Podcast-Understanding the 341 Meeting of Creditors

Welcome to today’s blog and podcast focusing on the 341 meeting of creditors. This includes a focus on the role of the bankruptcy trustee and the bankruptcy judge.

If it’s your first time here, I’m Alex, your personal professor, and I’m joined here by Murphy’s Law, who will be supervising me (pointing to a figurine on my desk). What could go wrong- will, right? We’ve all been there and done that.

Filing the Bankruptcy Petition

When a bankruptcy petition is filed, whether Chapter 7 or Chapter 13, a 341 meeting of creditors is scheduled. This notice will also be sent to creditors whether you are listed on the bankruptcy petition as a creditor for your business or a personal loan to a friend or family member. Yes, Thanksgiving and the Super Bowl party will be a little awkward. But if you received that notice, what are you supposed to do?

The 341 Meeting of Creditors

There’s a common misconception about the 341 meeting of creditors. Based on the title, you might think all creditors will be there, arguing and going over everything, but that’s not the case. It’s called the 341 meeting of creditors because it’s found in section 341 of the Bankruptcy Code.

In reality, creditors rarely attend. Typically, if a creditor does attend, it’s usually a small business owner who received the notice and thinks they have to go to court.

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To clarify the meeting of creditors, you’re not going to court because court implies a judge is present, making decisions based on the facts of the case. You will never see a judge at a 341 meeting. Judges are prohibited from attending these meetings.

In my four and a half years in Jacksonville, Florida, I have never seen a bankruptcy judge because of a Chapter 7 case. Seeing a judge for Chapter 7 bankruptcy is rare, while it is common for Chapter 13 cases.

The hearings for the 341 meeting of creditors are usually held in a room within the courthouse. The trustee will be present, but never the judge.

The Bankruptcy Trustee and the 341 Meeting of Creditors

The trustee’s role is to represent the bankruptcy estate, meaning the assets involved. The trustee will ask questions and make a recommendation to the judge, who then signs an order. The trustee cannot make rulings or decisions at the 341 meeting. For that reason, it’s usually not worth it for a creditor to appear.

If there are issues as a creditor, you may file an objection. For example, someone received a personal loan from you and immediately filed for bankruptcy. The objection is heard before the bankruptcy judge in a hearing, not before the trustee at the 341 meeting.

Even without an objection, it’s likely the trustee has the debtor pay back that amount to the bankruptcy estate, and those funds are distributed to creditors based on their pro rata share.

If a deep dive is required, then a 2004 examination can be scheduled, which is similar to a deposition where questions are asked under oath.

As the creditor, you can ask questions like when the loan was received and what was done with the money. Although not very common, a 2004 examination is usually scheduled by the bankruptcy trustee. This might happen in approximately 10-20% of cases. However, any party with an interest can proceed with a 2004 examination.

Bankruptcy and the Proof of Claim

Now, let’s suppose it’s a Chapter 7 case, although this applies to Chapter 13 as well. As a creditor or interested party, you can file a proof of claim on the bankruptcy court’s website. Your proof of claim is “claiming” how much is owed to you. This process is the same for all creditors, whether it’s a big bank or an individual.

The process can be intimidating, as a court appearance may be required, especially if the debtor objects. But for the most part, it’s smooth sailing. You can submit your proof of claim locally at the clerk’s office or through the main website, PACER.gov, where you need to create an account.

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For those of you who are paralegal students and have my textbook in your courses, feel free to chime in like everyone else on my YouTube Channel.

Take care, everyone.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link.

Need to look for prior blog posts or other categories? Click the links below:

• Bankruptcy
• Your Wallet