U.S. Bankruptcy Courts - Chapter 7 Meeting of Creditors

How US Bankruptcy Courts conduct Chapter 7 341 Meetings with Creditors

The meeting of the creditors is not held in US bankruptcy courts. The meeting may be located in the federal courthouse or an alternate location. The trustee begins the meeting by requiring a photo identification and social security number, then administers a sworn oath for testimony. Debtors should expect to be questioned about the petition, schedules and all documentation filed with the US bankruptcy courts. Many questions merely verify information within these documents. Also, should the trustee notice an irregularity, each item is discussed at length. Trustees are particularly concerned with preventing abuse from reaching US bankruptcy courts and judges. Both debtors and creditors are monitored closely, with all parties are required to conduct themselves in a professional manner.

Rule 2004 of the Federal Rules of Bankruptcy Procedure applies to US bankruptcy courts and proceedings. This rule allows creditors to ask questions and examine property of the bankruptcy estate. Creditors are not allowed to become aggressive with accusations or argumentative conclusions. Creditors are however allowed to seek information, reaffirmation, return of collateral or clarification of answers appearing within documents required by US bankruptcy courts. In practice, secured creditors and large unsecured creditors often attend while smaller, unsecured creditors seldom show interest in "no asset" cases.

US bankruptcy courts are not allowed to attend

One of the primary purposes of the meeting is allow the debtor and creditors to work-out differences without US bankruptcy court involvement. The trustee insures all parties comply with rules of conduct. This approach provides economy in the judicial process: US bankruptcy courts are not involved in routine or agreed matters, which frees judges to focus upon complex or disputed matters.

How US bankruptcy courts use information from the meeting

Testimony is under oath. A court reporter is not required at the meeting, however the entire proceeding is normally taped and may be introduced into evidence in US bankruptcy courts. The testimony provided has the same force as if testifying in US bankruptcy courts before a judge. US bankruptcy courts normally do not review all meetings, and limit their interest to testimony that pertains to contested case hearings and adversary proceedings. Either the trustee or creditors can file motions or initiate contested case hearings or adversary proceedings based upon testimony at the meeting. All motions are heard in US bankruptcy courts by judges.

The statutory authority of trustees is derived from 11 U.S.C. 341, entitled meetings of creditors and equity security holders, which provides, within a reasonable time after the order for relief in a case under this title, the United States trustee shall convene and preside at a meeting of creditors:

  • the trustee shall convene a meeting including any equity security holders;
  • US bankruptcy courts may not preside at, and may not attend, any meeting under this section including any final meeting of creditors; and
  • prior to the conclusion of the meeting of creditors or equity security holders, the trustee shall orally examine the debtor to ensure that the debtor in a case under chapter 7 of this title is aware of (1) the potential consequences of seeking a discharge through US bankruptcy courts, including the effects on credit history, (2) the debtor's ability to file a petition under a different chapter, (3) the effect of receiving a discharge of debts, and (4) the effect of reaffirming a debt, including the debtor's knowledge of the provisions of section 524(d).

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