Carol called me the other day to ask what she should expect at the 341 Meeting of Creditors. She was somewhat nervous about the hearing. It is not unusual that I get a call from my clients after they get the notice of the hearing. Carol also asked if there would be a judge there and I said no, the hearing is conducted by a Chapter 7 Trustee whose job it is to review cases to see if there are any assets that can be sold to pay creditors. She also asked if any or all of her creditors would be there. I told her that it is unusual for all creditors to attend, but sometimes an automobile or mortgage creditor would send a representative but that it would generally be only to get a Reaffirmation Agreement signed. I once again advised her that a Reaffirmation Agreement is just an agreement between her and the creditor that she will keep the asset, the car or house, and will continue to make the payments. She also asked whether there was any chance she would lose her house or car. Again, if she intends to keep the asset, she would most likely have to sign a Reaffirmation Agreement and once that is filed, it is as if that creditor was not even included in the case. She said that she was still nervous about the whole thing. It is understandable that debtors get nervous regarding this meeting and some have even admitted that they could not sleep the night before the meeting.
Yes, this is an important meeting and creditors do have the right to attend such meeting and ask questions of the debtor. However, as I mentioned above, if it is a Chapter 7 meeting, the likelihood of creditors attending such meeting is very low. This is especially true for unsecured creditors such as credit card companies or banks that loaned out unsecured funds. The reason these unsecured creditors do not attend is because unsecured debt is dischargeable and the majority of Chapter 7 debtors have no assets to pay such debt. Debtors will sometimes ask if they will be in a courtroom and I tell them that the meeting is held in a small meeting room and not a courtroom and no judge is present. I also shared with Carol that statistically there are only about 10% of all Chapter 7 cases which involve assets that can be distributed to creditors. So it is more common to see a no-asset Chapter 7 case proceed to discharge without any issues. Carol thanked me for clearing up any confusion she may have had and said she would see me at the hearing.