The “Meeting of Creditors” in a Chapter 7 Case

No creditors come to most Chapter 7 “meetings of creditors,” and seldom more than one or two. But this short meeting is still very important.

In virtually every Chapter 7 “straight bankruptcy” case, you never go to court. But you DO go to a formal meeting, usually lasting 5 to 15 minutes, one that you absolutely have to attend. If you don’t your case gets thrown out. (In extreme situations you and your bankruptcy lawyer may be able make special prior arrangements if you can’t make it, but it’s highly discouraged.)

This meeting is with your Chapter 7 trustee, but it is misleadingly called the “meeting of creditors.” It is sometimes referred to as the “341 hearing,” named after the Section 341 of the Bankruptcy Code which addresses it. If you understand what this meeting is about you won’t worry about it unnecessarily and will have a successful one.

It’s NOT What You Might Fear

This meeting is not one in which all your creditors attack you for filing bankruptcy. Although all creditors are given the opportunity to be there, most of the time most of them don’t go. As we said in the first sentence, often none of your creditors will go to it.

Why not? Because usually there is no reason for them to attend. The grounds for objecting to bankruptcy are very limited so most creditors can’t object. So they don’t waste their time.

The creditors that tend to be there are those which have collateral—such as your vehicle or furniture creditors. With them it’s actually often helpful to you that they are there, to make appropriate arrangements for the collateral. (Usually this is to do whatever you’ve decided to do about keeping or surrendering the collateral.) But with even these secured creditors usually these arrangements are handled more efficiently by phone or email so they don’t have to go to the meeting.

Troublemaking Creditors

Again, any creditor CAN be at the “meeting of creditors.” So if you have one who is personally angry with you—like an ex-spouse—he or she might attend. Any creditor can ask pertinent questions, including ones that COULD be dangerous if you’ve been engaged in any fraud or other illegal behavior. That’s not common, but be sure to talk with your lawyer well in advance if you have any concerns. He or she will warn you if your circumstances raise any red flags, and will prepare you for the meeting.

Creditors can ask relevant questions. But the bankruptcy trustee in charge of the meeting usually won’t have the time or patience for irrelevant discussion. Your meeting will be just one of many packed into a tight schedule, about three or four cases every half-hour. That means each one lasts about 7 to 10 minutes. The trustee can’t get too behind on the meeting calendar.

Rarely, if there isn’t enough time for legitimate questions a second meeting of creditors can be scheduled. Or the conversation with a creditor might continue informally outside the hearing.

But, again, most meetings of creditors are quite short and uneventful. The biggest surprise for most Chapter 7 debtors is when there are no surprises and they can stop worrying about it.

Not a Court Hearing

There is one person who is NOT allowed to be at the meeting: the bankruptcy judge. As the Bankruptcy Code says: “The court may not preside at, and may not attend, any meeting under this [341] section… .” So the meeting is definitely not a court hearing.

Conclusion

At most Chapter 7 meeting of creditors there are no creditors, or at most one or two. It’s rare that a creditor will ask tough questions, but it can happen. Be sure to share any concerns with your lawyer so you won’t worry unnecessarily, and so you are prepared.