Our 341 Meeting

[nohoneymoney]

For background on our case see “Our Story: The Beginning” in the Chapter 7 Bankruptcy Forum

I think the biggest shock at the 341 meeting had nothing to do with our case. As we sat waiting, lawyers would enter the room or be out in the hall calling people’s names. These lawyers did not know their clients. Once the lawyer found his/her client, they would give the client a quick overview of the process and their case and had them sit down and wait. That took no more than 2 minutes. Then the lawyer would go to the next client. One lawyer had six clients and he did not know or recognize any of them as they entered the room. We went third so I did not get to see how it went for them.


In contrast, our lawyer had directed us to be in the cafeteria thirty minutes before the 341 meeting. He showed up on time and was fully prepared. He went over every aspect of our petition to be sure we were prepared. Noting that we were very nervous and stressed, he joke with us and made every effort to reassure us that it would all go smooth. We may have paid more for our lawyer than many others on this site, in part due to the complexity of our real estate holdings, but it was worth it to us to have him there ready to help us every step of the way.


The second shock was that the trustee had not read our petition. It looked like someone in his office had read it briefly and provided him with notes. He read the notes while we waited at the table and his assistant checked our identification against their records. His questions further confirmed that he was not familiar with our facts. I guess he has the next 60 days to review it and ask more questions.


A third shock was that the trustee never asked about the rents we were getting from our rental properties. After all that has been said on this forum and by our lawyer regarding the trustee’s right to the rents, we were pleasantly surprised that the trustee said nothing. We didn’t say anything either.


In the past, both of us have been involved in small civil matters and have been on juries. In each case, the lawyer made an effort to ensure it was clear regarding the subject he was questioning. He would state the subject of his questions and point to a document or page, if appropriate, before asking his question. In our case, the trustee just asked the question and we had to quickly figure out what he was talking about. His questions were very focused and precise with no background information. For the most part, we did OK but I stumbled on a couple answers and he was not happy. Fortunately, our lawyer covered for us and provided the response, which we then confirmed.


Our case was continued for a few weeks due to late breaking news from our CPA regarding our tax return for 2011. It seems the old CPA made some errors and we may owe back taxes. As part of our preparation for BK7 we had hired a new CPA that specializes in BK tax filing and real estate to help with our 2011 taxes. He just found the potential error while reviewing our 2010 tax return, both state and federal. There may be less 2011 tax refund for the trustee to take. Moral of the story, this should have been done sooner.


Even with the complexity of our petition and my stumbles, our 341 meeting lasted no more than 10 minutes. (No creditors showed.) It seemed like foorrrevvvverrrr but in reality, it was very brief. The first of the two cases in front of us took longer than ours due to the need for a translator.

Going forward, we need to get the CPA to provide us with revised estimates of the 2011 taxes and amend our petition. There is a chance that we may not have to meet with the trustee if he finds the amendments to be satisfactory.


For the next sixty days or so we will wait to see if he comes up with any more questions. Given that he had not read our petition, I have no idea if this BK will go smooth or not.

[GIn]

How common is it that the Trustee hasn't looked at the file prior to the 341. Are you now going to have to appear at another 341 if the Trustee has additional questions? How often does the Trustee wait a week or less before the 341 before sending over his list of questions/documents?

[GIn]

"For the most part, we did OK but I stumbled on a couple answers and he was not happy." What types of questions were these?

[nohoneymoney]

I have only done one BK so I don't kow how common it is for the trustee to have others in his/her office review the petitions. Given that they get paid about $60 per case, I wouldn't be surprised if a $400 per hour trustee/lawyer had a lower cost assistant do the heavy lifting using guidance from the boss.

We did not get any requests for documents prior to the 341 meeting but I believe they can request documents and/or ask questions anytime up to discharge. In asset cases, they may be able to request information on the assets up until they are liquidated and the BK7 closed.

Keep in mind that in our case we were continued because we discovered new information not because the trustee hadn't personally reviewed our case.

[nohoneymoney]

"For the most part, we did OK but I stumbled on a couple answers and he was not happy." What types of questions were these?

They were detailed questions regarding our properties and my retirement funds.

Our lawyer told us to not bring anything with us to the 341 meeting. The only paper work that was present at the 341 meeting was a clean copy of our petition that the lawyer brought. If you bring supporting paperwork, notes, receipts etc to the 341 meeting, the trustee can demand that you hand them over at the meeting. As I looked around the room I did not see any debtor with paper work with one exception and that looked like a copy of their petition. So if your are going Pro se be careful what you bring to the 341 and be prepared to hand it over the trustee.

While we thought we were well prepared, we had not memorized our entire petition. I stumbled because of the lack of context for the questions. If he had only pointed to a section in the petition so I had a 30 seconds or so to think, I would have done better. But our lawyer was able to cover and it all seemed to be OK in the end.

[justbroke]

How common is it that the Trustee hasn't looked at the file prior to the 341. Are you now going to have to appear at another 341 if the Trustee has additional questions? How often does the Trustee wait a week or less before the 341 before sending over his list of questions/documents?

The Trustee themselves hardly EVER look at the petition themselves until the 341 Meeting. They typically have a staff that go through the petitions pretty thoroughly! They also review paystubs and tax returns. They then add notes to the file so that when the Trustee looks at it, s/he knows what the initial review found. If there are serious issues, the Trustee will usually know beforehand because the file will be flagged.

Remember, the Trustee earns only about $60 per case unless s/he finds assets (money) to administer. They really try not to pay too much attention to the under-the-median and "simple" cases. (Please don't ask me to define simple.)

[GIn]

The Trustee themselves hardly EVER look at the petition themselves until the 341 Meeting.

So, if the Trustee has asked for nothing in advance of the 341 meeting, and the debtors are above-the-median, non-consumer with what appears to be complex issues (from what I've read on this board) should they expect the Trustee to be grilling them with questions at the 341? I thought the 341 meeting would be relatively stress free with all questions answered before-hand. But what if the Trustee has asked no questions?

[justbroke]

The (Panel) Trustee isn't going to grill a non-consumer! The (Panel) Trustee is there for assets, not to really go through your specific numbers. It is the Office of the United States Trustee (OUST) that is problematic for over-the-median filers. I had absolutely no issues with the OUST with my non-consumer over-the-median case.

[nohoneymoney]

I agree and disagree with justbroke. In a non-consumer BK7 what you earn and how it was spent, Sch I and J, should not matter. Being over the median should not be an issue. We are also over the median and had no questions, so far, on our income. I also agree that the trustee is looking for assets. In our case, the federal tax return and an apartment complex that is underwater but has positive cash flow were areas that the trustee questioned. He smelled money. If there is realizable equity in an asset or a reasonable possibility of realizable equity (IMO) you should expect questions regarding those assets during the 341 and possible requests for information following the 341. Each trustee and district is different so your experience may be different. I remember a discussion on this forum regarding a 341 where the debtors stated they had not been questioned by the trustee but the guy in front of them was questioned at some length over this real estate holdings. It can happen. BTW: Given the state of the real estate market, I am not sure how any trustee could think there is equity in rental property but it is their job to find it, if possible, on behalf of the creditors. So we planned for the worst, questions during the 341 meeting, but hoped for the best. I do hope that you sail thru your 341 without any questions or problems. BK is stressful enough. Please post on how it went.

[justbroke]

So, which part do you disagree with? I specifically stated that they are looking for assets, so all questions related to asset discovery and potential liquidation are on the table.

I guess my response wasn't strong enough to indicate that while the (panel) Trustee is looking for assets, the Office of the United States Trustee (OUST) is actually looking at whether you "deserve" a discharge. Two different functions.

[nohoneymoney]

UPDATE on Continued 341

We had our second 341 and it went very well. We provided a copy of the amended schedules for the updated expected 2011 taxes and a draft estimated tax return. The new estimate was significantly reduced from 2010 due to depreciation recapture on several properties that we had to sell this year. Our lawyer had readjusted the exemptions to cover them so there was nothing for the creditors/trustee to claim. The trustee did not ask any questions on other topics. He just focused on the tax return. The meeting lasted 3 minutes which 2 ½ minutes was the trustee reviewing the documents. He looked up and said those great words; “… this concludes the examination. Thank you.” We thanked him, got up and left the room. We did not stop walking until we were out of the building. Then we got excited and had a small celebration. Finally the 60 day club.

Now we needed to wait to see if the trustee would try to sell some of our real estate with marginal realizable equity. The very next morning our lawyer called to inform us that the trustee had file us as a no-asset case. What a relief.!!! After two years and four trees of paper trying to work with the banks to modify our loans to no avail, we finally got out from under all those mortgages and maybe leveled the playing field. Christmas came early.

We now plan to try to modify the mortgages to see if we can turn any of them profitable. If the banks still don’t want to help we will just let them go. I will post on how this mortgage modification process goes post BK7.

[justbroke]

Your discharge should have come anyhow at day 60 from the first "scheduled" 341 Meeting of the creditors. I suspect that you should see a discharge 60 days after the "first scheduled" 341 meeting.

[IamOld]

GOOD NEWS nomoney!!!!!!

[nohoneymoney]

Your discharge should have come anyhow at day 60 from the first "scheduled" 341 Meeting of the creditors. I suspect that you should see a discharge 60 days after the "first scheduled" 341 meeting.

More good news!!!! The sooner the better.

[HighUnder]

I'm glad that part is over for you! I am also waiting to see if the banks will modify my mortgages to the point that the properties are profitable. At the same time, I look forward to not being a landlord any more. In short, they would have to offer me some very sweet deals for me to hang on to them...not holding my breath.

Congrats and let the countdown begin! (or continue, lol)