Tuesday, September 11, 2012

Chapter 7 Bankruptcy: 341 Creditor's Meeting

Ever sit outside of the principal's office waiting to get called in? Remember the sweaty palms and crazy escape plans that you have created in your mind?  That's kind of what it feels like waiting for your case to be called before the Bankruptcy Trustee.  Today I started my day waiting for my client's case to be called before the Bankruptcy Trustee.

It was almost like a cattle call because all of the filers and their attorney's are called into a big room to wait to learn their "fate."  When entering the room, everyone is required to pick up a few different forms depending on whether or not they are represented.  Most people were so nervous that they picked up every single form and held on to it for dear life, whether they needed it or not.  Then they get to sit and wait for their case to be called. Then just like waiting to be called into principal's office, most hang on the Trustee's every word, waiting to see if his lips form the letters that make up their name.  Then he proudly announces that he has just competed the 10:00 am calendar (at 11:25) and just as everyone's heart takes a dive into their stomach because they weren't called, they realize that they are on the 11:00 am calendar.

As everyone catches their breath from the near panic attack, I notice a lot of people sizing the trustee up a little.  He seems to ask pretty routine questions for the past three cases and I could hear my client's sighing and probably thinking, "I can do this."  Just as the room's confidence is building, CRASH!!!! goes all of their hopes of  things being "easy" as one debtor is dragged upstairs to meet with someone from the U.S. Trustee's Office with three or more creditors in tow.  Oh great, here comes the panic mode again.  However, soon the panic is drowned out by the trustee scolding someone in the room for talking by saying "Is your conversation more important than what we have going on up here?" Of course the offending parties become aware of their "err" and stop talking.

As we were watching the hearings, several more cases were called.  Debtors and attorneys were scolded alike, but that didn't stop more people from taking the rightful place at the "table."  Some required interpreters, which was promptly set up by the Trustee's call to a court provided phone interpreter.  Some had all of their documents and some had...well, um...none.  Some with and without lawyers understood the initial questionnaire and some said that they didn't consider a repossession a transfer of title or transfer of property (but this did not go over well with the trustee).  While others still were so nervous that they could not remember how long they had been in California that when asked how long they answered their whole lives.  The trustee informed the debtors that "all my life" needed to be measured in years, they each answered 25 years and 30 years.  This is only strange if one has a picture of these two debtor's being in their mid sixties or early 70's.

I know that most of that was scary, but I wrote all of that to get the scary stuff out of the way.  Shake it off!  In reality, most people get themselves way to worked up about the 341 Meeting of the Creditors.  As most posts on this topic already explain, in California, most creditors don't show up.  However if a creditor does show up, DON'T PANIC, they will only ask questions, they won't cause you any physical harm (if you have an attorney, ask them about dealing with this issue).  In helping my clients to prepare for their 341 Creditor's Meeting, I give them the following tips:
  • Take a deep breath;
  • Don't Panic;
  • Bring your driver's license and social security cards (ORIGINALS);
  • Review the petition before the hearing and let your attorney know about discrepancies;
  • Locate, pick up and complete mandatory forms upon arriving at the Bankruptcy proceeding;
  • Make sure that the trustee has a copy of the most current year's income taxes;
  • Pay attention to the Trustee's style i.e. If he doesn't like whispering in the audience, don't whisper;
  • Speak up when answering the Trustee's question because you are being recorded;
  • Wear business casual clothing;
  • Most importantly, bring everything your lawyer has asked you to bring.
Do not allow your upcoming 341 hearing to cause you to lose sleep because it really isn't as bad as you are imagining.  Just remember to breathe and follow the instructions that your attorney provides and if you don't have an attorney, make sure that you have prepared your materials according to the instructions provided by the bankruptcy court.

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