What is the §341 Meeting of Creditors?

Most people only have to attend one meeting when they file a bankruptcy which is called the Meeting of Creditors. This meeting is outlined in 11 U.S.C. §341 so bankruptcy attorneys often call it the “341 meeting” or simply a “341”. Normal non-attorney folks just call it the “Meeting of Creditors”.

22 Meeting

When does the Meeting of Creditors take place?
This meeting will be set by the Court and it usually occurs between 4 to 6 weeks after the date of filing. The Court will mail you a notice with the date, time, and place but your attorney will probably tell you as well.

Where does the Meeting of Creditors take place?
There are four locations in Utah where these meetings take place. Usually your meeting will be assigned to the location nearest the home address you listed on your bankruptcy petition. The addresses to all four locations are listed below.

Federal Building
324 25th St.
Room 6026
Ogden, UT 84401

Ken Garff Building
405 S. Main Street
Suite 250A or 250B
Salt Lake City, UT 84111

Provo City Library at Academy Square
550 N University Ave
Room 308
Provo, UT 84601

Washington County Boulevard Office Building
87 N. 200 E.
3rd Floor
St. George, UT 84770

What do I need to bring to the Meeting of Creditors?
I covered this in another post but there are four things you need to bring:

1. Driver’s License
2. Social Security Card (or other proof in the form of a document not prepared by you with your full social security number listed on the document, like a W-2)
3. Most recent pay stub (the last pay stub you received before the Meeting of Creditors)
4. Bank statements covering the month of your filing date

What happens at the Meeting of Creditors?
You should arrive at least 15 minutes before your scheduled time so that your attorney can meet you there and discuss your case if he needs to. You will then go into the room with your attorney where the meeting will be conducted. Although your case will be assigned to be heard during a 1-hour block with a number of other people, usually your case will last only 10 minutes.

The trustee will go through his list and call the names of the cases for that time. When your name is called your attorney will go with you and will sit right next you in the seats upfront. The trustee will then ask you questions about your case and the petition we filed. Answer the questions truthfully and accurately. If you don’t know the answer then you can defer to your attorney. Below is a list of some of the more common questions the trustees ask:

· whether you have read through, understand, and signed your petition
· whether the information listed on your petition is true, complete, and accurate to the best of your knowledge
· whether you read the bankruptcy information sheet
· whether you have listed all your property in your schedules and whether you have listed accurate values
· whether you have transferred any property in the last two years
· whether you have repaid any of your creditors within the three months prior to your bankruptcy
· whether you have repaid any relatives or close friends in the last year
· whether you have sold or given away any property or transferred any money in the past several years
· how you determined the value of your property listed in your paperwork
· whether your income is accurate in your schedules and on your “Means Test”

After the trustee asks you questions about your petition, he will then ask “are there any creditors with questions?”. At this point any of your creditors may come forward to ask you questions. Most of the time there are no creditors with questions. If you owe the State of Utah money then the Utah State Tax Commission will be sure to show up. If you have purchased something from RC Willey you can bet that they will be there. But for most creditors it’s not worth paying someone to appear at the meeting because they are not likely to recover anything.

Once the trustee and the creditors have finished asking questions then you are free to go. Sometimes the trustee will ask for some additional documentation and if he does then get that to your attorney ASAP so he can get it to the trustee.

Should I be a nervous Nellie about the Meeting of Creditors?
No, you should not be a nervous Nellie about the Meeting of Creditors. There is no reason to be nervous. The Meeting of Creditors is not held in a Court nor is it before a judge. You will be placed under oath and are required to answer truthfully. The reality is this—if you have been honest with your bankruptcy attorney and all your financial information is provided in your petition then you really have nothing to hide.

So, just tell the truth and you will be fine. Trust me, I’ve been to a gazillion of these and it’s really not as bad as most people picture it in their minds.

How should I dress for the Meeting of Creditors?
It actually surprises me how few people ask me the question. However, it doesn’t really matter how you dress in my opinion and I don’t think the trustees care either. I’ve seen a variety of attires ranging from the dingiest jeans to expensive and fancy suits. Again, I honestly don’t think it matters how you dress.

What happens if I don’t attend my Meeting of Creditors?
If you don’t attend your Meeting of Creditors then you have made a huge mistake. If you don’t go to your 341 Meeting your case will be dismissed. You will not receive a discharge of your debts and the automatic stay will no longer be in effect. If your case is dismissed you can still file again but you will have to pay the filing fee again and the automatic stay is limited for repeat filings. The point is this: DO NOT MISS YOUR MEETING OF CREDITORS! If for some reason you have a scheduling conflict that you cannot resolve, contact your attorney as soon as possible so that he can try to reschedule the date.

If you have more questions about the Meeting of Creditor be sure to ask your attorney. Bankruptcy attorneys sometimes gloss over the details of the Meeting of Creditors simply because there are so many things they could tell you but they don’t have the time and you don’t really need to know everything they could tell you. But if you have more questions, ask your attorney and he should be able to give you an answer.

What are my options for paying my bankruptcy filing fee?

Short answer: (1) pay in full, (2) pay in installments, or (3) apply for a fee waiver.

1. Pay in full21 Cash Register

This is the easy option for both me and for the client. When you make a payment to my firm for the attorney’s fees you also make payment for the filing fee. Paying in full makes it easier for me because I don’t have to worry about reminding the client to pay the filing fee. It’s also easier for the client because there is nothing else you have to do.

2. Pay in installments

Coming up with the money for attorney’s fees can be difficult when you are considering bankruptcy. Fortunately, the Court allows you to pay the filing fee in three installments. You don’t even have to pay the first installment when you file.

What the Court does require is that you make your first payment two weeks within two weeks of filing, the second payment within two weeks after the first payment, and the third payment within four weeks of the second payment.

Let me use an example. Let’s say you filed chapter 7 bankruptcy on Monday, February 1, 2016. The total amount for the filing fee is $335.00. Your first payment is due on or before February 15, 2016. Your second payment would be two weeks after that, on Monday, February 29, 2016, Leap Day (watch out for Leap Day William). Your third and final payment would be due four weeks later on Monday, March 28, 2016.

Below is a table showing how this works.

Payment Date Amount
File Bankruptcy February 1, 2016 $0.00
1st Payment February 15, 2016 $110.00
2nd Payment February 29, 2016 $110.00
3rd Payment March 28, 2016 $115.00

3. Apply for fee waiver

The last way to pay for your filing fee is to not pay at all. If you meet the guidelines then you file what is called the “Application to Have the Chapter 7 Filing Fee Waived”. This is only available to chapter 7 debtors; it is not available to chapter 13 debtors.

There are several factors the Court considers when deciding to grant or deny your application for fee waiver. The most important factor, however, is your income. If your monthly income is 150% or less of the poverty level for the number of people in your household then the Court will likely grant your application for fee waiver. I covered this in more detail in an earlier post.

Talk to your attorney about which payment method is best for you.

How do I pay my bankruptcy filing fee to the Court?

How do I pay my bankruptcy filing fee to the Court?

Short answer: pay by phone or pay in person at the bankruptcy court.

20 Court

When I meet with new bankruptcy clients I always give them a few documents that explain several things. I get asked a lot of repeat questions and most of the answers to these questions can be found on the documents I give to my clients. One of those questions that I get frequently is how do I pay my filing fee?

There are two ways to pay your filing fee:

1. Pay by Phone

You can call the Court on the phone and pay by debit card. The Bankruptcy Court phone number is 801-524-6687.

2. Pay in Person at the Court

You can go to the Courthouse and pay in person. The Bankruptcy Court Clerk’s office is located on the 3rd floor. The address is listed below.

Frank E. Moss, U.S. Courthouse
350 South Main Street, #301
Salt Lake City, Utah 84101

I always tell my clients that it is their responsibility to pay the filing fee. If you do not pay the filing fee on time then the Court will dismiss your case. Once your case is dismissed you can file again but your attorney might ask for more fees because it will take him more work. You will also have to pay the filing fee in full again.

It is your responsibility—not your attorney’s—to pay the filing fee. Save yourself, and your attorney, a headache and pay your filing fee on time.

How do I get a free credit report?

How do I get a free credit report?

Short answer: go to www.annualcreditreport.com and request a free credit report.

19 creditOne of the most important things you need to do when preparing for a bankruptcy is to identify all your creditors. You are required to list all of your debts and creditors on the bankruptcy petition. I’ve had a number of clients ask me ‘how do I identify all of my creditors?’

The best place to start is with a credit report. Credit reports are not perfect and they don’t list all of your debts but for most people the credit report will include most of your debts. There, however, are some items that are usually not reported on your credit report. Pay day loan companies, for example, generally do not go to the effort to report these loans to the credit bureaus. Small businesses also rarely report debts. That is why I recommend to my clients that they keep a stack of all the bills and legal documents they have received.

Is it your bankruptcy attorney’s job to identify all your debts? People ask me this all the time and the answer is ‘no’. Not only is not his job, it’s also impossible for your attorney to identify all your debts. Your bankruptcy attorney can pull a credit report for you but, as I mentioned before, not all debts will be listed on your credit report. The person who knows your debts best, is you.

I always pull a credit report for my clients for a couple of reasons. First, I want to be sure I can identify as many debts as possible. Second, people often don’t keep track of lawsuits or judgments filed against them. Third, and most importantly, I can import all the data from the credit report into the software I use to create the bankruptcy petition which saves me huge amounts of time. As a side note, years ago, when I was a mere legal clerk, I used to manually enter in the data from credit reports into the computer. It was horrible. My eyes and my fingers hated me for it.

Although I pull credit reports for my clients, I encourage them to get and print out a copy of their credit report for our initial consultation. It helps both me and my clients figure out what debts they have.

Once a year you can order your free credit report from www.annualcreditreport.com. It’s a good idea, whether you are considering bankruptcy or not, to review your credit report to make sure there are no errors.

Can I keep the items I bought from RC Willey when I file for bankruptcy?

Can I keep the items I bought from RC Willey when I file for bankruptcy?

Short answer: yes, if you want keep the item but you have the option to surrender the item.

18 RC Willey

About 4 to 6 weeks after you file any chapter of bankruptcy, you are required to attend what is called the “Meeting of Creditors”. At the Meeting of Creditors, the trustee will ask you questions about your bankruptcy petition. The bankruptcy trustee is an attorney appointed to represent the creditors in your case.

After the trustee has asked you some questions about your petition, he will ask “are there creditors with questions?” at which point any creditor can ask you questions. I would say a good three-quarters of my cases have no creditors that appear. When a creditor does show up it is generally the IRS, the Utah State Tax Commission, or RC Willey.

“Why does RC Willey show up to the Meeting of Creditors when no other creditors show up?” RC Willey tends to be a little more aggressive, for better or for worse, than other creditors. When you purchased a piece of furniture or any item from RC Willey on credit, RC Willey will retain a secured interest in that item, similar to the secured interest a lender has in your car or your house.

If for some reason you default on your loan, RC Willey has a right to take back the item that was sold to you, and they like to enforce this right. The reality is, however, they don’t want to take the item back from you. They want you to pay for the item. It is unlikely that RC Willey will recover more from acquiring the item and selling it at a discount than they will if you keep the item and pay them.

So what options do you have when you have purchased something from RC Willey? There are usually three options.

Option 1: Surrender the item

If you don’t care to pay for the item or it is a crappy item, you can tell RC Willey that you would like to “surrender” the item. Surrendering the item means you let RC Willey come take the item from you and whatever deficiency is left will be discharged in the bankruptcy.

Option 2: Reaffirm the debt for the full amount you owe

This is RC Willey’s preferred option. I always tell my clients, creditors care about one thing––collecting money. You do have the option to reaffirm the debt. When you file a bankruptcy, your contract with RC Willey is terminated. Reaffirming the debt means that you will voluntarily take on that debt again. If you reaffirm for the full amount, RC Willey will lend you credit in the future.

Option 3: Reaffirm the debt for fair market value

This option is usually the option I recommend to my clients. People generally like the items they purchased from RC Willey and would like to keep them. You do have the option of reaffirming the debt for the market value of the item. This amount is generally about half the amount you owe on the item, although it varies depending on the item.

The downside of reaffirming for fair market value is that RC Willey will NOT lend you credit in the future. For most people, this is not the end of the world. While I personally like RC Willey and I have purchased from them multiple times in the past, there are plenty of other furniture stores that WILL lend you credit.

What if I want to keep some of the items I purchased from RC Willey but not all of the items?

You can pick and choose which items you would like to reaffirm. Let’s say you really like a dining room table you purchased from RC Willey but you don’t like the sofa you purchased. You can reaffirm and keep the dining room table and surrender the couch.

What if I do not have the item?

Occasionally I will have a client tell me that they no longer have the item they purchased from RC Willey. I have heard all kinds of stories of what happened to items purchased from RC Willey from family members taking the items to foreign countries to ex-boyfriends and ex-girlfriends who have disappeared with the items. What happens then?

RC Willey has two choices––give up or file a suit for fraud against you. I say they have two choices but in every case I have dealt with RC Willey they just give up. Suits for fraud are rarely filed and usually involve tens of thousands if not hundreds of thousands of dollars of debt. Any claim RC Willey files against you is not a secured claim but rather an unsecured claim. After all, they cannot expect you to surrender an item you do not have.

How much does it cost to file a chapter 13 bankruptcy?

Short answer: typically around $500 to $800 to get things rolling.

16 Chapter 13

I am going to split this question into two sections. First, I will discuss how much money you will need upfront to file. Second, I will discuss how much money you will pay in total over the course of your chapter 13 plan.

Upfront Costs

The bulk of what a bankruptcy attorney will earn on a chapter 13 plan is earned through chapter 13 plan payments (an amount you will pay every month to the chapter 13 trustee) which take place over a three-year or five-year period. Because of this, your bankruptcy attorney doesn’t necessarily need any money upfront because he will get paid through the plan. But he is also taking a risk on getting paid because he may or may not be able to confirm your case. You will sometimes see attorneys advertise a “no-money-down” chapter 13 and these are the attorneys that will get paid solely through plan payments. You will still need to pay the Court filing fee but this can be paid in installments after you have filed.

Many attorneys, however, have a different approach. Many chapter 13 attorneys will require between $500 and $800 to get your chapter 13 filed. Part of that amount, $310 to be exact, will be used to pay the Court for the filing fee. The rest of it will be used as attorney’s fees to cover the attorney’s risk just in case your case doesn’t get confirmed so he will at least be able to earn something.

Total Amount Paid Through Plan

I bet most people who file for chapter 13 don’t know how much their attorney will make through the plan, although this is disclosed on the bankruptcy petition. In 2010 the presumptive fees for chapter 13 cases were set by the bankruptcy court. Here is the breakdown from the court’s website.

$3,000.00 – in below median income cases with $150/mo payments for 36 months or less

$3,250.00 – in all other below median income cases

$3,500.00 – in above median income cases

This amount will be paid to your bankruptcy attorney over the course of three or five years.  The trustee will also get paid about 10% of the total amount of payments you make which can range from a few hundred dollars to a few thousand dollars.

If your plan is not returning any money to unsecured creditors (the lowest amount you can pay) and you have a three-year plan then you will pay around $3,300.00 over 36 months which equals out to just under $100 a month. That is the bare minimum you will have to pay.

If you have tax debts or other priority or secured debts then your plan payment, and consequently the total amount that you will pay, will be more.

While this might seem like a lot of money, especially for those filing for bankruptcy, it does take quite a bit of time for a bankruptcy attorney to confirm a chapter 13 case. And the chapter 13 monthly plan payments are almost always easier to make than the alternatives.

How much does it cost to file a chapter 7 bankruptcy?

Short answer: there are two fees you will have to pay—attorney’s fees and the Court filing fee.

1. Attorney’s fees: depends on the complexity of your case but usually between $900 and $1,800.

2. Court filing fee: $335.

Money

Whenever I shop on Amazon and I do a search for a particular product, the first thing I notice is the rating of the product. I need (want) to buy quality stuff! The very next thing I look at is the price. If the price isn’t in the range I think I should be paying then I can easily dismiss the product and move on, period. I don’t need to take any more time analyzing the product.

Price is an important factor to consider when filing for bankruptcy. If you are considering filing for bankruptcy that means funds are already tight.

As I mentioned above, there are two fees associated with filing a chapter 7 bankruptcy—attorney’s fees and the Court filing fee.

The attorney’s fees are determined by the attorney or the firm he/she works for. Because bankruptcy attorneys cannot collect their fees after the client has filed for bankruptcy, this means that most attorneys will quote you a flat fee. This differs from the general billing practice which most areas of law, and lawyers, use, which is an hourly rate.

The amount of time I spend on each bankruptcy case varies. Some cases are fairly simple and I only spend a few hours on the case. Other cases are much more complex and require much more time to meet with the client, communicate to the client about the issues that need to be addressed, prepare the bankruptcy statements and schedules, draft additional motions, and attend additional meetings (i.e. extended 341 Meeting of Creditors, 2004 Examination). Because of this, I hesitate (as do most other bankruptcy attorneys) to simply quote a price over the phone without knowing much about the case.

That being said, if I do not foresee many problems arising in your case (and I would say a good 70% of cases fit into this category) I charge around $1,200 (at the time of this writing) for attorney’s fees. I used to charge less when I was young warthog because I was hungrier for business. After I got some experience under my belt, I am much better now at estimating how much time each case will take me.

In Utah I have seen attorneys charge as low as $800 and as high as $3,000 for a chapter 7 bankruptcy, but both of these are outliers. For your standard run-of-the-mill chapter 7 bankruptcy in Utah I would say most attorneys charge between $1,100 and $1,800. I always tell my clients that they can call around and get quotes from other attorneys. I probably shouldn’t do that, as it is definitely not in my financial best interest to do so, but I absolutely hate making my clients feel pressured.

The Court filing fee is far less complicated. Every chapter 7 in every state of the union (because bankruptcy is federal law) the filing fee is $335.

In total you are looking at spending between $1,500 and $2,200 total on a chapter 7 bankruptcy. You can file a bankruptcy without the help of an attorney but I would not recommend it (see here and here).