The Bankruptcy Hearing

What happens at your bankruptcy hearing?

If you file for consumer bankruptcy, chapter 7 or chapter 13, you will be required to attend what is called a “Meeting of Creditors.” This meeting is also known as the “341 hearing” because of the federal code provision that sets up the meeting, 11 U.S.C. §341. Everyone who would like their case to proceed must attend this meeting. It offers the case trustee and creditors an opportunity to ask questions of debtors on the record.

When a bankruptcy is filed the case is assigned to an individual trustee who works under a centralized US trustee. There are US trustees in every jurisdiction. A lot of how your case proceeds is determined by which US trustee’s office you are assigned to, which is determined by where you live.

The region where you attend the meeting will dictate some of how this meeting will go, but the basics are the same in every jurisdiction as required by the bankruptcy code. Debtors must provide proof of identity in the form of legal photo identification and proof of social security number. They must also indicate that they have read a document required by the US Trustee informally called "The Bankruptcy Information Sheet.” The specific questions asked from there are set by the US trustee in the jurisdiction where the hearing is held.

Since COVID, most jurisdictions are holding hearings by telephone. This has made hearings much easier for most debtors. When hearings were held in person, it was necessary to go to a central location, often paying to park, and waiting until their turn for the hearing to be held. Some locations required participants to go through a stressful security check. They had to take time off from work.

Since hearings have been held by phone, it has made things much simpler for a lot of people. There are sometimes technical issues such as feedback on the call when callers don’t mute their phones or leave the calls on speakerphone, but these small difficulties are trivial in comparison to the hassle of showing up in person. It may be that hearings will return to in person, but there are many of us who hope they remain by phone.

The number of hearings held at a certain time also varies by jurisdiction and trustee. I have some cases where there are ten hearings scheduled an hour, and others where there are four every half hour. There are many variables to this and a lot is dependent on the specific US trustee involved, and which local trustee your case is assigned to.

Some typical hearing questions are whether you have paid creditors more than the usual due in the months prior to filing, if you have paid friends or family members in the months prior to filing, if you have sold anything and for how much, if you own a business, and many other questions you should have been asked by your attorney when they first met with you. The bulk of questions can be answered with a “yes” or a “no.” If the trustee requires additional information, they will ask, but this is uncommon.

Although the hearing is called the “Meeting of Creditors,” it is unusual for creditors to show up in most cases. Occasionally a business case will bring lots of creditors out of the woodwork, and many smaller credit unions, the IRS, or state taxing authorities will show up, particularly in chapter 13 cases, but these are the exception rather than the rule. Sometimes also former spouses or former landlords will show up. These cases can sometimes be tricky because there are emotions involved and these types of creditors have issues beyond the scope of the bankruptcy process. Most trustees recognize when this is the case and work to limit how things proceed if the issues involved aren’t really part of the bankruptcy. Yet even these are rare. Creditors simply show up in very few cases.

Hearings are often stressful and scary for debtors, but the stress can be minimized by having a good attorney who has done the work in advance of the hearing to ensure things proceed smoothly. If you are in Oregon or western Washington and need help with a bankruptcy, give us a call. We can help your bankruptcy proceed as easily as possible. We help people file chapter 7 and chapter 13 bankruptcy in Oregon and Washington.