Chapter 13 Rules

Compliance with Chapter 13 rules, advantages, disadvantages

One of the most important aspects of a Chapter 13 case occurs during the 341 Meeting of the Creditors. Chapter 13 rules allow creditors to question debtors under oath in the presence of the trustee. From this meeting, debtors may gain a fairly accurate assessment of regarding future objections. Either the trustee or creditors may file objections, and during the meeting, the debtors should identify potential objections and attempt to resolve differences before formal motions are filed. The trustee is given broad authority by Chapter 13 rules to conduct the meeting in a professional manner and supervise the conduct of all who attend.

Testimony is always preserved, under oath, and is admissible in subsequent court proceedings. A court reporter is not required by Chapter 13 rules, but rather, a tape recording is normal made which may later be transcribed, if necessary. The testimony provided has the same weight as if testifying before the Court. US Bankruptcy Courts seldom review testimony from meetings, and restrict their review to contested matters. Chapter 13 rules allow either the trustee, creditors, or parties in interest to file objections or initiate adversary proceedings based upon testimony provided at the meeting.

Protection afforded by Chapter 13 rules

Rule 2004 of the Federal Rules of Bankruptcy Procedure permits creditors and parties in interest to question debtors during 341 meetings. These parties are not permitted to become abusive, assert facts that are know to be false, or conduct themselves in a manner consider inappropriate by the Trustee. In this case, Chapter 13 rules are designed to facilitate trustees in the fair presentation of evidence. According to the Chapter 13 rules however, creditors are permitted to request any relevant information, clarification of written statements, return of collateral when payments are past due, and inquire about the proposed plan. Usually, large secured creditors attend 341 meetings while small and/or unsecured creditors seldom attend.