Often the only interaction a debtor has with the whole judicial process called bankruptcy comes at the meeting of creditors, sometimes called a “341 Meeting” because it is held pursuant to Section 341 of the Bankruptcy Code. That section mandates that all debtors meet with the trustee shortly after filing bankruptcy. The question in most debtors’ minds is, “what’s going to happen?”
There are several purposes for the meeting of creditors. One is to allow creditors to elect a trustee in any given case. When a case is filed, the United States Trustee’s office for the district in which the bankruptcy is filed appoints an interim trustee for the purpose of conducting the meeting of creditors. At the meeting, any qualified creditors who are present can elect a permanent trustee. In individual cases, that never happens. Even in large bankruptcies it’s the norm for the interim trustee to act as the permanent trustee.
Beyond that, the meeting is an opportunity for the trustee to meet face to face with the each debtor and ask specific questions she might have concerning the debtor’s schedules and statements that he filed in the case. The trustee usually has several standard questions that he asks of everyone, such as, “did you read your schedules and statements before you signed them?” “Did you list all your property and all your creditors?” “Is everything complete and accurate?” “Are there any changes you need to make?” Then, if she has specific questions she will ask those. Oftentimes the trustee asks for additional information by way of a trustee’s directive, which is a written document to the debtor to provide more information. It might be to take a car to an auction company to determine its value. It might be to receive a copy of a divorce decree if property was awarded to an ex-spouse. Whatever it is, the debtor has to comply with the directive or risk losing his discharge.
The other purpose is to allow creditors to appear and ask questions of the debtor. Creditors almost never show up at 341 meetings. The IRS and the State Tax Commission are exceptions if there are unpaid taxes or unfiled tax returns. Sometimes secured creditors, such as the bank on a car loan, will send a representative just to ascertain the whereabouts of the creditor’s collateral, whether it is insured, what kind of condition it is in, and what the debtor’s intentions are. That’s becoming less common, though.
When a 341 notice is given, it will tell the debtor to appear at a certain time on a specific date. The trustee will have 8-10 other debtors appear at the same time, and there will be another calendar of 8-10 people that is scheduled to begin an hour later. As a result, the questioning isn’t very detailed. If the debtor is engaged in business or has complex financial affairs, the trustee might continue (postpone) the meeting to a later date where the debtor and his attorney appear with the trustee for a one-on-one meeting. Such a meeting could last two to four hours or longer.