What Really Happens When You File Bankruptcy?

Posted by Wesley Scott on July 13, 2018 at 5:16 PM
Wesley Scott

life-after-bankruptcy.pngSo you decided to file bankruptcy, and get your life back. You have resolved yourself to the fact that of all the options available to you, filing for bankruptcy, getting a fresh start, makes the most sense. I am really proud of you and honor your courage and anxiety! There is a lot of fear about filing bankruptcy. You wonder what people will think of you, what will they ask you and if you have to go to court?

The Older You Get The Less You Worry What People Think

However, the older you get the less you should worry about what people think about you to begin with. After all, it’s your life not theirs, right? Life is humbling and we have all been humbled by events that happen, good or bad. But, like a playground bully, there will always be people who have to say something. Now, I'm not a psychologist but I suspect the playground bully, bullies because of a personal insecurity. It makes them feel better if they believe they are superior to you. You would think in adulthood, the bullying would be over but there is never a shortage of insecure people in the world is there?

Life Is Like The Ocean

One of the best e-mails I ever received contained a picture of the ocean, with wave after wave coming to shore. The caption read- “You cannot stop the waves, but you can learn how to ride them." How beautiful and humbling is this? What a wonderful metaphor for life! Nobody wishes that their life would be full of overwhelming debt, stress, and worry. And nobody expects a business fail, income drop, medical problems, divorce and broken relationships - Guaranteed!

You see, some of the waves in life are good- they propel you to new heights- like pay increases, successful businesses, health, family, etc. But, some of the waves in life are bad- and wipe you out, like business failure, lay offs, medical problems, broken relationships, and bad financial decisions. Fortunately, no different than treating a bad infection, overwhelming debt can be treated. Bankruptcy is a way to resolve, once and for all, overwhelming debt problems and without going to court.

Filing Bankruptcy Requires A 341 meeting Not a Court Date

When you file for bankruptcy protection, Section 341 of the Bankruptcy Code requires you to attend a “first meeting of creditors” not a court date. Why they call it a “first meeting of creditors” I am not sure. For most meetings no creditors are present. I am also not sure why they call it a "first" meeting of creditors because there usually is not a second!

Most 341 Meetings Locations are not in a court room. The US Trustee’s office appoints a Chapter 7 or Chapter 13 Trustee to administer the case. Typically, this is a lawyer licensed in Minnesota who presides over the meeting. The hearing could take place in a conference room or any other room- it doesn’t have to be and usually is not in a court room.

If you are in a Chapter 13 meeting, the meetings are typically scheduled every 15 minutes. If you are in a Chapter 7 Bankruptcy meeting, the meetings are typically scheduled every half hour but in that half hour the court will schedule 5 meetings.

Kain & Scott Will Keep You Informed

At Kain & Scott, we let our clients know of the date and time of your “341 Meeting of Creditors” well in advance so they can arrange to take time off of work. In the letter we send our clients, we give specific instructions on where to meet and what to bring to the meeting. When the hearing date arrives, we attend the meeting with our clients. The Chapter 7 meeting, once called, takes typically 5-10 minutes. The chapter 13 meeting takes typically 10-15 minutes.

The main point of the 341 meeting is to have you verify that the information contained in the schedules is true, complete, and correct. It is typically the one and only time the government steps in to make sure that the what is being stated in the petition and schedules is true and correct.

When your meeting is called, you and your Kain & Scott lawyer (your rock) will sit a table with a trustee. The meeting is recorded so you have to speak audibly. You can’t grunt or nod your head like I would. You will need to provide the trustee with your drivers license or state ID and proof of your social security number (i.e. social security card, w-2, or 1099). 

You Will Be Asked Some Questions

With your Kain & Scott Bankruptcy Lawyer by your side, the trustee will press the recorder on and ask that you raise your hand and swear to tell the whole truth and nothing but the truth then proceed to ask you the following questions:

  • Please state your name and address for the record
  • Did you sign the petition and schedules you filed with the court
  • Is the information contained in the petition and schedules true and correct
  • Are all your assets and debts listed
  • Have you ever filed bankruptcy before
  • Do you own any real estate (there might be questions about some other assets)
  • Did you pay any unsecured creditor $600.00 or more in the last 90 days before filing the bankruptcy
  • Did you pay a family member or friend $600.00 or more in the last year
  • Did you transfer in any assets to anyone in the last two years
  • Did you transfer, besides token gifts, any assets to a family member or friend in the last 6 years
  • Do you expect to inherit any money in the 6 months after you file the bankruptcy.

This seems like a lot of questions but it actually goes quite fast!

Its Normal TO BE nervous But Not if Your well Prepared

About 60 days after the meeting of creditors you get your notice of discharge. Now- does this seem scary to you? Maybe? We always tell our clients it is normal to be a little nervous about this meeting. But, when you file a bankruptcy, and the bankruptcy is well prepared, you don’t have much to worry about. That is the benefits of using a MN bankruptcy attorney. The meetings that don’t go well are typically the meetings where someone tried to file the bankruptcy by themselves, or the case was not well prepared in advance. At Kain & Scott, we believe in thoroughly preparing the case so that we don’t have any surprises. Clients don’t like surprises and neither do we! 

The players at the 341 meeting are not mean spirited at all. The trustee’s we deal with are kind and helpful. However, they do have a job to do,the role of a chapter 13 trustee in your bankruptcy case is to make sure the schedules are complete and correct. They are also charged with administering the case whether you filed a chapter 13 bankruptcy or chapter 7 bankruptcy.

All 341 Meetings Are The Same

It doesn’t matter if you are Filing Bankruptcy in Roseville or Brainerd, Minnesota, the meetings are all the same. The 341 meeting is a federal hearing not a state court hearing. If you ever have any questions about a 341 meeting or what happens at the meeting, we would be happy to answer any questions you have. In the meantime, don’t worry about the 341 meeting- just make sure that the law firm you have hired has thoroughly vetted your case, asked you all the relevant questions and the petition and schedules are complete and correct.

A Word Of Caution

Because you sign the petition and schedules under penalty of perjury it is absolutely critical that you meet with a lawyer to go over every single page of the petition and schedules carefully to make sure it is complete and correct. Do not let a law firm mail you the petition and schedules to sign off on without meeting with a lawyer and their team for at least two hours.

Topics: 341 Meeting of Creditors, Filing Bankruptcy

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