What Happens at a Chapter 7 Bankruptcy Meeting of Creditors?

Everyone who files for Chapter 7 bankruptcy—both individuals and businesses alike—must attend a hearing called the 341 meeting of creditors. At the hearing, the bankruptcy trustee—the person responsible for overseeing your case—will verify your identity and ask questions about your bankruptcy filing under oath. Your creditors will also have the opportunity to ask you questions about your financial affairs and the information in your bankruptcy papers (but rarely do). Read on to learn more about what happens at a Chapter 7 meeting of creditors.

What Is the Purpose of the Chapter 7 Meeting of Creditors?

The Chapter 7 meeting of creditors (also called the 341 hearing) is a meeting at which the bankruptcy trustee and your creditors get to ask you questions under oath about your bankruptcy petition and the documents you're required to provide the trustee. The creditors' meeting is essentially a hearing used to verify that the information contained in your bankruptcy papers is accurate and complete.

You'll also be required to prove your identity by presenting two forms of identification—usually a driver's license (or a military identification card or passport) and your social security card. These steps prevent and identify fraudulent filings.

Who Will Be at Your Chapter 7 Meeting of Creditors?

There won't be a judge presiding over the meeting of creditors. In fact, most Chapter 7 debtors don't see a judge at any point throughout the case. Instead, the Chapter 7 bankruptcy trustee appointed in your matter will conduct your meeting of creditors.

The trustee will likely schedule up to ten other bankruptcy filers for the same hour, so other Chapter 7 debtors will observe your hearing while waiting for their case to be called. You'll want to check the calendar to see where you fall on the schedule. If you aren't first, you'll be able to observe the process ahead of time (most trustees will follow the same pattern in each case).

All of your creditors are invited to attend your meeting of creditors. However, they rarely come. This is because creditors have a very limited time to ask questions and will usually not benefit from coming to the creditors' meeting unless they suspect you are hiding assets or committing bankruptcy fraud.

How Will I Find Out About the Meeting of Creditors?

The court will send a notice of the 341 meeting of creditors to the address listed on your bankruptcy petition. The 341 notice tells you the date, time, and place of the meeting. (You can view a blank copy of the form by visiting the U.S. Court's bankruptcy website.)

The notice provides you with other relevant information, too, so it's a good idea to keep it in a handy place. For instance, you'll also find the following:

• your bankruptcy filing date and case number, and
• the bankruptcy trustee's name and contact information.

You'll need your bankruptcy case number to complete your debtor education course (the class you must take after filing for bankruptcy). You'll also provide the case number, along with the filing date, to any creditor that might call. The information will allow the creditor to verify the bankruptcy. Once done, it's unlikely that the creditor will call again.

Additionally, you'll use the trustee's contact information to forward the 521 bankruptcy documents (paycheck stubs, bank statements, and tax returns) that you're required to provide to the trustee before the 341 meeting of creditors.

The notice provides important deadline dates for your creditors, as well. For instance, a creditor will know when it must object to:

• your discharge (the order that wipes out qualifying debt), and
• your bankruptcy exemptions (the property you claim you're allowed to keep).

The court will include another deadline date if your case is an asset case (meaning that there will be money to distribute to creditors): The last day that a creditor can file a “proof of claim” form. A creditor uses the proof of claim to prove that it's entitled to payment. On the form, the creditor will list the type of debt, the date incurred, and the total amount owed, along with other information. After the deadline expires, the trustee will examine each claim before dispersing payment. You'll have the opportunity to review and object to claims, too.

The Chapter 7 Bankruptcy Trustee Will Examine You Under Oath

When your case is called, you will go up to the trustee's desk to be examined under oath. Before your examination can begin, you will provide your identification and proof of social security number to the trustee.

The Chapter 7 bankruptcy trustee's role at the meeting of creditors is to verify the accuracy of the information disclosed in your bankruptcy papers. Since a Chapter 7 trustee is authorized to sell your nonexempt assets (the property you can't keep) to pay your creditors, most questions will usually involve your assets. If you're represented, your bankruptcy lawyer will have a good idea about the areas the trustee will cover beforehand and will likely attempt to resolve any issues before the meeting.

Your Creditors Can Also Examine You

When you file for Chapter 7 bankruptcy, all of your creditors are notified of and invited to attend your meeting of creditors. If a creditor chooses to come to your hearing, it can examine you under oath as well. However, since time is limited, creditors aren't allowed to conduct a lengthy examination at the creditors' meeting. Typically, creditors can ask you about the nature and location of your assets and other financial information.

You should be aware that if a creditor shows up, the creditor is likely assessing whether it makes sense to bring an action against you to dispute the discharge of the creditor's debt. The creditor will use any evidence gathered at the meeting to its advantage.

In most cases, a debtor isn't surprised when a particular creditor appears. For instance, it's common for disgruntled business partners and ex-spouses to attend the hearing. A creditor with a secured claim—a debt that's guaranteed by collateral, such as a car—or a creditor who believes you breached the presumption of fraud rules by purchasing luxury goods on credit shortly before the filing might send a lawyer to appear, too. In the latter cases, the creditor's representative will likely try to settle the matter in the hallway after the meeting.

Concluding the Meeting of Creditors

The bankruptcy trustee will conclude the meeting after asking questions if no further information or documentation is required from you. If the trustee concludes your hearing, you don't have to come to another hearing. You'll receive your discharge after meeting all other requirements.

However, if the trustee requires further information—or wants to give a creditor additional time to examine you—the trustee will usually set another hearing date to allow you time. If all that is required is additional documentation, the trustee might take the continued meeting off the calendar if you provide the information promptly (and it answers all of the trustee's questions). But, if the trustee has more questions, you'll have to go to the next hearing.