The Chapter 13 Meeting of Creditors - What to Expect

Have you recently filed Chapter 13 Bankruptcy? Do you have an upcoming Meeting of Creditors hearing? Many Chapter 13 debtors get a little nervous about the meeting since they are not exactly sure what to expect. So, I decided to take some notes on exactly what happens during the meeting for the benefit of those who have an upcoming meeting. Of course, I knew what was going to happen since I've done these hearings before for my clients, but I wanted to note the exact words this hearing officer (trustee) was using and the exact questions she was asking. Sometimes, clients have visions that creditors are going to sit there and hammer them all day with questions or something. This is just not the case, in my experience. Let's start with some basics.

What is the Meeting of Creditors?

The Meeting of Creditors is a hearing that is held 20 to 40 days after the bankruptcy petition is filed. The debtor must attend this meeting, at which creditors may appear and ask questions regarding the debtor's financial affairs and property. If a husband and wife have filed a joint petition, they both must attend the creditors meeting. The trustee also will attend this meeting. It is important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests.

The trustee is required to examine the debtor orally at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy, including the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt.

In some courts, trustees may provide written information on these topics at or in advance of the meeting, to ensure that the debtor is aware of this information. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. This paragraph was adapted from Bankruptcy Basics, a FREE publication, click here to get a copy.

What Can You Expect at the Meeting?

Well, that's what this article is all about. Let's talk about that: If you have an upcoming meeting of creditors hearing, the best way to overcome your fear of the unknown is simply to go to a meeting(before yours) and just sit there and observe. That will probably prepare you much more than if you learn about it second hand.

So what I've tried to do is give you blow by blow of what happened at this particular meeting of creditors about a week ago (December, 2005). I primarily practice Bankruptcy in the Northern District of California, although I can practice anywhere in California.

Disclaimer: The following is an example of what occurred on a particular date in my jurisdiction (Northern District of California, Oakland Division) at a Chapter 13 Meeting of Creditors hearing in December, 2005. This may vary dramatically from what occurs where you live. Therefore, do not think that the way the meeting is presented above reflects what will occur in your jurisdiction. You should speak to your attorney about what occurs in your particular jurisdiction. This article is for informational purposes only and does not constitute legal advice.

That having been said, in the Oakland Division of the Northern District of California Bankruptcy court, the meetings are held at a location other than the actual Bankruptcy court. The court itself is across the street. The meetings are held in a suite on the 6th floor of the Federal Building. Inside the suite, there are two main rooms. One is a waiting room where attorneys can confer with clients, talk to each other, etc... The other room is where the actually meeting of creditors hearing occurs. There is usually a person there to help direct you and answer basic non-legal questions about the process.

1. So, let's say your hearing is at 9 A.M. You get there at 8:30 or so and go into the waiting room. The trustee in our jurisdiction hands out a booklet called "The Chapter 13 Debtor Handbook" which is for you to take home and read and tells all about the process. You are then directed to watch a 15 minute video that explains the basics of bankruptcy and particularly Chapter 13 bankruptcy.

2. Once the video is over, the trustee's assistant comes into the waiting room and announces that the meeting is about to start and that anyone who is on the 9 A.M. calendar should come into the room where the meeting will be held. There are about 20 or 30 seats and all of the people on calendar head in to the adjoining meeting room.

3. The hearing begins. Trustee starts the calendar and introduces herself. She talks about what will occur at the meeting. The trustee states that she will call debtors individually and that she will question each for approximately 5 minutes. If creditors are present, they will be able to ask questions for 5 minutes per case per debtor. The debtor is to have their Social Security card and ID ready to show to the trustee when their name is called. She says that all payments into the Chapter 13 plan are to be made in cashier's check or money order. Debtors are not allowed to incur new debt. If you absolutely need to purchase a car for transportation, the trustee must approve how much you can spend on the car and approves the purchase contract. You can only sell or refinance your real property with permission of the trustee. Permission is only given to Title companies when in escrow. In other words, the deal must be already in place.

4. The Trustee calls the name of the first debtor. The debtor and their attorney comes up to the table. The attorney sits on one side of the table and the debtor on the other side. (Picture a long cafeteria-style table. The trustee and her assistants are sitting at the middle of the table facing the front of the room. The attorney and debtor are sitting at the far ends of the table opposite each other).

5. The trustee asks for debtor's ID and Social Security Card.

6. The attorney states his or her appearance for the record. (e.g. "Leon Rountree, appearing on behalf of John Doe debtor")

7. The Trustee swears in the Debtor: "Do you solemnly affirm under penalty of perjury that the testimony that you are about to give is the truth, the whole truth, and nothing but the truth"?

8. Trustee states for the record: "I have seen the debtor's Social Security card and identification and Social Security number on the card matches the number on the petition."

The trustee then asks the debtor the following questions:

9. "Is your home address still: "[Home Address]"?

10. "And do you still work at [Place of employment] as an [occupation]"?

11. If the debtor owns a car and is keeping it: "Is your car insured"? "Have you made the necessary car payments"?

If the debtor is not keeping the car, "Are you surrendering the car"?

12. "Do you own any real estate"? If yes, "Have you made all the necessary house payments since the petition was filed"?

"When did you make those payments"?

"Is the house insured"?

"Do you pay the property taxes directly"?

"Are the property taxes current"?

13. "Have you filed all tax returns for the last five years"? If not, "When will they be filed"?

14. "Do you owe any money to the IRS or the California Franchise Tax Board"?

15. If debtor has credit card debt, "Have you destroyed all your credit cards"?

16. "Do you believe that you can make monthly payments of [Chapter 13 plan payment] per month"?

17. "Did you review the bankruptcy petition and schedules before signing them"?

18. "Is everything in the petition and schedules true and correct"?

19. Are there any creditors that wish to be heard in this matter?

If everything runs smoothly, the trustee states that she will recommend to the Judge that the Chapter 13 plan be confirmed.

That's it! When they say that it will last about 5 minutes, they usually mean it. The only exception might be if there are objections of some kind to the plan or a married couple is filing in which case the meeting may last a few minutes longer.

Disclaimer: The above is an example of what occurred on a particular date in my jurisdiction (Northern District of California, Oakland Division) at a Chapter 13 Meeting of Creditors hearing in (December, 2005). This may vary dramatically from what occurs where you live. Therefore, do not think that the way the meeting is presented above reflects what will occur in your jurisdiction. You should speak to your attorney about what occurs in your particular jurisdiction. This article is for informational purposes only and does not constitute legal advice. This article does not create any attorney client relationship. Copyright 2005, Leon H. Rountree III