Chapter 7 Overview and the Creditors Meeting
To file for Chapter 7 bankruptcy, you must complete the required forms that constitute the bankruptcy petition and deliver it to the court that services the district in which you live. If you are using a bankruptcy attorney, then the attorney will file your papers electronically. When your petition is filed, you will be given a case number that uniquely identifies your case.
One of the forms that you must complete in your bankruptcy petition is the creditors matrix, which lists the names and addresses of all of your creditors. The court will use this list to send a notice to each of them, informing them of your bankruptcy, your filing date, and your case number, and the date of your creditors meeting.
Asset Case or No-Asset Case
In your bankruptcy petition, you will have to estimate whether, after deducting exemptions and liens on your property, there will be anything left to pay unsecured creditors.
In a minority of the cases, there will be some assets that can be liquidated to pay unsecured creditors, and, hence, these cases are called asset cases. Creditors will be notified to file a claim, describing the debt and the amount owed to them.
However, most Chapter 7 cases are no-asset cases—after deducting priority payments, exemptions and liens from the debtor's property, there would be nothing left to pay unsecured creditors. So creditors are told not to file a claim, since it would be a waste of time. However, if it later becomes apparent that there are assets that are available for distribution, the trustee will notify the creditors to file a claim.
Preparing for the Creditors Meeting
You must attend the creditors meeting, where the trustee and any creditors that show up can ask you questions under oath. If, for any reason, you cannot attend the creditors meeting, you should notify the trustee as soon as possible to either reschedule or to make some other accommodation that would be necessary, if, for instance, you were seriously injured or disabled. However, do have an excellent reason; otherwise, the trustee may move to have your case dismissed.
You will have to take a photo ID, such as driver's license or passport, and your social security card, or some other document that shows your social security number, to the creditors meeting. If you are not represented by an attorney, you will also need a copy of your bankruptcy petition. You may also need other documents, such as tax returns or transcripts, wage stubs, financial account statements, so be sure to call the trustee and ask specifically what will be needed.
Note: you can order your free transcripts from the IRS: Order A Transcript
You should review your bankruptcy papers in detail to ensure that everything is correct. If you found a mistake, you should amend the form as soon as possible, before the creditors meeting. Because several or many other debtors will be there for their meeting, you will probably have to wait until your interview—use that time to review your papers. You want to be able to answer any questions honestly and completely. If the trustee suspects that you are lying, then she will investigate your case with much greater diligence, which will probably delay or even prevent you from a getting a discharge.
Creditors Meeting (341 Meeting)
The creditors meeting is a meeting between you and any of your creditors if they decide to show up (hence, the name) and is presided over by the trustee. Most of them won't be there, but you must be there, for if you are not, your case will be dismissed and the automatic stay ended. If it is a joint filing, then both you and your spouse must attend the meeting.
The creditors meeting—also known as a 341 meeting after the section of the bankruptcy code that concerns it—gives your creditors a chance to ask you questions concerning your debt to them. Because there is little that a creditor can do about your bankruptcy, most of them don't show up, especially representatives from the major credit card companies and banks. However, some local creditors might show up, especially if you ran a business that used local suppliers and services. Most of these creditors are small businesses and many of them do not realize that there is little they can do other than ask you questions.
The trustee will most certainly ask you questions. Most of these questions will concern your income, assets, whether you will receive an inheritance, insurance proceeds, or other income in the near future, and whether you read and verified all of the information entered into the bankruptcy forms that you filed. (This is asked because most filers use attorneys, who enter most of the information into the forms by asking you questions or using your credit reports for information on your debts.) The trustee will also ask any questions to resolve either inconsistent or incomplete information in your bankruptcy petition.
In a no-asset case, the trustee probably isn't going to ask too many questions, unless the information that you provided is suspect. In fact, your meeting with the trustee will probably last only about 5 minutes or less, simply because the trustee only gets $60 of your $299 filing fee, so it would not be profitable for her to spend a long time questioning you unless she thinks that you are hiding assets or that you have not been honest. Furthermore, there are usually 10, 20 or more other bankruptcy petitioners in the same room with you that she must also interview about their cases. Usually, several of the filers are represented by the same attorney, so the trustee will have each attorney come up for the interview, and then, each of the attorney's clients will come up sequentially to be interviewed. This is done so that the attorney can have all of their papers ready at one time—the attorney remains seated with the trustee until all of his clients have been interviewed.
Continuation of the Creditors Meeting
The trustee may ask for some documents that you didn't bring along. In most cases, the trustee will permit you to mail the documents. But in other cases, especially if the trustee believes that you have been dishonest, she may request that you return to another meeting so that you can bring documents along to verify some of your statements.
In a joint filing, both spouses must appear, but if the trustee requires a continuation of the session at a later date, then ask if both of you must come back, or if one of you is sufficient.
After the Close of the Creditors Meeting
The conclusion of the creditors meeting also begins time periods when certain actions must be performed. You must take a personal financial management course within 45 days after the creditors meeting. Your creditors have 60 days to object to the discharge of their debts, and, if your case is an asset case, to file any claims.
Both the creditors and the trustee have up to 30 days to object to any exemptions that you claimed.
Note, however, that the creditors meeting is only considered closed when the trustee notes it on the court docket. Unless, it is so noted, the creditors meeting is still considered open, giving both the trustee and creditors an unlimited amount of time to file objections. So make sure that the creditors meeting was properly closed. If it is not, notify the trustee.
Statement of Intention
The Statement of Intention is the form that you must fill out to inform the court and your creditors which of the 3 options—surrender, redeem, or reaffirm—that you intend to do for each secured item. The automatic stay will be lifted for secured debt if the Statement of Intention is not filed within 30 days after filing for bankruptcy, or you don't follow through with the plan within 45 days after the creditors meeting.
About 3 months after the creditors meeting, you should receive a discharge notice in the mail if you have satisfied all of the requirements. If you signed a Reaffirmation Agreement and you are not represented by an attorney, you will probably have to attend a discharge hearing, when the judge will ask you if you really understand the Reaffirmation Agreement and if you still want to accept it. You should then receive your discharge notice in the mail within 1 month of the hearing.