Chapter 7 Bankruptcy: What Happens in the First Meeting Of Creditors?

In a previous podcast & videoblog we discussed the Chapter 7 Bankruptcy Process.   In this article we will discuss what happens at the First Meeting of the Creditors in a Chapter 7 case.  

‍When your bankruptcy petition and schedules are filed, the court will schedule a meeting with the trustee called the First Meeting of the Creditors.  Although notice of this meeting is sent to everyone you list as a creditor in your petition, it is extremely rare for a creditor to actually attend.

Meeting of the Creditors

‍After the meeting, you will be required to take an online financial management course.  Once this occurs and once the period for creditors to object to your discharge has passed, your bankruptcy case will be closed.  

At a typical meeting of creditors the trustee will first ask some preliminary questions for the record:

• The trustee will ask to see your photo ID and Social Security Card to confirm that you are the same person who filed your schedules.
• The trustee will swear you in.  You promise to tell the truth in the meeting under oath. 
• The trustee will show you a declaration that you signed before filing your petition and schedules, certifying that you have reviewed your schedules and that they are true and accurate.  The trustee will ask you if the signature on the declaration is yours and if you did in fact review your schedules before signing.  The trustee will ask you to confirm the accuracy of the schedules and that there are no changes necessary.
• Before you hired your attorney, your attorney should have shown you a Bankruptcy Information Sheet, describing the Chapter 7 and Chapter 13 Bankruptcy processes and discussing how bankruptcy may affect your credit.  The trustee will ask you if you reviewed this Bankruptcy Information Sheet and whether you had any questions.  
• Next, the trustee will confirm your place of residence.    

The trustee will then review your schedules and ask any specific questions she may have regarding your debts, assets, income and liabilities.  If there are no special issues that arise, the trustee will ask the following basic questions, and may ask some follow up questions based on your answers:

• Have you owned any real estate in the past 5 years?
• Have you owned a vehicle in the past 1 year?
• Have you had a bank account within the past 1 year?
• Did you receive an income tax refund or are you expecting one?
• Does anyone owe you money?
• Do you have any claims for which you may be able to sue anyone?
• Were you recently left any inheritances or are you imminently expecting an inheritance?
• Do you have any life insurance or other investments such as stocks, bonds, mutual funds, or IRA accounts?
• Have you been self-employed within the past 2 years?
• Do you have any personal property, such as jewelry or art, worth more than $2,000.00?
• Do you have a current source of income?
• Have you sold any major assets or transferred assets out of your name in the past 1 year?

I always recommend that my clients answer these questions briefly, open and honestly.  I also tell my clients to remember that most of the time, these meetings are very painless and that the trustee is not adversarial. For more information on Chapter 7, read our article Is Chapter 7 Bankruptcy in Illinois Right for You?