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Trustee's meetings exposed! (Part 1)

When I have a new bankruptcy client in my office, the first thing I will do is explain to them how bankruptcy can help them and, given the results of a preliminary interview, what kind of bankruptcy (Chapter 7 or Chapter 13) can help them best. After that, the conversation will move to how the process will actually unfold. First, I explain, we will sign a retainer. Second, I will conduct a fairly lenghty interview to ascertain the nature of their assets and liabilities. Third, I will give them a list of documents - bank statements, pay stubs, tax returns etc. - that I will need from them in order to draft their petition. Fourth, a week or so later, with those documents in hand, I will draft and then file their petition with the bankruptcy court. Fifth, about a month after their petition is filed, we will go and meet with the bankruptcy trustee.

The meeting with the bankruptcy trustee can be horrendous. They trustee, I explain to the client, will sit them in a dark room on a broken chair, shine a light in their face and shoot them rapid-fire questions about their credit card use and their spending habits. Then the trustee will pull out all their checking account statements and credit card statements for the last five years and God forbid the client can't account for every penny spent during that period!

Of course, the Trustee's meeting is nothing like that, but sometimes, no matter what I tell my new clients, I can tell that that's what they're afraid of. I thought it appropriate, therefore, to devote a couple of blog posts to what trustee's meetings are actually like.

They're boring. Most of the time, they're just boring. But boring is good. As a matter of fact, when it comes to trustee's meetings, boring is exactly what you want.

On the morning of your trustee's meeting - also called a 341 meeting after the section of the bankruptcy code that dictates the requirements of the meeting - you will wear casual clothes and you will bring, per my previous instructions, your original social security card and your drivers license or other state ID. We will get to the bankruptcy court about an hour before your meeting is scheduled, and we will go to the room designated for the meeting, but we won't actually go into the meeting room just yet. Instead, we will find a private place to sit and we will flip through your bankruptcy petition page by page to refresh your memory of what's in it. We will also flip through whatever bank statements, pay stubs and tax returns the trustee may have asked for, and received, a couple of weeks before.

As we flip through your petition and financial documents, I will bring to your attention issues that the trustee might ask you about. I've probably been to a hundred trustee's meetings, and I have a pretty good idea what they look for and what they'll ask about. For example, if a month before you filed your bankruptcy petition, you deposited and then immediately withdrew a large sum of money from your bank account, that's something that might catch the trustee's attention. We'll discuss that beforehand and I'll ask you to explain it to me just like you will explain it to the trustee, if he or she asks about it. The most important thing is that you tell the truth, the whole truth and nothing but the truth. The trustee knows you have filed for bankruptcy. The trustee knows your finances are a mess and the trustee knows you probably made some bad financial decisions along the way. They won't judge you. They will, however, rightfully expect you to be 100% truthful in your responses.

Eventually, when our review is done, we will go into the room where the meetings actually take place. The room will have three or four rows of chairs, maybe 20-30 chairs in all. All or nearly all of those seats will be occupied with debtors and their lawyers waiting for their turn to be called. In front of the room will be a desk, and on the other side of the desk, facing us, will be the trustee and his or her assistant, and on our side, with their back to us, will be the debtors the trustee has called up to be interviewed, along with their attorney. Each interview can take anywhere from five minutes to twenty minutes. If a debtor doesn't speak English and needs a translator, the trustee will call a translation service and put the translator on speaker phone and then go on with the interview.

Most of the time you spend at the trustee's meeting will be spent waiting for you turn to be called. The best way to spend that time is to listen closely to the questions the trustee asks the other debtors who are called on before you. I always try to get seats closest to the trustee for just that reason. I want my client to be well prepared when it's there turn.

Once we are called on, my client and I will take our seats at the table opposite the trustee. The trustee will turn on a tape recorder, read the title of the case into the tape recorder, then they will ask my client to raise their right hand and swear to the truthfulness of what they are about to say. The trustee will then ask me to identify myself for the record, and then the questioning will start. We will discuss what happens next on my next blog post.

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