The meeting of creditors (also called the 341 hearing) is a mandatory hearing almost all bankruptcy debtors must attend. At the 341 hearing, creditors have the right to ask questions about your bankruptcy papers and financial affairs under oath. But in most cases, creditors rarely attend 341 hearings.
Read on to learn more about when a creditor might appear in Chapters 7 and 13.
When you file for bankruptcy, you must disclose all of your creditors in your bankruptcy papers. In addition to listing your creditors' contact information in your bankruptcy schedules, you must submit a creditor mailing list (also called a creditor matrix) to the court. After filing the case, the court sends notice of your bankruptcy matter and the 341 hearing date to all of the creditors listed on the creditor matrix.
Unless there's an issue to explore, it's unlikely a creditor will appear at the 341 meeting of creditors because it costs money to hire an attorney to attend. Even if a problem exists, many debtors avoid attending the meeting or filing a motion or adversary proceeding or bankruptcy lawsuit by negotiating a solution with the creditor informally.
Even though it is unlikely that any creditors will come to your 341 hearing, it can happen. But it's doubtful that you'll be surprised. Most people have reason to suspect that a creditor might show up.
For instance, creditors will attend the 341 hearing if the creditor:
Former spouses and business partners who feel cheated tend to appear in Chapter 7 bankruptcy cases. People or government entities suing you in state court might also attend and ask questions. Finally, a creditor with a potential fraud case against you might inquire about things such as information on a loan application and your finances when charging a purchase.
However, most Chapter 7 matters are "no-asset" cases without property or assets to distribute to creditors and don't involve fraud. Even if a creditor suspected fraud, the creditor could still file an objection to discharge even if they didn't attend the hearing.
Creditors appear in Chapter 13 bankruptcy for the same reasons creditors attend in Chapter 7. The creditor who's most likely to show up suspects fraud and plans to ask the court to force you to pay off the entire balance owed in your bankruptcy case.
A creditor could appear to gather evidence to use to object to the approval or "confirmation" of your Chapter 13 plan, but it's unlikely. A creditor can file an objection without attending the hearing.
Keep in mind that creditors can still object to your discharge or object to your Chapter 13 plan even if they didn't show up to the meeting of creditors. If you commit bankruptcy fraud or incur debts shortly before filing for bankruptcy—known as presumptive fraud—creditors could have grounds to file objections in your case.
However, it's generally a good sign if no creditors come to your 341 hearing. If this occurs, and the bankruptcy trustee appointed to your case is satisfied with your answers to questions posed at the 341 meeting of creditors, the trustee will conclude the hearing.
Learn what happens after the 341 meeting of creditors in a Chapter 7 case.
A creditor whose debt the bankruptcy court discharged in Chapter 7 can't ask you to pay the debt after the case ends. However, a creditor whose debt wasn't discharged can resume collecting once the Chapter 7 case is over.
For instance, you can expect your student loan lender, the IRS, or the person you owe a support obligation to restart collection efforts after your Chapter 7 case closes. Learn more about debts you can erase in Chapter 7.
Also, the lender can recover a home, car, or other property serving as collateral if you aren't paying the debt after Chapter 7. The lender can't force you to make the payment because the bankruptcy discharge would have wiped it out. However, the discharge won't erase the lien, and the creditor can recover property using the lien.
Learn how to avoid liens in bankruptcy.
Absolutely. If the bankruptcy court dismisses your Chapter 13 case without granting you a discharge, you'll be responsible for paying outstanding debt balances.
People usually suspect that a disgruntled creditor might show up to object to their bankruptcy case. If you're in this situation, it's a good idea to speak with a bankruptcy lawyer. An attorney can explain the potential consequences and help you decide whether filing for bankruptcy is in your best interests.
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.