Bankruptcy # – B

What is a 341 (Meeting of Creditors)?

The Meeting of Creditors or Section 341 Meeting as it is called, is a major milestone in your bankruptcy case.  These are conducted for every Chapter 7 or Chapter 13 Bankruptcy.  Each creditor or other party in interest receives a notice from the court usually 4 weeks ahead of the meeting.  The meeting is conducted by the Trustee and the debtor is required to appear.

The Office of the United States Trustee has promulgated certain questions that are required to be asked at each meeting.  This meeting is the first opportunity for the Trustee to interview the debtor, though in most cases, the trustee has already reviewed enough supporting documentation to make a determination about the case before the meeting every begins.

What are Aliases in the Bankruptcy Context?

When most people think of an alias, they think of an assumed name.  Something used by an undercover cop or a criminal on the run.  In the bankruptcy context it can refer to something as innocuous as a nickname or a shortened form of your name that you’ve used.  Anyone who has, in the last 8 years, changed their name or used a different name for any reason should list those former names or variations on their bankruptcy petition.  The most common uses include Maiden Names, and nicknames or shortened forms of a proper name that were used on a credit card.

What are Assets?

When most people think of assets, they thing of big ticket items. Stocks, bonds, property, etc. In the bankruptcy context, assets are everything that you own or is owed to you. A potential claim against someone for a personal injury or wrongful termination is an asset. The tax refund that the IRS will pay you next year is an asset that is accruing right now.

Several times per month, I hear “Oh, well, I don’t own any assets,” or “I don’t own anything.” Invariably I point out their clothes, the watch the person is wearing, the earrings and necklace and ask if these are borrowed. And the response usually goes something like “Oh, well these aren’t worth anything.”

The point is that lack of value does not exclude it from your list of assets.

What is the Automatic Stay?

The Automatic Stay is like a trump card and a pause button combined.  When a bankruptcy is filed, the court issues a “Notice of Bankruptcy Filing and Automatic Stay.”  This “stay” or more often a document known as a “Suggestion of Bankruptcy” can be filed in any civil proceeding currently underway against the debtor or co-debtor (even if the co-debtor did not file bankruptcy!)

The stay is also a block for any new litigation, foreclosure proceeding, repossession, auction of repossessed property, and even evictions.  Under certain circumstances, creditors can receive “relief” from the Automatic Stay.  If granted, this allows that creditor to proceed with recovery actions against the party or parties involved.

Serial or repeat filers may not have an automatic stay.  These filers must petition the court and ask that a stay be granted.  It often will be refused.

What are Avoidable Transfers?

One of the most common mistakes people make when planning to file bankruptcy, especially those who either haven’t spoken to or did not listen to their attorneys, is making transfers of property that the trustee can overturn or avoid. The trustee has the power to undo some transfers that a debtor has made or that have been made on a debtor’s behalf. Examples of transfers that may be avoided are Preference Payments, Insider Payments, Fraudulent Conveyances, and certain transfers of property for less than the value of the property.

Trustees are given this power to help combat abusive exemption planning and to avoid some creditors from getting preferential treatment.

Debtors can use avoidance powers as well. They can use avoidance powers to remove certain liens and judgments from their property. They can use it to recover property of the bankruptcy estate that the Trustee may abandon such as wages that were garnished shortly before filing.

What is Bankruptcy?

Bankruptcy is a legal structure by which individuals and entities restructure their debts and assets to varying degrees, depending on the chapter filed.  Most often bankruptcy is thought of as a federal system of laws, but many states still have their own bankruptcy laws on the books.

Historically, bankruptcy has roots going back to the ancient world.  The book of Deuteronomy says that every 7 years creditors shall release their debtors.  Congress adopted Chapter 7 of the Bankruptcy Code in honor of this precept.  Prior to the 2005 attempt an bankruptcy reform, Chapter 7’s could only be filed once every 7 years.  Presently the rule limits repeat Chapter 7’s to 8 years.