How Cases Move Through Federal Courts
Chapter 7 Bankruptcy Cases
Section 341 of the Bankruptcy Code requires a creditors’ meeting. In a voluntary Chapter 7 case, it may take place twenty to forty days after the bankruptcy petition is filed. The 341 meeting, as it is called, is the creditors’ chance to meet with the debtor and get a preliminary idea of the debtor’s financial situation and of their prospects for getting their money. The debtor is required to attend the meeting and can even be arrested to compel attendance. The court sends notices of the meeting to all persons or businesses the debtor has listed as creditors. (In large cases in which some creditors may not be known, the court may advertise the meeting in newspapers.)
Technically, the U.S. trustee is responsible for presiding over the 341 meeting. In Chapter 7 cases, however, the U.S. trustee almost always delegates this responsibility to an interim trustee, who has authority to ask the debtor questions under oath but not to resolve disputes that may arise. (The judge is prohibited by law from even attending the 341 meeting.) Creditors rarely exercise their right to elect a permanent case trustee at the meeting; usually the interim trustee continues in this role.
The trustee and creditors ask questions of the debtor at the 341 meeting, with the aim of uncovering unlisted or undervalued assets. The trustee also explores whether the debtor has legal claims against others that could yield more money if pursued. If the trustee has any doubt about what the debtor owns after the 341 meeting, he or she must continue to investigate the debtor’s financial affairs.