This article will primarily deal with the processes involved with the filing of chapter 7 bankruptcy, sometimes called ‘consumer,’ or ‘personal’ bankruptcy and is a continuation from the article of the same name.
Step 7 – Notification of Creditors
About 7 days after the court receives your chapter 7 bankruptcy petition, it will notify all those creditors that you have listed on your filed pleadings that you have filed bankruptcy. The court will announce the case trustee and the date and time for the section 341 first meeting of creditors.
Step 8 – Supplying Copies of Your Federal Tax Returns
At least one week before the 341 meeting, you must supply copies of your most recent federal tax returns to the trustee and certain financial documentation, such as three months bank statements incurred prior to filing.
In chapter 13 cases, you must supply the standing trustee the last four years of your tax returns. If you fail to supply these tax returns, your case may be dismissed.
Therefore, it is important to file your tax returns prior to filing the bankruptcy.
Step 9 – Chapter 7 Bankruptcy 341 Meeting; First meeting of Creditors
Most petitioners dread the 341 meeting because they do not know what to expect. This fear is usually way overblown. Since these meetings are open to the public, we suggest that you attend a meeting for other positioners prior to attending your own. Since 341 meetings are little different between Chapter 7 and Chapter 13, be sure to attend the correct kind of filing meeting. This will give you a complete and accurate picture of what actually goes on at a 341 meeting and enables you to be thoroughly prepared for your own.
In Chapter 7 cases, seldom do any creditors show up at the meeting, although one or two might. They do have the right to ask questions, but this does not frequently happen. The 341 meetings are not emotional affairs. There are conducted to gather, clarify and affirm the statements that you made in your bankruptcy filing documents, with respect to assets and liabilities.
The 341 meeting usually takes place 30 to 40 days after you file. The trustee conducts the meeting, and you and your attorney must attend. Also bring proof of your Social Security number and a photo identification document, like a driver’s license.
Typically, the trustee will ask you if you have any nonexempt property that can be sold to pay off creditors. They may also ask about any payments or transfers you made in the two years preceding the bankruptcy. They will probably also ask about the value of your home, value of your car, any retirement plans, and other questions that meet the requirements of the state you live in.
They may also ask about nonexempt assets that you may want to keep, and if so, arrange for you to pay for them. If you do not want to keep nonexempt property, the trustee arranges to have those assets evaluated and picked up. They will then be sold for the benefit of creditors.
Your attorney will review 341 meeting questions with you before the meeting. An experienced attorney can usually anticipate any areas of uncertainty and will usually deal with those before the 341 meeting. In most chapter 7 cases there will be little or no nonexempt assets. Usually this is the end of 341 meetings. In about 60 to 90 days after the 341 meeting, the bankruptcy debts are discharged, assuming the debtor passed and file their post condition credit counseling certificate.
There are a few milestones and chapter 7 bankruptcy processes that you want to keep in mind:
- The trustee has 10 days after the 341 meeting to decide whether you passed or failed the Means test. If you fail, the trustee will ask the court to dismiss your case.
- The trustee and creditors have 30 days after the 341 meeting to object to any of your claims of exempt property. If you have amended exemption claims, the 30 day clock starts from the time of any amendments.
- Creditors have 60 days to object to the discharge of certain kinds of debt. If they don’t file objections, it’s too late for them to do it later, and you are over the last bankruptcy hurdle.
All these deadlines assume you have supplied accurate information and have answered questions accurately.
Section 341 first meeting of creditors are important for the debtor filing the petition, in that they will have the opportunity to answer questions the bankruptcy trustee for their case might have with respect to the extent location and availability of assets to pay creditors’ claims, as well as information regarding the liabilities of the petitioner. For creditors, some opportunity to ask questions of the petitioner with respect to his available assets and liabilities in the case as well as asking questions about inconsistencies found in the schedules of assets and liabilities, and statement of financial affairs filed by the debtor.
Additionally, this section 341 first meeting of creditors date triggers the time for filing complaints objecting to discharge then go 90 days after the time first set the 341 meeting, as well as time for the debt of the bankruptcy trustee to object to the debtor’s claim of exemptions – 35 days from the date last set for the section 341 meeting. Extended 341 first meeting of creditors are not encouraged by the bankruptcy trustee and the debtor’s attorneys, especially if the question becomes too intense at the 341 meetings specific to a creditor’s particular issue concerning the debtor.
After 15 to 60 minutes of questioning the chapter 7 bankruptcy trustee will more than likely suggest and/or recommend to the creditor or the creditor’s attorney asking the questions to notice a rule 2004 examination in order to ask the debtor questions in a formal atmosphere with no time constraints. Normally there are time constraints at a section 341 first meeting creditors because there are other scheduled debtors to give testimony and to answer questions to the bankruptcy trustee, normally anywhere from 3 to 8 cases every half hour.
Assets in Chapter 7 cases
In a few Chapter 7 cases that have assets that need to be liquidated or distributed for creditors, the case will remain open until all those assets are dealt with. Sometimes, depending on the kind of assets, their disposal can take quite a long time, sometimes years. Once your case is filed the non-exempt assets are turned over to the trustee and those assets become property of the bankruptcy estate, and no longer yours to do what you want.
You must, of course, cooperate with the trustees to dispose of those non-exempt properties and assist with collecting any monies or properties that might be owed to you. You may have tax refunds that are outstanding at the close of bankruptcy, or outstanding real estate or personal notes that needs to be collected or sold to pay your creditors.
Those are the steps that you must go through to finalize your Chapter 7 bankruptcy case. Barring any foreseen complications, you should be done with your bankruptcy case in about 120 to 180 days after the 341 meeting.
I know there is a lot of information here so my advice is to call our office at (775) 786-7600 or (775) 690-2190 anytime to set up a complimentary and confidential consultation with me at your earliest convenience. You can also visit our new business Facebook Page for more information.