Moving along with the bankruptcy alphabet series, this is about the letter “E”, and the topic is the dreaded Examination of the Debtor pursuant to section 341(a) of the Bankruptcy Code.    Other names for this examination are the “Meeting of Creditors”  “Trustee’s Meeting” and “341(a) Meeting.”

The meeting is slightly different in each bankruptcy chapter, but in most cases it is a very ministerial and quick examination.  It also varies from district to district, so the questions that are asked may be somewhat different in Rhode Island than, for example, in California.

Myths About the Bankruptcy Examination/Meeting

Creditors do not need to be present at this meeting, despite it being referred to often as the “meeting of creditors.”  In fact, creditors almost never attend the meeting because there is rarely any need.   Any questions the creditors might be able to ask of the debtor are very limited in scope.  It is the Trustee who does the questioning.

The Trustee is NOT the judge.   The Trustee’s job is to liquidate and/or disburse assets of the bankruptcy estate to creditors, and ensure certain information is accurate.  The Trustee can and will refer cases that look fraudulent or that haven’t complied with rules and procedures to the U.S. Dept. of Justice for possible prosecution (or to deny discharge, or simply dismiss the case), but the Trustee makes no determination as to whether or not a discharge is entered.

Chapter 7 Meeting of Creditors

In Chapter 7 cases the Trustee’s job is to ensure the debtor(s) is (are) who they say they are, by verifying their driver’s license (photo ID) and social security number.  Additionally, the Trustee wants to make sure everything in the bankruptcy papers is accurate, and will ask whether the debtor read the papers before signing them.

Usually the debtor is asked to recite their address and other personal information from memory.  Other than that, the only other questions the Trustee’s usually have arise from poorly drafted petitions by attorneys.  In other words, if the attorney has done their job, then 99% of questions a Trustee would have (such as about the value of assets, or transfers of property, etc.) will be listed and explained clearly in the bankruptcy papers.

For most of my clients, this meeting takes less than 2 minutes.  But I have seen others get grilled for a while.  The Trustee’s job in a Chapter 7 is to see if there are any assets available to sell or liquidate in order to pay the creditors.  Thus, the focus is going to be on anything that might lead to that goal.

Again, if presented properly by the attorney, and all applicable  bankruptcy-related exemptions have been taken to protect the assets, there’s usually very little for the trustee to ask.    Proper preparation by an experienced bankruptcy attorney is the key to a smooth and trouble-free debtor’s examination.

 Chapter 13 Meeting of Creditors

In a Chapter 13 case, all the same questions are asked as in Chapter 7 above, but also a few more.  In a Chapter 13, since the Trustee is not concerned about liquidating assets, the questions tend to focus much more on income and expenses, and the overall plan of repayment.  Thus, the meeting can take a bit longer than in Chapter 7, but again if everything is presented properly and all the t’s are crossed and i’s dotted, they usually go very smoothly and quickly.

Proper attorney presentation is the key

The Debtor’s examination in bankruptcy is usually not a big deal.  It is very short.  The questions are easy.  And creditors rarely, if ever, show up.   But as explained above, the key to this being smooth and easy is the quality with which the bankruptcy petition and schedules are prepared and presented to the Trustee, along with other required  documents.   This is where having a quality, experienced bankruptcy attorney can make a HUGE difference in how smoothly the meeting goes, as well as how successful your entire case will be.

Other Examinations of the Debtor

Just to be complete, any creditor or party-in-interest may apply to the bankruptcy court to examine the debtor much more fully, pursuant to Federal Rule of Bankruptcy Procedure 2004.   This is essentially a deposition which can last for a day or more going through any and all information listed in the bankruptcy petition, schedules and statement of financial affairs, and anything pertaining to the debtor’s finances going back several years.   The ability of creditors to engage in this more comprehensive examination is one of the reasons t hey are so limited at the “trustee’s meeting” from questioning the debtor at length.

Not to worry though, in most run-of-the-mill cases,  it is very unusual (absent evidence of fraud or other bad faith in the filing) for a creditor or other party to make such a request under F.R.B.P. 2004.

This article is part of my bankruptcy alphabet series


Photo courtesy of Capture Queen