeting of Creditors (NJ)

Posted by Kevin on September 21, 2009 under Bankruptcy Blog | Be the First to Comment

Usually during the initial consultation, a Chapter 7 debtor will ask, with some trepidation, if he or she is required to appear in court. The answer is that most Chapter 7 debtors will never see the inside of a court room. However, every Chapter 7 debtor must attend a 341(a) meeting.

Section 341(a) of the Bankruptcy Code states that within a reasonable time after the filing of the bankruptcy petition, the United States Trustee shall convene and preside at a meeting of creditors. In New Jersey, the Office of the United States Trustee has established a panel of trustees to administer Chapter 7 cases. Almost all of the so-called “panel” trustees are attorneys or accountants who are familiar with bankruptcy. The United States Trustee assigns upwards of 70 cases to each panel trustee in a given month. It is the job of the panel trustee to conduct the 341(a) meetings for each debtor.

Prior to the meeting the debtor must provide his tax return to the trustee. At the meeting, the debtor must produce a photo ID (usually a driver’s license) and a social security card. If the debtor does not bring these two items of identification, the 341(a) meeting is usually adjourned, and the debtor’s attorney is required to send a written notice to all creditors of the adjourned date (for which the debtor usually will be charged an additional fee).

The debtor is required to bring his latest pay stub (called a payment advice), and may be required to bring documentation to prove his expenses if requested by the trustee. In addition, the debtor is required to produce his latest bank statement(s) and brokerage statement(s) if any. Although not required, a debtor who owns real estate should provide a copy of a comparative market analysis and a mortgage payout statement. This will allow the trustee to determine whether any equity exists. If the debtor does not speak English well, it is advisable to bring a translator and to notify the trustee in advance.

Although called a meeting of creditors, it is rare for a creditor to attend a meeting, and even more rare for a creditor to question the debtor. In the cases that I have seen a creditor attend and question a debtor, it is usually because an unsophisticated creditor believes that he is required to appear, or a creditor is trying to find out the location of collateral. If the creditor is not represented by an attorney, the exchange between the debtor and creditor can get a bit unpleasant because they tend to know each other. Therefore, the trustee usually limits questioning and advices the creditor to retain counsel.

For the most part, the trustee conducts the questioning of the debtor. In most cases, the questioning lasts for less than 5 minutes. In all cases, the trustee confirms that the debtor signed the petition and other required documents, and reviewed them for accuracy. He asks about assets, income, expenses, possible lawsuits, domestic support obligations, transfers of property, and why the debtor got into financial trouble. More time will be spent if the debtor sold real property within 3 years of the filing, or if the debtor had his own business.

I have been involved in many 341(a) meetings both as a trustee and as debtor’s counsel. No matter what you say to a client, he is going to be nervous about the 341(a) meeting. The debtor is worried that he may freeze, that he may forget something important, that he will make a misstatement, that the trustee will say something that will embarrass him, that he will not get his discharge. Being questioned under oath by a trustee, who certainly is not your friend, is enough to make anyone nervous.

Besides preparing my clients with sample questions, I ask them to show up for the meeting early. As stated above, in today’s economic environment, panel trustees may have upwards of 70 cases per month for which they must conduct 341(a) meetings. Trustees will usually schedule 30-40 meetings for a single day beginning at 9 AM and going until 3 or 4 PM. If the debtor gets to the hearing room early, he can listen to the questions that the trustee is asking the other debtors. They tend to be the same questions. He can also see that the rest of the debtors in the room look like him, sound like him and are in the same boat. This tends to calm down the debtor. Finally, I stress to my clients that I am there to protect them- that’s my job.

Most 341(a) meetings are closed by the trustee at the end of questioning. In some cases, the debtor may be required to provide some additional documentation. It is advisable to meet all reasonable requests of the trustee as soon as possible. The quicker the 341(a) meeting is closed, the quicker the debtor will receive his discharge- and that is the goal.

For further information, please refer to the following video:

Meeting of Creditors in personal bankruptcy cases

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