The U.S. Trustee Program’s Simulated Meeting of Creditors for Chapter 7 Bankruptcy

Anyone who has ever attended a 341(a) Meeting of Creditors knows that it is not as stressful as it is made out to be. Most of the time, it is boring. If your attorney anticipates any issues, they’ll let you know ahead of time.

My experience at the Meetings of Creditors in Spokane is that the meetings are more perfunctory than the video above portrays. Chapter 7 trustees get to the point quickly. For instance, if you’ve not submitted the documents required by the trustee, or if the documents came in past the trustee’s deadline, then your meeting will be adjourned pending receipt of the documents by the trustee. Usually, the trustee will ask your attorney to provide those documents. After the trustees receives and reviews the documents, your meeting is technically concluded.

Commentary, as to Chapter 7 meetings of creditors

11 U.S. Code § 341 - Meetings of creditors and equity security holders

(a) 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.

This usually occurs +/- 30 days after your attorney files your bankruptcy petition. In the Spokane and Yakima districts of the Eastern District of Washington, the United States Trustee does not, in practice, preside over the 341 meeting. It is the Chapter 7 trustee who presides.

(b) omitted.

(c) The court may not preside at, and may not attend, any meeting under this section including any final meeting of creditors.

Notice the language here, that “the court may not preside.” Ordinarily, when the law is stringent about what must or must not happen, the law’s drafter will write the word “shall.” For instance, “the court shall not preside”, which is legally distinct from “the court may not preside.” It’s probably a distinction without a difference, but always look at the language of the law when trying to interpret what a statute or code actually says.

Notwithstanding any local court rule, provision of a State constitution, any otherwise applicable nonbankruptcy law, or any other requirement that representation at the meeting of creditors under subsection (a) be by an attorney, a creditor holding a consumer debt or any representative of the creditor (which may include an entity or an employee of an entity and may be a representative for more than 1 creditor) shall be permitted to appear at and participate in the meeting of creditors in a case under chapter 7 or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this subsection shall be construed to require any creditor to be represented by an attorney at any meeting of creditors.

There’s a few things going on here. First, this code says that no other code or law has authority over any other law or code, save the United States Constitution. This is somewhat extraneous, but nonetheless per se true. This code can say this because it was, in theory, written by members of the U.S. Congress. When courts interpret the law, they invariably give deference to congress, because the courts are not permitted to ‘legislate from the bench’. Here, the code is saying that credits “shall be permitted” but are not “require[d]” to be represented by an attorney, a creditor, or a creditor’s “representative.” In other words, creditors can show up and be heard.

(d)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—

Note the language, the “trustee” and “shall orally examine the debtor. Here, the code does not mandate that the U.S. Trustee perform the examination, but that a “trustee” do so. In practice, this means that the Chapter 7 trustee has a legal duty to examine the debtor.

(1) the potential consequences of seeking a discharge in bankruptcy, including the effects on credit history; (2) the debtor’s ability to file a petition under a different chapter of this title; (3) the effect of receiving a discharge of debts under this title; and (4) the effect of reaffirming a debt, including the debtor’s knowledge of the provisions of section 524(d) of this title.

I find this part of the code interest. Usually the trustee will ask the debtor if they’ve read the U.S. Trustee’s “handout” or “information sheet.” This satisfies their duty under this part of the code.

I am omitting subsection (e) since it rarely comes up in the context of a case.

In cases where the debtor is pro se, the United States Trustee will show up at the meeting. This is largely because pro se cases are often problematic, and probably require some extra scrutiny to ensure that the schedules were filled out properly. Luckily, most pro se cases do not involve assets (like houses, for instance), nor large amounts of debt; thus, a dismissal isn’t necessarily the ‘end of the world.’ Moreover, a pro se debtor can hire an attorney and refile the case.

In a no-asset Chapter 7 case: Within a week (or so) of your meeting being concluded, the Chapter 7 trustee will file a report of no distribution as well as a request to be paid. Their involvement in the case is basically over at this point.