Meeting of Creditors

The meeting of creditors (also known as a “341 hearing”) occurs in front of the bankruptcy trustee approximately one month after filing a bankruptcy case. Although your creditors can attend and ask you questions during the hearing, creditors rarely attend these hearings (unless they believe you are hiding assets).

During the meeting, the bankruptcy trustee will verify your identification (government-issued photo ID and Social Security card). The trustee will also need your financial documents if you haven’t submitted them prior to the meeting. Examples of such financial documents include proof of income, bank statements, tax returns, and loan statements.

The bankruptcy trustee will then ask a series of questions about your bankruptcy paperwork. It is the trustee’s job to ask you questions under oath and verify that your financial information is complete and accurate.

What Is A Bankruptcy Trustee?

When a debtor files bankruptcy, an impartial person known as a bankruptcy trustee is appointed to administer the bankruptcy case. A bankruptcy trustee is appointed in almost every type of bankruptcy case except for Chapter 11 (reorganizations) and Chapter 9 (municipality cases). A bankruptcy trustee is appointed by the United States Trustee, which is an officer of the United States Department of Justice.

The trustee’s duties will depend on the type of bankruptcy case. In general, the trustee reviews the bankruptcy petition and other documents filed by a debtor for accuracy and to detect any possible fraud. The trustee will also meet with the debtor at the Meeting of Creditors, where the debtor will answer the trustee’s questions under oath. (Creditors are also permitted to ask the debtor questions during the Meeting of Creditors, but unless they feel the debtor is hiding assets, creditors rarely attend these meetings.) In a Chapter 13 case, the trustee is also responsible for reviewing the debtor’s proposed payment plan, collecting the debtor’s payments, and distributing the payments to the creditors. In many Chapter 7 bankruptcy cases, the bankruptcy trustee will find no assets to distribute. But if non-exempt assets do exist, the trustee is responsible for collecting those assets, selling them, and remitting the cash proceeds to the creditors.

The bankruptcy trustee will recommend to the court whether the debtor’s bankruptcy should be granted or dismissed. However, the bankruptcy judge has the ultimate authority to make the final determination. In most bankruptcy cases, the debtor has little or no direct contact with the bankruptcy judge. The only bankruptcy official that the debtor is likely to have contact with is the bankruptcy trustee.

Liquidated Debts vs. Unliquidated Debts

Liquidated debts are liabilities for which the amount owed is certain. Most debts are liquidated debts, such as credit cards, mortgages, car loans, personal loans, and medical bills. Such creditors make it easy to determine the amount owed because they usually send monthly statements specifying the charges, accrued interest, fees, payments made, and the balance.

Unliquidated debts are liabilities for which the amount owed can not yet be ascertained. In other words, you know you owe someone money but the exact amount has not been determined. For example, if you are a party to a lawsuit and you will definitely owe someone money for damages, but the jury has not yet determined the amount of damages, the judgment is an unliquidated debt. The debt will become a liquidated debt when the jury determines the value of the damages.

Note that an unliquidated debt is not the same as a contingent debt (which is a liability that may or may not arise depending on the happening of a future occurrence) or a disputed debt (which is a liability that you and the creditor do not agree upon, either as to the amount owed or whether you owe it at all).