Tips for a Smooth 341 Meeting of Creditors

A great source of anxiety for many Chapter 7 and Chapter 13 bankruptcy filers is the 341 meeting of creditors. It is named after the section in the U.S. Bankruptcy Code which requires that such a meeting be held. The meeting is an opportunity for the bankruptcy trustee administering the case, and any creditors who care to attend, to question the debtor. The debtor is sworn-in by the trustee at the beginning of the meeting and must answer the questions posed under the pains and penalties of perjury.

For debtors in Worcester County, Massachusetts, the 341 meeting of creditors takes place at the U.S. Trustees Meeting Room located on the 1st floor of the Sovereign Bank Tower (the blue-glass high-rise), 446 Main Street (the corner of Main Street and Pleasant Street) in Worcester, Massachusetts.

For debtors in Hampden County, Massachusetts, the 341 meeting of creditors takes place at the U.S. Trustee Meeting Room located in Suite 1112 at One Financial Plaza, 1350 Main Street in Springfield, Massachusetts.

For debtors in Hartford County, Tolland County, and Windham County, Connecticut, the 341 meeting of creditors takes place in Room 742 of the Federal Courthouse located at 450 Main Street in Hartford, Connecticut. Allow extra time to get through security.

This sounds very official and intimidating, doesn't it? Although the meeting is a necessary part of the bankruptcy process, most debtors are presently pleasantly surprised by the speed and somewhat informal nature of the event.

Notice that I said "most debtors" and not "all debtors". For the meeting to run smoothly, the following must be observed:

1. The bankruptcy petition and all schedules and forms must be prepared completely, accurately, and with internal consistency. This is the most important part of a successful bankruptcy case, and should not be entrusted to anyone other than an experienced, local bankruptcy attorney, who will be attending the 341 meeting with the debtor.
2. The trustee must receive, no later than seven days in advance of the meeting, certain supporting documentation required by the U.S. Bankruptcy Code. The trustee may request other documentation in addition to the Code mandates. The meeting will generally not be held unless all documents are received by the trustee in advance of the meeting. For this reason, it is crucial that a debtor respond quickly to any requests from their bankruptcy attorney for additional information.
3. The debtor must provide to the trustee a photo ID (usually a driver's license) and proof of social security number (usually a social security card, but can be a W-2). The debtor will need these documents to prove their identity and social security number to the trustee at the beginning of the 341 meeting.
4. The debtor should arrive 15 to 20 minutes early, sit in the meeting room, and listen to other debtors' examinations. This will give the debtor time to get familiar with the meeting room and the type of questions being asked by the trustee. This, more than anything else, will help alleviate some of the anxiety most debtors experience on 341 meeting day. If I have a debtor who is very stressed out about the meeting, I suggest they visit the meeting room a day or two ahead of time (during normal business hours) to get familiar with the driving route, parking, and meeting room itself.
5. The debtor should listen to the question being asked, and answer only the question being asked, in as few words as possible. If a "yes" or "no" will do, that is all that should be said. Nervous chatter, defensive statements, and other superfluous gabbing can open the door to additional questions and extend the meeting. Let the trustee or creditor work to elicit the desired responses.
6. Above all else, the debtor should tell the truth. An intentionally false or misleading statement under oath can result in fines and/or imprisonment, as well as the dismissal of the bankruptcy case. A debtor should not turn a bad financial situation into a prison sentence because he or she failed to tell the truth. If some of the information on the petition and schedules turns out to be wrong, that is o.k. The petition and schedules can be amended after the meeting.

I hope this post helps many debtors feel more prepared and comfortable at their 341 meeting of creditors. By observing the above tips, a smooth and uneventful 341 meeting is virtually guaranteed.

Matthew S. Rousseau, Esq.
Morrison Rousseau, LLP
www.WorcesterBankruptcyAttorney.com

Will You Lose Your House If You File For Bankruptcy?

One of the most frequent questions asked of me by those contemplating a bankruptcy filing is, "Will I lose my house if I file for bankruptcy?" Although the answer is generally "No", the question cannot be answered properly until the potential client provides some details about their financial situation. The two biggest considerations are whether the debtor is current with their mortgage payments and how much equity they have built up in their home.

Not surprisingly, a debtor can lose a home if they fail to make regular mortgage payments. In a Chapter 7 proceeding, a debtor who falls behind in mortgage payments before or after the bankruptcy case is filed is at risk of losing the home. For this reason, I will not file a Chapter 7 bankruptcy petition on behalf of any client who has expressed a desire to keep their house if they are not current with their mortgage payments. The client must become current with their mortgage (or have entered into an enforceable loan modification agreement with their lender that addresses the missed payments) before filing, or if that is not possible, the client must file for debt relief under Chapter 13.

In a Chapter 13 proceeding, a debtor who misses mortgage payments before the case is filed can avoid losing the home if they pay back the arrearage through the Chapter 13 plan, but the debtor will risk losing the home if any regular mortgage payment or Chapter 13 plan payment that comes due after the case is filed is not paid. For this reason, it is very important for a debtor to make all regular mortgage payments and plan payments after a Chapter 13 bankruptcy proceeding is commenced.

In a Chapter 7 proceeding, there is the additional consideration of the amount of equity a debtor has built up in their house in determining whether or not the debtor will keep their house. Equity is the difference between the value of the house and the amount of debt secured by the house (usually in the form of a mortgage). If the debtor has too much equity built up in their house, they are at risk of losing their home. A Chapter 7 trustee will sell, or liquidate, all property having value over and above the total amount of all secured creditors' liens and valid exemptions, and distribute to unsecured creditors the net proceeds of the sale remaining after payment of the secured creditor liens, exemptions and transactional expenses. Fortunately, in Massachusetts the exemption available for a primary residence is significant, up to $500,000.00 per household. In Connecticut, the exemption is more modest at $75,000.00 per individual, or $150,000.00 per couple. Exemption analysis can be complicated and you should not proceed with a bankruptcy proceeding unless your bankruptcy attorney can confidently demonstrate to you that your home equity will be protected by a valid exemption.

In conclusion, most people will not lose their house if they file for bankruptcy, provided they are current with their mortgage payments, and remain so after filing, and have not accumulated too much home equity.

Matthew S. Rousseau, Esq.
Morrison Rousseau, LLP
www.WorcesterBankruptcyAttorney.com