There is a hearing in a Chapter 7 bankruptcy case. It is referred to as the “Meeting of Creditors.” The name of this hearing makes it sound worse than it is. It is actually a very easy process. Creditors rarely show up at the Meeting of Creditors. Sometimes, the creditors who show up are small-time creditors who think they are required to show up because they received notice of the Meeting of Creditors. In such situations, the Chapter 7 bankruptcy trustee will ask these well-meaning but uninformed creditors if they have any questions for the Chapter 7 debtor. They virtually always say no, and the trustee thanks them for attending and tells them they are free to leave when they are ready to do so.
On the other hand, a creditor is likely to appear at the Meeting of Creditors if that creditor believes you attempted to defraud that creditor or if that creditor has specific information that is needed from you, such as the location of secured property or other assets, information regarding the condition of various assets or secured property, the financial circumstances of the debtor at the time any application for credit was signed, etc. In business bankruptcies, it is quite normal for at least some creditors to appear for the Chapter 7 Meeting of Creditors. Sometimes, if the trustee is seeking to pursue claims against the Chapter 7 debtor, the trustee’s attorney may show up and ask questions of the debtor.
This is just one example of why it is critical to have representation at every phase of your bankruptcy case, because there may be traps that you can easily avoid with proper legal advice. With an advocate sitting by your side, it is unlikely that the trustee’s attorney is going to overstep the normal bounds of questioning. There is no judge present at the Chapter 7 Meeting of Creditors, so it is important to have an advocate by your side to protect you if the questioning goes too far. For most people, though, the Meeting of Creditors in a chapter 7 case goes smoothly and quickly.
The hearings usually are set every half hour, and during the half hour session, anywhere from six to ten Chapter 7 bankruptcy debtors will be questioned. The trustee will make the debtor take an oath to tell the truth, under penalty of perjury. The trustee will also verify the identity of the debtor, usually by examining the driver’s license and comparing it to the social security card. Most trustees will also administer a series of instructions at the beginning of the session that the debtors must follow. These include things like being truthful, making sure that the financial management course is completed in a timely fashion, having ID ready when the approach the trustee’s table for questioning, turning over tax returns when the next tax returns are filed, turning over tax refunds the next time they are received, etc. The trustee in Arizona Chapter 7 bankruptcy cases is the person who will ask questions of the debtor. A decade or two ago, it was common for the Chapter 7 bankruptcy client’s attorney to ask the questions of the Chapter 7 debtor. But now it is the trustee who controls the questioning.
The questions are usually the same for everybody, as well as some specific questions that are particular to that person’s case. The standard questions pertain to whether the Chapter 7 debtor took the oath to tell the truth; whether the Chapter 7 bankruptcy debtor reviewed and signed all the documents that were filed; whether the Chapter 7 bankruptcy debtor admits that all information in the petitions and schedules are true and accurate; whether the Chapter 7 filer has any changes that need to be made; whether any amounts of money are due to the Chapter 7 debtor; whether the Chapter 7 debtor has resided in Arizona for the requisite jurisdictional period; etc.
The standard questions typically only last about five minutes. If there is a joint-debtor in the Arizona Chapter 7 bankruptcy case, the trustee will next turn to that person and ask if his/her answers would be the same as the ones just given by his/her spouse. The trustee then may ask a few specific questions that only the debtor would know the answer to. The Meeting of Creditors is then concluded. The next step is for the Chapter 7 bankruptcy client to wait another 60 to 120 days for the discharge notice to be issued. The discharge notice is the document that tells the debtor and creditors that all debt that is able to be erased in the Chapter 7 bankruptcy has been erased. It’s a great feeling to get that notice in the mail!
When And Where Does The Hearing With The Chapter 7 Trustee Take Place?
In a Chapter 7 bankruptcy case, a hearing is held. That hearing is known as the “Meeting of Creditors.” Rarely to creditors actually show up at these hearings, but they are permitted to if they so desire. Often, the only creditors who show up are small business owners who think they are required to show up because they received a hearing notice in the mail. What they don’t realize is that the hearing notice they received in the mail is merely informational. They may attend the Meeting of Creditors if they so desire, but they usually will only be wasting their time unless they have important questions for the debtor or if they have reason to believe the creditor may have defrauded them or omitted material information in the bankruptcy petition, schedules, and/or statement of financial affairs.
The Meeting of Creditors usually takes place approximately 30 days from the date the bankruptcy case is filed – at least in the Phoenix area. Other locations may have different timeframes. But any chapter 7 case filed in Maricopa County is virtually always going to result in a Meeting of Creditors at the Bankruptcy Court in Phoenix, which is located at 230 N. First Avenue, Phoenix, Arizona. When you arrive at the courthouse, you will need to bring two forms of ID with you. There are two lists from which you must choose. You must choose one form of ID from one column, and another form of ID from the other column. Most people choose to take their driver’s license and Social Security Card to the Meeting of Creditors. The Meeting of Creditors usually takes only a few minutes, but you could be waiting a long time if the trustee is running behind schedule.
The Meeting of Creditors will take place in a hearing room, not in a courtroom even though the location is at the Bankruptcy Court in Phoenix. Cases filed in which debtors live in Pinal County are usually held in Florence. Cases filed in which debtors live in Yavapai County are usually held in Prescott. Cases filed in which debtors live in Coconino County are usually held in Flagstaff. Other hearings are held in other locations, based on the county the debtor resides in, such as Yuma.
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