Everyone who files for bankruptcy must attend a 341 meeting of creditors, where the trustee will question filers to confirm the information they have supplied regarding their finances. You’ll be more at ease if you know beforehand about the questions the trustee will likely ask. In this article, you’ll get a preview, as well as tips on how to prepare properly for your meeting. If you carefully complete your petition, provide the trustee with all requested 521 documents, and comply with bankruptcy law, the questioning will likely take less than five minutes.
(For an overview of the 341 meeting of creditors, see What Is the 341 Meeting of Creditors in Bankruptcy?)
Understanding the Role of the Bankruptcy Trustee
The trustee’s primary responsibilities include reviewing the bankruptcy petition for completeness and accuracy and questioning you under oath at the meeting. The trustee is responsible for finding, liquidating, and distributing assets to the bankruptcy creditors, as well.
In some ways, a trustee is similar to a debt collector because the trustee receives a portion of the funds paid to creditors. In other words, the trustee has a financial incentive to sell your nonexempt property so that there’s more for the creditors. Once you recognize that the trustee is motivated to find and sell your nonexempt property (property you’re not allowed to keep)—and financially benefits from doing so—you’ll be in a better position to anticipate questioning.
(Learn more about nonexempt property in Chapter 7 Bankruptcy Exemptions: What Property Can I Keep?)
Questions the Trustee Can (and Will) Ask
The trustee must stick to questions about your financial condition and cannot ask about personal matters unrelated to the bankruptcy petition. For instance, asking about your religious affiliation would be inappropriate—it simply wouldn’t be relevant to your finances. Also, the trustee cannot harass or badger you. Everyone present must remain respectful at all times.
Questions Directed at all Filers
The trustee will ask each bankruptcy filer a series of questions concerning their papers and any changed circumstances in their financial situations. Here’s what you can expect:
- Did you read and review your bankruptcy petition, including all of the schedules, before signing it?
- Was the information contained in the petition accurate when you signed it?
- Has anything changed since you signed the petition?
- Have you filed for bankruptcy before? When?
- Did you provide accurate copies of your tax returns?
- Do you owe spousal or child support?
- Did you list everything you own in the petition?
- Do you own or have an interest in any real estate?
- Did you list all of your creditors no matter who they are?
- Have you transferred any property within the last two years?
- Have you made any payments exceeding $600 during the past year?
- Are you involved in a lawsuit?
- Are you entitled to receive any inheritance or insurance proceeds?
- Does anyone owe you any money for any reason?
Questions Specific to Individual Filers
After reviewing your petition, the trustee might want more information about an entry that appears out of the ordinary. For instance, the trustee might ask you to explain how you arrived at a value of $50 for your purebred show dog (if the value is higher, the trustee will be more inclined to sell the dog), or $1,000 for the car you race at the local track each weekend (you’ll need to prove the accuracy of an unusual valuation). You should be able to predict such questions and be prepared to respond appropriately. Here are several easily anticipated questions, along with reasonable answers:
- Question: Why didn’t you list any household furnishings on Schedule A/B Property? Answer: I live with my parents. They own all of the furnishings in the house.
- Question: How is it that your Porsche is only worth $10,000? Answer: It’s 25 years old and in need of extensive repairs.
- Question: Why did you budget $1,000 for your monthly vehicle expenses on Schedule J: Your Expenses? Answer: I have a long daily commute and incur significant fuel expenses each month.
- Question: Why are you supporting four adults in your household? Answer: My two adult children lost their jobs and haven’t been able to find employment.
Some anticipated questions are best addressed before the hearing—especially if the explanation is lengthy or involves sensitive information that you’re not comfortable sharing at a public hearing. Also, be prepared to provide supporting proof in the form of photographs and receipts when appropriate.
If you’re not confident explaining the nuances of your case or aren’t sure whether your explanation is legally sound, you’ll want to consult with a bankruptcy attorney before your meeting takes place.
Questions for Your Attorney
- What should I do if I don’t feel comfortable answering a particular question?
- If I don’t know the answer to a question, should I guess?
- What will the trustee do if I refuse to answer a question?