If you have filed for bankruptcy in California or anywhere in Los Angeles, California, you must attend the bankruptcy meeting of creditors. The meeting is required under 11 U.S. Code 341; hence, it is alternatively called the 341 hearing.

The court clerk schedules your 341 hearing and other essential events, dates, and deadlines shortly after you file your bankruptcy case. The clerk will then notify you and any other party listed under the bankruptcy petition of the place and time of the hearing. The hearing will generally take place in the county where you reside.

Like many bankruptcy debtors, you may wonder what to expect at your 341 hearing. Luckily, most debtors easily navigate the meeting and avoid related problems. With adequate preparation, you can as well. You can start preparing for your meeting by reading this blog to learn what to anticipate.

The Purpose Of The 341 Meeting

A 341 hearing is when a debtor meets with the bankruptcy trustee selected to oversee their case. Before the court grants a debtor their request to discharge qualifying debts, it must verify whether it is the debtor who filed their bankruptcy case and whether they are eligible for financial relief, and this happens during the bankruptcy meeting of creditors.

The bankruptcy trustee carries out procedural requirements at this meeting and resolves outstanding questions. They will check the debtor's identification details and ask them various questions under oath about their bankruptcy paperwork, liabilities, assets, and other issues regarding their bankruptcy situation.

The Role of the Bankruptcy Trustee In The Hearing

During the 341 hearing, the bankruptcy trustee has to verify the accuracy of your paperwork, verify your identity, and ensure all of your creditors are paid to the greatest extent possible. They will assess your property and assets and check whether you reported your income correctly.

They will also check for any unreported property and income sources to pursue to obtain more cash for your lenders. Lastly, the bank trustee will check for any indications suggesting bankruptcy fraud.

If you filed for bankruptcy under Chapter 7, the bankruptcy trustee may pursue your claims on your behalf to seek recovery for the lenders. But if you filed for Chapter 13 bankruptcy, the trustee would not pursue your claims on your behalf, making it your responsibility to fund or litigate these kinds of ventures.

The bankruptcy trustee under Chapter 13 and Chapter 7 has more responsibilities, as we shall see later. The trustee under Chapter 7 will sell the assets you cannot protect with an exemption and divide the proceeds among your creditors. The trustee under Chapter 13 will assess your proposed repayment plan's feasibility. Should the judge approve your plan, the trustee will divide your monthly payment among your creditors.

How Do You Prepare for the 341 Hearing?

Before you attend your 341 meeting, you must double-check your bankruptcy request carefully. Should you discover a wrong entry or see you missed some details when writing the petition, you should, if possible, file an amendment before the meeting or prepare to share the problem with the trustee during the meeting.

A prevalent problem that can arise is failure to write your name precisely as it is reflected on your passport, government ID card, or license. In that case, you will provide any of these identification documents accompanied by evidence of your Social Security number at the start of the meeting. If they do not match, you should amend your bankruptcy petition and may have to return on another date.

What to Carry to the Meeting

You will often have given the trustee your verification documents before the hearing, including income tax returns, paycheck stubs, and retirement and bank statements. Some trustees request additional documents. If you have not already sent them the requested additional documents, carry them to the hearing. And in some jurisdictions, you will file all the necessary documents in court. You need not carry many documents to the meeting other than.

  • Your Social Security card or other evidence of your Social Security number.
  • An approved form of photo ID.
  • Any other documents reflecting financial changes since you filed your bankruptcy petition.

You will also likely need copies of your bankruptcy petition and paperwork to bring to the meeting for your reference or any other things the trustee says you should carry. Your attorney will likely have all your bankruptcy-related documents; hence, you will not have to carry anything apart from your social security number and photo ID. The lawyer will advise whether you need to bring anything further.

341 Meeting Logistics

Parking around courthouses or court facilities can be challenging. Planning for parking in advance is good, particularly if you will attend the meeting in person. You could arrive about 15 minutes ahead of the meeting time. Many trustees may hold hearings simultaneously; use the available spare time to locate the right venue for your meeting.

You will want to check the calendar available outside the meeting venue door; the bankruptcy trustee will schedule approximately ten cases within the same hour; thus, you want to know where you are in line.

A judge will not be present at the hearing. The bankruptcy trustee will preside over the meeting. The bankruptcy court invites creditors to attend, too, though in most cases, lenders do not appear. The bankruptcy trustee will swear you in and ask numerous questions while you are under oath.

Should your creditors attend the hearing, they can also ask about financial matters. The bankruptcy trustee will end the hearing if they agree with your answers. If not, they will continue the hearing until some other date. A continuance is often rare if you promptly provide all the necessary documents.

What to Expect at the Meeting

You will appear in person or virtually, depending on whether or not the bankruptcy court is complying with the social distancing rules. Most trustees start by taking a roll call and expounding on the process. Once the trustee calls out your name, you will sit at a table before the meeting venue, submit your ID, and swear to answer questions truthfully. You will also likely read a bankruptcy pamphlet before you are called and fill out a form if you must pay any domestic support obligations, like alimony.

Most of the trustee’s questions will require a ‘yes’ or ‘no’ answer. Respond with ‘yes’ or ‘no’ and speak clearly. You will be recorded. Ensure to wait until the trustee finishes posing the question before answering, even if you know what the answer will be before they finish asking.

How Long Does The Hearing Take?

You will be among the approximately ten debtors scheduled for the set hour. Things will move faster once the trustee calls out your case. They will ask numerous routine questions before inquiring about matters or issues needing further explanation.

Questions from your creditors can be brief too. If they are not, the bankruptcy trustee will continue the hearing for another day to allow for more questioning. Mostly, these meetings only go up to ten minutes.

Standard Questions During the 341 Hearing

The bankruptcy trustee asks numerous routine questions that a trustee should ask any debtor. They will then proceed to ask any specific questions emerging from your case. Many bankruptcy lawyers can foretell the trustee’s questions and elucidate the situation beforehand—to the trustee and you. Standard questions from the trustee include the following:

  • Did you crosscheck your bankruptcy schedules and petition before filing them in court?
  • Did you list all your assets?
  • Are all the details in the bankruptcy documents correct and true, as far as you can tell?
  • Did you include all your lenders?
  • Have you ever declared bankruptcy before?
  • Are you mandated to pay domestic-related support obligations like child support or alimony?
  • Has any information changed since declaring bankruptcy?
  • Does anyone owe you cash?
  • Have you made any payments to your lender exceeding six hundred dollars in aggregate in the past year?
  • Is there currently a lawsuit against you?
  • Have you filed all the tax returns that are due?

One advantage of being among the last people on the calendar is that you will know what questions the bankruptcy trustee will ask.

Any recent property transfers can raise a red flag and trigger further questioning. For example, if you transfer or give away property within 24 months of declaring bankruptcy, you must disclose it on your statement of financial affairs form. Based on the specific facts surrounding the transfer and whether you meant to defraud your lenders, the trustee may object to your debt discharge, avoid the transfer and retrieve the asset, or refer your case to the United States Trustee for criminal investigation.

Instances In Which Your Creditors Attend the 341 Hearing

Even though your lenders will be notified of the hearing, most will not appear. The following are some of the instances in which your creditor may appear:

  • The lender is a hostile spouse, ex-business partner, or another person worried about not being paid.
  • The lender is looking for information regarding inaccurate information on your credit application, for example, your income amount.
  • The lender wishes to inquire about your recent credit card purchases or cash advances.

Most lenders use the hearing as a discovery tool. They will ask questions regarding your transactions with them to establish whether objecting to the discharge of your debt will be worth it. If the lender has a valid issue, they will probably be open to settling the problem without litigation.

If the issue seems serious, the bankruptcy trustee may continue the hearing to give the lender extra questioning time. A trustee is likely to allow additional time if the creditors' questions would disclose hidden assets since the more cash they distribute, the more they are paid.

The following are some of the reasons a lender may object to your debt discharge:

  • You abused the bankruptcy system or committed fraud in your bankruptcy case—should you lie on your bankruptcy paperwork, hide assets, declare bankruptcy only to delay lenders, or abuse the bankruptcy system in any other way, the trustee can request the judge to turn down your request to discharge all your debts. Engaging in bankruptcy fraud is a severe crime that can lead to the loss of your debt discharge, imprisonment, and fines.
  • You paid nondischargeable debts using your credit card—using a credit card to repay nondischargeable debts, like recently incurred taxes or a student loan, and wiping out the credit card in bankruptcy may be tempting. Generally, however, it is not allowed. Under Chapter 7, those debt transfers are not dischargeable. But you may successfully discharge credit card balances you suffered when repaying a tax debt under Chapter 13.
  • You suffered debts through false pretenses, misinterpretation, or fraud—fraudulent debts are non-dischargeable. If you used fraud, misinterpretation, or false pretenses to acquire credit, the lender may have grounds to object to your debt discharge. Examples of fraud include buying items on credit, intending not to repay the debt, and misinterpreting income on a credit application.
  • You took cash advances before declaring bankruptcy—if you took cash advances from a credit card or any other consumer credit plan totaling more than $1,100 70 days before filing for bankruptcy, the cash advances are presumed to be non-dischargeable.
  • You purchased luxury goods on credit before declaring yourself bankrupt—if you purchased luxury goods or services (things you do not need for yourself or your dependents' support, like expensive electronics or vacations) totaling more than eight hundred dollars from one creditor within ninety days of declaring bankruptcy, your debt is presumed to be nondischargeable too. The presumption of fraud shifts the burden to you to prove you are eligible for a discharge as it was a necessary expense, not a luxury service or good.

The Difference Between Chapter 13 and Chapter 7 Creditor Meetings

Both meetings begin similarly. The trustee checks your ID and asks mandatory questions. The trustees in both chapters also look for means to raise the lenders' payday as they take a given fraction of the cash they recover.

However, Chapters 13 and 7 function differently since they give filers different benefits. Therefore, trustees in Chapters 13 and 7 naturally assess cases slightly differently.

The bankruptcy trustee in Chapter 7 has two responsibilities: check that you are eligible to file for bankruptcy under the chapter and sell assets you cannot protect with an exemption. The trustee will probably begin by checking your budget.

They will, for example, subtract your total monthly expenses from your overall income to determine if there is enough money to pay your lenders. If some expenses are too high, they may need you to submit receipts substantiating that you spent the reflected amount. If the trustee determines you have enough cash to pay lenders, they suggest that the court transfer your case from Chapter 7 to Chapter 13 bankruptcy.

If your overall budget is accurate and you are eligible to discharge your debts, the bankruptcy trustee will evaluate your assets. Essentially, their motivation is finding and selling assets you cannot protect with an exemption. For example, once the trustee investigates your filing, they might discover your assets are worth much more money than you alleged or that you concealed a property that should have been included in your bankruptcy case.

The trustee in Chapter 13 will also check for unreasonable or exaggerated expenses. If they question the necessity of a given expense, for example, $1000 monthly for food, you would likely have to pay $1000 more to the lenders through your repayment plan.

Additionally, although a trustee in Chapter 13 will not sell your assets, they will still review the value you assigned them. That is because you should pay your lenders at least as much as they would receive under a Chapter 7 bankruptcy case or a value equivalent to your non-exempt property.

Generally, the trustee evaluates the practicability of your repayment plan and discusses any issues at the hearing. They will divide monthly payments among creditors if the bankruptcy judge approves the repayment plan during the confirmation proceeding.

What Happens After the Meeting?

If you filed your bankruptcy under Chapter 7, you must undergo debtor education and file your certificate in court upon completion. Most people who have declared Chapter 7 bankruptcy receive a debt discharge about sixty days from the date the hearing ended. 

If you filed for bankruptcy under Chapter 13, the next action would be to have the court approve your repayment plan. Once the plan is approved, you can continue paying your creditors. If the court does not approve your plan, you will receive the funds back, with various exceptions.

Before completing your repayment plan, you must also undergo debtor education and file your certificate in court. Once you complete all requirements, the court will erase or discharge eligible outstanding balances.

Find an Experienced Bankruptcy Attorney Near Me

When considering bankruptcy, looking at the bigger picture can be overwhelming. That is why you want to consult a bankruptcy attorney who can assist you in navigating this process so you can feel more comfortable. A bankruptcy meeting of creditors is just one of the steps you must sail through when declaring bankruptcy.

At the Los Angeles Bankruptcy Attorney, we will be there for you when you need us most. If you believe declaring bankruptcy is the right move or are having trouble deciding whether it is the ideal option, we provide a cost-free consultation to assist you in learning more about what happens when you choose the bankruptcy path. Call us at 424-285-5525 for more details.