Bankruptcy: The Meeting of Creditors. What Did The Trustee Say?

01 Jan Bankruptcy: The Meeting of Creditors. What Did The Trustee Say?

Every person who files a bankruptcy is required to attend a Meeting of Creditors.

The meeting, also called a Section 341(a) meeting, is held by a Trustee.

The Trustee is an individual, usually an attorney or a certfied public account, who is responsible for reviewing the debtor’s bankruptcy to see if there are any assets available to pay the debt owed to unsecured creditors.

The meeting is usually scheduled to occur about one month after the bankruptcy is filed. Attendance is mandatory, and failure to attend can result in dismissal of the bankruptcy.

At the end of the meeting,the Trustee will announce what he plans to do with the debtor’s property.

This is usually referred to as a “Statement of Intentions”.

Unfortunately, the Statement of Intentions tends to be in Legalese, and debtors frequently leave the meeting uncertain of what the Trustee intends to do with their property.

The following are three phrases you may hear and what they mean.

1) THE PROPERTY IS EXEMPT.

Property that is exempt cannot be sold (liquidated) by the trustee and is retained by the debtor.

2) THE PROPERTY IS UNWORTHY OF ADMINISTRATION.

Property that is unworthy of administration is property that, while not exempt, has little or no equity value. Simply put, it is not worth the time, effort and cost for the trustee to seize the item of property and sell it. This property is usually abandoned by the trustee and is also retained by the debtor.

3) THE PROPERTY IS ENCUMBERED. (OR THE PROPERTY IS ENCUMBERED BEYOND ITS WORTH)

An encumbrance is a secured debt such as a mortgage or a car loan. For most debtors the encumbrance also makes the property unworthy of administration.

Finally, don’t be afraid to ask questions if you hear something said at the trustee’s meeting that you don’t understand. Bankruptcy lawyers and trustees use these terms on a regular basis: you don’t.

However, understanding the terms used in bankruptcy as well as the process are important parts of having a successful case.

An experienced bankruptcy attorney can guide you through the entire process and will be able to bring the legalese down to earth.

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I've been a consumer bankruptcy lawyer for nearly 25 years. Since that time I have helped many people resolve their financial problems. I have been practicing law since 1986 and I am licensed to practice in all state and federal courts in the State of Louisiana. Because I am a sole practitioner, you know that your debt matters are being handled by me personally. In addition to my work with consumers, I am also frequently asked to speak at local seminars on bankruptcy law. I am member of the following organizations: • Louisiana Bar Association • National Association of Consumer Bankruptcy Attorneys • Bankruptcy Law Network My office is located at: 3920 General DeGaulle Drive, New Orleans, LA 70114 Telephone: (504) 368-4101

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