If you are considering bankruptcy, have filed for bankruptcy or discussed it with an attorney or a friend, you have probably heard that a creditors’ meeting or 341(a) hearing takes place soon after the bankruptcy case is filed.

While it sounds like a scary meeting where you stand in front of the judge and all your creditors and justify your reasons for filing bankruptcy, it is anything but that.

What is this “meeting of creditors” then?

If you file for Chapter 7, most likely you will never even meet the bankruptcy judge, but you will meet the Bankruptcy Trustee. In Los Angeles and San Fernando Valley, the Trustee is usually a bankruptcy attorney or a CPA. Trustee’s job is to both make sure that the paperwork is in order, but mainly to determine if there are any assets available (that are not exempt) that can be liquidated and sold for the benefit of creditors.

How will you know when it is and where to go?

If you filed for bankruptcy with an attorney, your attorney should be able to tell you when and where it is. If you didn’t (and even if you did), you should receive a notice from the bankruptcy court within a week after filing. Review it carefully for deadlines and meeting dates. Note, the date/time/address and put it in your calendar.

Don’t confuse the location of the meeting with the bankruptcy court location or Trustee’s office address. In Los Angeles and San Fernando Valley, creditors’ meeting takes place in a designated location that is different from the Bankruptcy Court. The meeting of creditors is generally scheduled 28-45 days from the date you bankruptcy was filed.

Where is it exactly?

If you live in the Los Angeles or nearby, your meeting will likely take place in the following two locations. Note, refer to your notice for location.

Location 1:
725 S. Figueroa St., Room 101
Los Angeles, CA 90017

About this location: Meeting of Creditors takes place on the first floor of the Ernst & Young Building. The building is located on 7th St. and Figueroa. There is a parking structure when you turn onto 7th St., but it is expensive. However, validation can usually be obtained at Starbucks.

Location 2:
21051 Warner Center Lane, Room 105
Woodland Hills, CA 91367
About this location: This location is a bit hard to find and is close to the actual Bankruptcy Court. Pay attention to the numbers. There is plenty of free/open parking right outside the building.

What should you bring with you?

1. Bring a current/original driver license or ID.
2. Bring an original social security card.
3. It may be a good idea to bring a copy of your most recently filed tax return. While you or your attorney (if you have one) are required to mail your most recent tax return to the Trustee ahead of the meeting, sometimes the attorney (or you) fail to do it. Sometimes the Trustee never receives it or loses it. It is good to have a copy on hand.
4. Bring any documents specifically requested by the Trustee or the office of the US Trustee before the meeting (if any were requested).

What should you wear?

This is not court and you are not required to wear a suit and you are likewise not expected to go out and buy a new outfit just for the meeting of creditors. The Trustee understands that you are in a tough financial situation. However, there is something to be said for being reasonable and respectful.

Every attorney has a story about a client that showed up in something absolutely inappropriate and how it affected the Trustee’s questioning and impression of the client. Yes, ideally what you wear should have absolutely no impact on how the Trustee perceives and questions you. However, I don’t have to tell you that reality is not ideal. You don’t want the Trustee to have a negative attitude towards you and have that reflected in how they treat your case and you at the meeting. Think – respectful, conservative (not flashy), and clean. Just be reasonable!

What will the Trustee ask you? Will he/she want to know why you filed for bankruptcy?

While it is impossible to generalize because the questioning will depend on the Trustee as well as your particular paperwork, there are certain questions you should be prepared to answer.

• Please state your name and address.
• Did you list all your debts and assets?
• Did you transfer any property in the last 4 years?
• When was the last time you used your credit card?
• If you took out a HELOC (line of credit on the house), when did you take it out and what did you use the money for?
• If you have a business, you may have to talk about that.
• Do you have any spousal or child support obligations?
• Did you read the green pamphlet? This is a pamphlet you should grab when you enter the room and review before your name is called.

Will your creditors be at the meeting of creditors?

While it is called a meeting of creditors and your creditors likely received notice and can attend, it is unlikely they will actually show up. Creditors like Citi or American Express are unlikely to show up. Who is more likely to show up? An ex-spouse (or friend) you owe money to. An aggrieved business partner or employee. It is usually obvious before the filing if a creditor will show up. They will usually try to contact you or the attorney and will attempt to threaten you into repaying the debt.

How long will your meeting of creditors take?

The actual “questioning” will take about 3-5 minutes. However, because approximately 30 people are scheduled to appear at the same time and the Trustee may be running behind already, I recommend allowing at least two hours for the meeting. I ask my clients to meet 15 minutes before the meeting.

Lastly, why is it sometimes called a 341(a) hearing?

Because the requirement to have this type of meeting when bankruptcy is filed can be found in the Bankruptcy Code’s Section 341(a).

Final words:

DON’T FORGET YOUR SOCIAL SECURITY AND DRIVER LICENSE!
TURN OFF YOUR CELL PHONE BEFORE ENTERING THE ROOM!
BE REASONABLE!
BE HONEST, YOU ARE UNDER OATH!
DON’T WORRY! YOU WILL LIKELY COMPLETE THE MEETING SUCCESSFULLY AND REGRET THE TIME YOU SPENT WORRYING ABOUT IT.

I heard income taxes do not go away in bankruptcy. Is that true?

It depends. I know you like to hear that, but that is unfortunately the correct answer.

You can discharge taxes (make them go away) in Chapter 7 bankruptcy if you meet the following requirements.

1. Tax return was due more than 3 years ago.
- If we were filing today, 7/12/10, then the year for which taxes are dischargeable would have to be not later than 2006. Why? Because taxes are due April 15. So count back, 2007 taxes would not be due until April 15, 2008, so it has been less than 3 years since taxes were due.

2. Tax return was filed more than 2 years ago.
- This limits things a bit more. Assuming you didn’t file a return for the 2006 taxes until August of 2008, in order to have the taxes be dischargeable, you would have to wait until August 2010 before filing.

3. Tax claim was assessed more that 240 days before the filing of the bankruptcy. - When the tax was assessed can be determined by reviewing the tax transcript.

4. The tax return filed was not fraudulent and was not a result of a willful evasion of taxes.

If you are living abroad, but have accumulated debt in US that you would like to discharge through bankruptcy, can you file and if so where? The specific question is where will the venue be proper?
Assuming that you don’t have a US domicile, residence, principal place of business, you can still file where you have principal assets for a longer portion of one-hundred-eighty-day period.

You can file in any district where you have majority of US assets.

28 U.S.C. Section 1408 provides in relevant part that “…a case under title 11 may be commenced in the district court for the district….(1) in which principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceeding such commencement, or for a longer portion of such … period than ….in any other district … .”

For example, if you no longer have ties to US, you can hire my office and I will open a bank account in your name, or will deposit your money in a client trust account for a period of 91 days prior to filing, giving you Central District of CA as the proper venue. In the alternative, if you have a bank account that you opened while residing in US, you should consider using that district for your bankruptcy filing.

1. You are having trouble sleeping due to financial troubles, especially worries over debt.
2. You are borrowing from one credit card to pay another card.
3. You are about to withdraw money from 401(k) to repay debt.
4. Your wages are about to be or are being garnished.
5. The calls from creditors are relentless.
6. You are unable to save money for retirement or emergency fund and depleting your savings paying credit card debts without making any headway in the balances.
7. You are not likely to repay your current debt within the next 5 years.
8. Your credit is already very bad and you would like to see it improve, but don’t have the funds to repay credit card/collection debt.
9. You had surgery/emergency medical procedure and now that you recovered you are stuck with a huge medical bill you will not be able to repay.
10. You have stopped using your credit cards a long time ago and have been paying monthly payments, but just cannot make a dent.

Effective April 1, 2010, Chapter 13 debt limits will go up. This is exciting for those debtors who previously would only be able to file for Chapter 11 (more complicated and expensive) due to their inability to qualify for Chapter 13 because of too much debt.

The new limits prescribed in 11 U.S.C. Section 109(e) will go to $360,475 for liquidated, unsecured debt and $1,081,400 for liquidated, secured debt.