What Is a Creditors' Meeting?
Whenever a debtor files a petition for bankruptcy protection, they must attend the first meeting of creditors, usually scheduled 30 days after the filing. This meeting is also called the 341 meeting, which is a reference to the bankruptcy code. Once the meeting starts, there are certain requirements that take place. If there are discrepancies or disputed claims, other meetings similar to a deposition could take place. A creditors meeting is one of the initial steps that must take place before a bankruptcy is completed.
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Process
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The first meeting of creditors is a process where the trustee, from the court, acting as administrator gets the opportunity to ask the debtor a number of questions regarding his assets and liabilities. Assets listed could include cash, cars, jewelry, homes, collectibles and other valuables. The debtor's liabilities could include credit card debt, mortgage balance and other debts. The schedules are reviewed and must be filed with the court. The debtor is placed under oath when the questioning begins.
Exemptions
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After reviewing the schedules, the trustee will address the matter of exempt property. These are items that the debtor gets to keep and are not subject to the bankruptcy case. Exempt items will vary from state to state. Some things which are usually exempt include, clothes, furniture, and if a debtor has tools which he uses for his profession or occupation. The property of the debtors, which is more than the value of exempt property, is usually liquidated with the proceeds going to pay creditors.
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Creditors
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All creditors are invited to the meeting, but rarely do they attend. For the most part, those creditors that have loans secured with some type of property or collateral will attend. Creditors that feel the debtor may have committed some type of fraud will also attend. Creditors are also given the opportunity to ask the debtor questions while under oath, but they are not allowed to take more than a few minutes.
Recording
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Every facet of the meeting is recorded by a court reporter or a tape recorder. This recording is used to confirm that the proceeding took place. Anyone can refer back to the recording if there is a discrepancy or someone disputes what was said. The recording is a way of establishing clarity.
Motion
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After the questioning starts, if there appear to be some serious discrepancies, the trustee or any of the creditors can file a motion which is a claim or lawsuit questioning whether or not a debt should be discharged. This type of motion could concern other matters. In most instances, a meeting of creditors proceeds without incident.
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