23 Aug The Bankruptcy Meeting Of Creditors – Preparation Leads To Smooth Sailing
Cathy Moran’s recent article about the importance of the meeting of creditors drove home the point that the thorough and honest preparation of your court documents is crucial. The most important part of the Meeting of Creditors, however, is just making sure you show up. Full disclosure in the schedules and statements filed with the court will usually lead to a smooth Meeting of Creditors.
However, like Cathy’s clients, mine will obsess over the Meeting of Creditors no matter what I say. So here’s an idea of what to expect. In a Chapter 7 or Chapter 13 bankruptcy case, the trustee will preside at the Meeting of Creditors in the case. Though questions may vary from case to case and trustee to trustee, most trustees will ask the same series of basic questions of each and every debtor. After putting the debtor (or debtors) under oath, the trustee will ask whether the debtor read and signed the paperwork filed with the court, and whether any information needs to be changed or added to make the information accurate. The trustees will ask whether you have read the US Trustee Information Sheet provided by the office of the United States Trustee. Most trustees will ask about your current employer, and ask you to confirm under oath that you have disclosed all of your income for the six months before bankruptcy, and provided copies of payment advices for all income in the 60 days before bankruptcy. Most trustees will also ask whether you have sold, given away, or otherwise transferred any property in the last few years–the length of time may vary, depending on statutes of limitations in differing jurisdictions. Most trustees will also ask about whether tax returns have been filed, and what if any tax refunds have been received. Some also want to know how those refunds were spent.
Trustees will also ask questions specific to your case, depending on what your situation is. If you are self-employed, or if you have operated a business in the past, the trustee will almost certainly have questions about that. Trustees in my district always ask for the debtor’s opinion of the value of any real estate, and sometimes ask the same question about other assets
Many of my clients are surprised that the trustee does not ask them to explain how they ended up filing bankruptcy, but most trustees are focused on what can be done to remedy the situation, not what went wrong. And frankly, after doing it for a while, trustees can generally figure out what when wrong. There are some exceptions. For example, if the amount of debt is particularly high, the trustee may ask how the debts were incurred. Usually the explanation is simple–a business failed, credit cards were used to fund a business, or to pay medical bills. Often credit card balances are not the result of charges, but of using one credit card to pay another, or of transferring balances to try and retain better interest rates. A simple explanation is usually sufficient, but that is one of the questions that makes clients the most nervous.
Another surprise to many debtors is how brief the meeting actually is. Again, where I practice, Meetings of Creditors are usually scheduled for 5 minutes each. (It could be longer, or, believe it or not, shorter.) Talk to your attorney about what to expect, and try not to worry. A lawyer friend of mine boasts, tongue firmly in cheek, that he has “never lost a Meeting of Creditors.”
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