Yesterday I sat through a slew of 341 hearings - 35 of them to be exact over a 5 hour period. I did this as I am preparing to file my own Chapter 7 case (pro se) on Oct 1 and wanted to see first hand how the Trustees operated in my Northern Georgia district.
I hope these notes help people here on the forum. I will try to answer any questions as they are posted.
SUMMARY
In summary, in each and every case, the Trustee's questions were around ASSETS and INCOME/JOB. There was not a single question about EXPENSES. This was surprising to me.
Also, in each case, most of the questions were read from a checklist and thus repeated to every debtor.
There were 2 different Trustees. One covered the morning cases and one covered the afternoon session. In relation to the checklist mentioned above, they each had their own personal checklist - so their questions were different. One example is the "afternoon Trustee" asked if anyone had made a payment of more than $600 to "anyone in the world" in the last 90 days. The morning Trustee did not ask this.
The debtors looked like everyday people. Don't know why, but this surprised me.
Each case took less than 5 minutes, with very few exceptions.
The only creditors who showed were for secured debts. The only questions the creditors asked had to do with repossessing the items. An example was a couple that had 2 JetSkis they were going to surrender. Not a single credit card (unsecured debt) representative showed up.
INCOME/JOB QUESTIONS
The income/job questions only came up when (a) person was unemployed, (b) a person had a significant drop in income - especially in relation to their 2009 tax return and (c) a person was self-employed and/or owned a business.
Unemployed
Unemployed people were asked if they had a new job. No one who was unemployed had found a new job so I do not get to observe any follow-up questions on this.
Drop in Income
People that had a significant drop in income were asked what happened. In every case, the people simply explained the job loss, drop in self-employed income, etc. The Trustee marked down what happened and moved on.
Self-Employed / Business Owners
Self-employed/business owners were asked if they had any accounts receivables/invoices that had not been reported. All debtors responded that they did not.
ASSET QUESTIONS
The majority of questions asked during each case seemed to be asset-related. I got a very strong sense that the Trustee was searching for assets that may not have been listed on the original paperwork.
Cash
The Trustee asked everyone not only how much cash they had when they filed, but also how much cash they had today. This was interesting as I expect the Trustee was looking for people that had current cash assets that the Trustee could claim. All debtors seemed to answer they had around $100 both when they filed as well as today. Some had a few grand - but none more than $3,000. Some claimed they had $10. In any event, this taught me to not have cash the day of my 341.
Real Estate
I do not own any, but for those who do, the Trustee asked everyone if they held an interest in any real estate anywhere in the world. Those that answered yes were asked if they were going to reaffirm the debt. One thing that jumped out at me was the alarming number of people who could not tell the Trustee what their property was currently worth. The Trustee would grow frustrated when they could not give him a value and a reason for the value. My suggestion: Go to zillow.com and get your real estate value. He accepted zillow values. Another observation: Not a single person had equity in any real estate property. Not one. This seemed to work in the debtors favor as the Trustee did not drill them deeper to see if there was any valuable asset he could grab. It is almost like the Trustee's have come to the conclusion that real estate equity is worthless to paying off creditors.
Transferring Assets prior to Filing
The Trustees were definitely looking for assets that might have been transferred (hidden) to family members or friends. They asked if any property had been given, bartered or sold to family/friends in the last 12 months. (Note: One man said he had given a used dining set to his son, worth around $500. The Trustee seemed not to care.) The Trustees asked if any payment of over $600 had been made to anyone "in the world" in the last 90 days. (Note: People who answered yes to this had paid mortgage/rent - and the Trustee did not care about these kinds of payments.) They also asked if anyone owned a safe deposit box in the last 12 months. (Note: Only one debtor answered yes and then said nothing was in it.)
Stocks/Bonds
Every debtor was asked if they had any possessions of stocks or bonds. None did expect one - who claimed the value was under $200. No questions came up about 401k and IRAs.
Cash Value of Whole Life Insurance
Every debtor was asked if they had any value stored in whole life. The only debtors who actually had whole life insurance policies answered they had already borrowed/used any value trying to pay off debts.
Expected Property from an Inheritance/Life Insurance
Every debtor was asked if they expected to receive an inheritance/life insurance. None did.
Expected Property from a Tax Refund
Every debtor was asked if they expected to receive a tax refund. None did.
Expected Property from a Divorce
Every debtor was asked if they expected to receive property in a divorce. None did.
Expected Property from a Lawsuit
Every debtor was asked if they expected to receive property in a current lawsuit - such as a personal injury from a car crash. None did.
Lottery Tickets
Every debtor was asked if they had a winning lottery ticket. No kidding. Like if they had hit the Mega Million jackpot they would still show for their 341.
OTHER OBSERVATIONS
2009 Tax Returns
People that had not filed their 2009 Tax Returns started off on the wrong foot with the Trustee. Most were told they would have to come back again for another 341. The only ones who got a pass had a good excuse (like they did not make enough to have to file.) The ones who had filed breezed through this step.
Identification
My district requires a government issued photo ID and a Social Security card. I was struck by how many people did not bring their SS card - and this caused their case to be rescheduled.
Debtors
I sat in the back of the room and watched people come in waves as every 30 minutes they tried to run 5 or 6 cases. No debtors wore suits, it was casual (bit not t-shirt / flip flop casual.) Some seemed nervous and fidgety but others brought books to read until their case was heard. They ranged in age from early 20s to retired. Each had a lawyer and I saw no pro se cases. I can say after watching the process 35 times, there is nothing to worry about.
Lawyers
Lawyers really did not do much. They sat at the table with the debtors, but the Debtors answered all of the questions. In some cases, the debtors struggled with the answer. The better lawyers helped by pointing out the answer in the paperwork. The crappy lawyers literally let the debtors flounder. You could easily tell the difference between the ones who knew their debtors' cases and the ones who were winging it. One case was really painful to watch as a debtor could not tell the Trustee what year he took a cash out refinance of close to $500k. The lawyer offered no help and the Trustee was pissed. It was the only case out of 35 were I felt a "tension" in the room. In addition, I watched lawyers change hats during the day. A lawyer in one case represented a secured creditor and two cases later he represented a debtor. I even saw the "morning Trustee" represent a debtor in the afternoon.
Expenses
As I mentioned in the summary above, not a single question came out around expenses. Not one in 35 cases. This was surprising to me. I am going to be cutting it close on the Means Test and frankly expected to observe questions about this - but the overall tone of the 341s was searching for income and especially assets. I have no assets so this was not a huge concern for me. Passing the Means Test is my top concern.
Renters
Some of the debtors were renters. Even though some were very low on cash (at least that is what they claimed) - not a single person was asked about "reaffirming their home/apartment lease." I found this also to be strange, as the homeowners were all asked if they wanted to keep their homes.
I hope these notes help people here on the forum. I will try to answer any questions as they are posted.
SUMMARY
In summary, in each and every case, the Trustee's questions were around ASSETS and INCOME/JOB. There was not a single question about EXPENSES. This was surprising to me.
Also, in each case, most of the questions were read from a checklist and thus repeated to every debtor.
There were 2 different Trustees. One covered the morning cases and one covered the afternoon session. In relation to the checklist mentioned above, they each had their own personal checklist - so their questions were different. One example is the "afternoon Trustee" asked if anyone had made a payment of more than $600 to "anyone in the world" in the last 90 days. The morning Trustee did not ask this.
The debtors looked like everyday people. Don't know why, but this surprised me.
Each case took less than 5 minutes, with very few exceptions.
The only creditors who showed were for secured debts. The only questions the creditors asked had to do with repossessing the items. An example was a couple that had 2 JetSkis they were going to surrender. Not a single credit card (unsecured debt) representative showed up.
INCOME/JOB QUESTIONS
The income/job questions only came up when (a) person was unemployed, (b) a person had a significant drop in income - especially in relation to their 2009 tax return and (c) a person was self-employed and/or owned a business.
Unemployed
Unemployed people were asked if they had a new job. No one who was unemployed had found a new job so I do not get to observe any follow-up questions on this.
Drop in Income
People that had a significant drop in income were asked what happened. In every case, the people simply explained the job loss, drop in self-employed income, etc. The Trustee marked down what happened and moved on.
Self-Employed / Business Owners
Self-employed/business owners were asked if they had any accounts receivables/invoices that had not been reported. All debtors responded that they did not.
ASSET QUESTIONS
The majority of questions asked during each case seemed to be asset-related. I got a very strong sense that the Trustee was searching for assets that may not have been listed on the original paperwork.
Cash
The Trustee asked everyone not only how much cash they had when they filed, but also how much cash they had today. This was interesting as I expect the Trustee was looking for people that had current cash assets that the Trustee could claim. All debtors seemed to answer they had around $100 both when they filed as well as today. Some had a few grand - but none more than $3,000. Some claimed they had $10. In any event, this taught me to not have cash the day of my 341.
Real Estate
I do not own any, but for those who do, the Trustee asked everyone if they held an interest in any real estate anywhere in the world. Those that answered yes were asked if they were going to reaffirm the debt. One thing that jumped out at me was the alarming number of people who could not tell the Trustee what their property was currently worth. The Trustee would grow frustrated when they could not give him a value and a reason for the value. My suggestion: Go to zillow.com and get your real estate value. He accepted zillow values. Another observation: Not a single person had equity in any real estate property. Not one. This seemed to work in the debtors favor as the Trustee did not drill them deeper to see if there was any valuable asset he could grab. It is almost like the Trustee's have come to the conclusion that real estate equity is worthless to paying off creditors.
Transferring Assets prior to Filing
The Trustees were definitely looking for assets that might have been transferred (hidden) to family members or friends. They asked if any property had been given, bartered or sold to family/friends in the last 12 months. (Note: One man said he had given a used dining set to his son, worth around $500. The Trustee seemed not to care.) The Trustees asked if any payment of over $600 had been made to anyone "in the world" in the last 90 days. (Note: People who answered yes to this had paid mortgage/rent - and the Trustee did not care about these kinds of payments.) They also asked if anyone owned a safe deposit box in the last 12 months. (Note: Only one debtor answered yes and then said nothing was in it.)
Stocks/Bonds
Every debtor was asked if they had any possessions of stocks or bonds. None did expect one - who claimed the value was under $200. No questions came up about 401k and IRAs.
Cash Value of Whole Life Insurance
Every debtor was asked if they had any value stored in whole life. The only debtors who actually had whole life insurance policies answered they had already borrowed/used any value trying to pay off debts.
Expected Property from an Inheritance/Life Insurance
Every debtor was asked if they expected to receive an inheritance/life insurance. None did.
Expected Property from a Tax Refund
Every debtor was asked if they expected to receive a tax refund. None did.
Expected Property from a Divorce
Every debtor was asked if they expected to receive property in a divorce. None did.
Expected Property from a Lawsuit
Every debtor was asked if they expected to receive property in a current lawsuit - such as a personal injury from a car crash. None did.
Lottery Tickets
Every debtor was asked if they had a winning lottery ticket. No kidding. Like if they had hit the Mega Million jackpot they would still show for their 341.
OTHER OBSERVATIONS
2009 Tax Returns
People that had not filed their 2009 Tax Returns started off on the wrong foot with the Trustee. Most were told they would have to come back again for another 341. The only ones who got a pass had a good excuse (like they did not make enough to have to file.) The ones who had filed breezed through this step.
Identification
My district requires a government issued photo ID and a Social Security card. I was struck by how many people did not bring their SS card - and this caused their case to be rescheduled.
Debtors
I sat in the back of the room and watched people come in waves as every 30 minutes they tried to run 5 or 6 cases. No debtors wore suits, it was casual (bit not t-shirt / flip flop casual.) Some seemed nervous and fidgety but others brought books to read until their case was heard. They ranged in age from early 20s to retired. Each had a lawyer and I saw no pro se cases. I can say after watching the process 35 times, there is nothing to worry about.
Lawyers
Lawyers really did not do much. They sat at the table with the debtors, but the Debtors answered all of the questions. In some cases, the debtors struggled with the answer. The better lawyers helped by pointing out the answer in the paperwork. The crappy lawyers literally let the debtors flounder. You could easily tell the difference between the ones who knew their debtors' cases and the ones who were winging it. One case was really painful to watch as a debtor could not tell the Trustee what year he took a cash out refinance of close to $500k. The lawyer offered no help and the Trustee was pissed. It was the only case out of 35 were I felt a "tension" in the room. In addition, I watched lawyers change hats during the day. A lawyer in one case represented a secured creditor and two cases later he represented a debtor. I even saw the "morning Trustee" represent a debtor in the afternoon.
Expenses
As I mentioned in the summary above, not a single question came out around expenses. Not one in 35 cases. This was surprising to me. I am going to be cutting it close on the Means Test and frankly expected to observe questions about this - but the overall tone of the 341s was searching for income and especially assets. I have no assets so this was not a huge concern for me. Passing the Means Test is my top concern.
Renters
Some of the debtors were renters. Even though some were very low on cash (at least that is what they claimed) - not a single person was asked about "reaffirming their home/apartment lease." I found this also to be strange, as the homeowners were all asked if they wanted to keep their homes.
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