Chapter 7 bankruptcy involves a hearing that is called a 341 hearing. The more common name for this hearing is the meeting of the creditors, and all of the creditors that are listed in the bankruptcy petition have a right to attend. The debtor must attend this meeting, but it is not mandatory for the creditors. The purpose of the 341 hearing is to allow the creditors to obtain certain financial information concerning the debtor.
During the Meeting of the Creditors the bankruptcy trustee will normally be in charge and the bankruptcy judge will not normally attend unless there is a debt reaffirmation or a creditor is challenging the discharge of any debts listed in the petition. The bankruptcy trustee will oversee the meeting, ask questions of the debtor, and allow any creditors that appear to ask certain questions as well.
Many creditors will not show up for the 341 hearing for one of several reasons. The creditor can not stop the discharge unless it can be shown that fraud or deception are involved in most cases. A creditor may be able to claim a valid reason why the discharge should not be given but that does not mean that the judge will deny the discharge of that specific debt if there was no fraud or deception on behalf of the debtor.
At the Meeting of the Creditors the debtor will be asked questions, and it is very important that all the questions are answered honestly and accurately. The bankruptcy trustee will usually go over the information contained in the bankruptcy file and ask questions to ensure that the correct information is available. The questions asked will help verify all the facts in the case and make sure that the information that the bankruptcy court has is accurate and up to date.
If the debtor is suspected of hiding assets by a creditor then the creditor may show up for the 341 hearing in order to bring this information to light to the bankruptcy trustee and judge. If it is determined that assets are being hidden by the debtor or that there is any suspicion of bankruptcy fraud then the bankruptcy case could be severely affected. In addition the debtor may face civil and criminal penalties for lying to the court, hiding assets, fraud, and a number of other possible charges.
The Meeting of the Creditors will usually take approximately one hour to complete. The time needed may be more or less, depending on the number of creditors who appear and the specifics of the bankruptcy case. The trustee will question the debtor under oath about all of the facts and information in the case. Questions about income, assets, debts, and other financial aspects may be asked. The trustee may allow creditors who attend the hearing to ask questions as well. If an attorney has been retained then this lawyer will attend the 341 hearing with the debtor and make sure that the hearing foes smoothly and the desired results are achieved.