The bankruptcy process is intended to provide individuals a way out from under mounds of debt and an opportunity to rebuild their lives, and their credit, and begin daily life with a fresh start. Most bankruptcies are filed under chapters 7, 11, and 13 of the Bankruptcy Code.
Chapter 7 Basics
Chapter 7 bankruptcy is one of the main types of bankruptcy filed by individuals. Chapter 7 bankruptcy discharges much, if not all, of the debt owed.
A bankruptcy trustee will liquidate any non-exempt assets of the person owing the debts, also called the debtor. The money obtained from the liquidation is used to pay back creditors before the remaining debts are extinguished. Many times, debtors do not have any non-exempt assets to liquidate.
When filing for bankruptcy, it is very important to first determine the chapter of the bankruptcy code that is best for you and your financial circumstances.
In order to file a bankruptcy petition you must gather all the information about the debt you owe, your income, and your assets. After filing a bankruptcy petition, there will be much more work to do. There will be meetings and hearings.
You may determine that your assets are non-exempt and may not be liquidated in a Chapter 7 bankruptcy but your creditors may challenge that determination. One meeting you will be required to attend as the debtor is called the “section 341 meeting,” or the “meeting of creditors,” or the “creditor’s meeting.”
Section 341 Meeting
The 341 meeting is a meeting that a debtor is required to attend after filing bankruptcy. The meeting is conducted by the case trustee or the U.S. Trustee.
The debtor must appear at this meeting and testify, under oath, about his financial condition, assets and debts. The debtor will be asked about the information he has placed on his bankruptcy paperwork. Creditors may also attend this meeting and question the debtor, although the meeting is directed by the trustee assigned to the case and most of the questions originate with him.
If a debtor fails to attend the meeting, his bankruptcy case can be dismissed. If you are unable to attend the creditor’s meeting on the day it is scheduled, you must contact the Trustee assigned to your case and request the matter be continued.
The Bankruptcy Clerk’s Office cannot answer any question about changes to the 341 Meeting of Creditors. All questions about this meeting must be directed to the Trustee assigned to the case or the U.S. Trustee’s Office. The Office of the United States Trustee is an Executive Branch agency that is part of the Department of Justice. It is responsible for monitoring the administration of bankruptcy cases and detecting bankruptcy fraud. It has other responsibilities as well.