Wednesday, May 25, 2016

The Meeting of Creditors

Upon filing a bankruptcy, a meeting of creditors is scheduled. This hearing is often referred to as the 341 hearing, which is a reference to Bankruptcy Code section 341. The hearing is scheduled approximately 30 days from the date you file a bankruptcy. The person filing bankruptcy, a "debtor", must attend the meeting of creditors.

Bankruptcies are administered by a person referred to as a Trustee. The Trustee, or their representative, conducts the meeting of creditors. At that hearing, the Trustee asks a series of questions designed to make sure the bankruptcy filing is accurate and to elicit certain information about the debtor's property and finances.

The meeting of creditors is also an opportunity for a debtor's creditors to appear and ask questions. While creditors or their attorneys have a right to appear and ask questions, they very rarely do.

Where Will My Meeting of Creditors Be Held?

Upon filing, the Bankruptcy Court will generate a notice of the bankruptcy filing. In Chapter 7, the notice is called Official Form 309A. In Chapter 13, the notice is called Official Form 309I. In both Forms 309A and 309I, the hearing date, time and location are located on the second page in box number 7.

The location of the hearing will depend on the debtor's county of residence. The following is a list of the hearing locations in the Western District of Michigan and the counties assigned to each location:

Grand Rapids: Barry, Ionia, Kent, Mecosta, Montcalm,  Muskegon, Newaygo, Oceana, and Ottawa

Kalamazoo: Allegan, Berrien, Branch, St. Joseph, Van Buren,  Hillsdale, Cass, Calhoun, and Kalamazoo

Lansing: Clinton, Eaton, and Ingham

Traverse City: Antrim, Benzie, Charlevoix, Emmet, Lake,  Kalkaska, Leelanau, Grand Traverse, Manistee, Mason,  Missaukee, Osceola, and Wexford

Marquette: All of the counties in the Upper Peninsula of Michigan.

What Do I Need to Bring to the Meeting of Creditors?

A debtor must bring photo identification (i.e. drivers license) and an original social security card. The Trustee is under strict orders to not hold the meeting of creditors unless these forms of identification are produced. It is a good idea to make sure you have these forms of identification prior to filing your case, so that if new copies need to be requested, they arrive prior to the scheduled hearing. If these forms of identification aren't provided at the hearing, the Trustee will adjourn the hearing to a later date.

Other documents may need to be provided at the meeting of creditors. What needs to be provided can vary by the practice of the assigned Trustee and what was or wasn't provided to the debtor's attorney prior to the hearing. Most required documentation is provided to your attorney prior to the filing of the bankruptcy. If all of the required documents aren't provided to your attorney prior to filing, they should be provided as soon as possible so that they can be sent to the Trustee in advance of the meeting of creditors as required.

What Will the Trustee Ask Me at the Meeting of Creditors?

When your case is called, you will sit at a table with your attorney and the Trustee and/or their representative. If there are creditors, they will sit at the table too. Before asking any questions, the Trustee and/or their representative will swear you in and collect your photo identification and original social security card.

Most debtors are asked the same or similar questions. However, the questions can vary depending on the assigned Trustee, what type of bankruptcy was filed, what was stated in the bankruptcy schedules, what documents were provided prior to the hearing, etc.

The following are examples of questions that are often asked at the meeting of creditors:

  • What caused you to file bankruptcy?
  • Have you listed all of your creditors and everyone you owe money to?
  • Have you listed all of your assets?
  • Do you have any ownership interest in any real estate? 
  • How did you determine the value of your real estate?
  • Do you own any vehicles?
  • Does anyone owe you any money for any reason?
  • Do you have a claim of any kind against anyone, or any business?
  • Do you have a reason to file a lawsuit, or are you a plaintiff in any pending lawsuit?
  • Have you been notified you may be party to a pending or future class action lawsuit?
  • Have you suffered any accident or injury for which someone else may be at fault?
  • Do you expect any inheritance or life insurance proceeds? 
  • Are you the beneficiary or trustee of an estate?
  • Do you have an interest in any trusts or estates?
  • Have you owned or operated a business?
  • Have you paid any of your creditors a total of $600.00 or more during the 90 days prior to filing bankruptcy?
  • Have you repaid any family members or friends any money in the last year?
  • Have you been divorced?
  • Have you given away, or otherwise transferred real estate, cash, vehicles or property of any kind in the last several years? 

Again, this list is just an example of commonly asked questions and is by no means complete.

What Do I Do If I Have a Question About the Meeting of Creditors?

If you have a question about the meeting of creditors, you should contact your attorney. If you hire an attorney to represent you in a bankruptcy, they should be more than willing to answer your questions about this hearing and everything else that relates to the bankruptcy.

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This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

Monday, February 22, 2016

Bankruptcy, Joint Debt and Non-Filing Co-debtor

This post is meant to be an update to the previous post How Will Bankruptcy Affect My Spouse. I get asked all the time how bankruptcy will impact a non-filing spouse or other party. The answer to this question can be a little twisty, especially with credit card debt. 

Liability for Credit Card Debt

It is often unclear if certain credit card accounts are joint or one person is just a permissive user of the account. What matters is whether a person agreed to be liable for the debt. To be liable, a person would need to sign an obligation (i.e. contract, application for credit, financing agreement, etc.). Having your name on a credit card does not automatically mean you are liable. 

So, what happens to debt that is joint and only one person is filing? Only the person filing is discharging their liability. The non-filing person would remain liable for 100% of the debt. So, when contemplating filing bankruptcy, it is extremely important to determine whether any debts are joint, especially if the debt is owed by your spouse. If the debt is joint and for an amount that exceeds your spouse's ability to pay, it may lead to two separate bankruptcy filings. While an attorney may really appreciate you paying them for preparing two bankruptcies, it just doesn't make financial sense when married individuals can file one joint case.

Current Joint Debt

What happens to the non-filing person's credit when there is joint debt that is current and remains current? Unfortunately, this question is not so simple to answer. The non-filing person's credit should not be impacted. However, a lot of things should not happen but they do. It is fairly common for creditors to report this type of an account as being in bankruptcy on a non-filing party's credit. It is also fairly common for creditors to shut the account down and transfer the debt to a collection company. If that happens, the debtor and the non-filing party should contact the three credit reporting agencies (Experian, Transunion and Equifax) and dispute the tradeline [Creditors refer to each separate reporting of the account as a "tradeline."].   

The Bottom Line

If you are considering bankruptcy, make sure you meet with an experienced bankruptcy attorney. Make sure to discuss your debts with the attorney in detail. Figure out whether any accounts are joint and discuss the best way to proceed so that you and any potentially non-filing party are protected. Maybe it makes sense to file with your spouse, maybe it doesn't. Just make sure you and your spouse aren't paying to file two separate cases when it could have been take care of together for half the cost.

This website is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.