What Is The Bankruptcy Meeting of Creditors?

We sit down with Bankruptcy Attorney, Darin Wisehart, to discuss the bankruptcy meeting of creditors, including what it entails, why it’s important, and how you can prepare. In this interview, Darin answers the following questions:

•    What is the meeting of creditors, and why is it important?
 •    How long does the meeting normally take?
 •    Who runs the meeting of creditors?
 •    Will you have to answer questions under oath?
 •    How many creditors usually attend the meeting?
 •    What can you expect on the day, and how can you prepare?

If you would like to speak with one of our attorneys, please call our office at (503) 227-0200, or visit our website at https://www.pacificcascadelegal.com.

Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.

Transcript

Intro:
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.

Steve Altishin  0:28  
Hi everyone, I'm Steve Altishin, Director of Client Partnerships here at Pacific Cascade Legal. And today, we're here with our bankruptcy attorney Darin Wisehart to talk about what you need to know about the meeting of creditors in a bankruptcy case. Hey, Darin, how you doing today?

Darin Wisehart  0:48  
I'm doing great. I'm doing great. Thanks for having me today.

Steve Altishin  0:51  
Oh, thanks for being on. So yeah, I imagine that it can sound pretty scary to a person who's looking to file a bankruptcy, I have to sit down and meet my creditors who I'm about to stop paying. I think my first question would probably be, do I really need to attend the meeting?

Darin Wisehart  1:08  
And the answer to that is yes. The answer to that is yes. So you will have to do a meeting, what happens there with the meeting of creditors, it's the meeting that's scheduled the day you file the case, and it will be scheduled about 30 days after you file your case. And that allows the creditors and the trustee to oversee the case a little bit, to see, you know, if the documents are true or accurate. And that's what they're checking for, and basically gives them a chance to ask you questions if they want to. And that's what bankruptcy is all about. Bankruptcy is all about getting the opportunity as a creditor to ask questions and make sure that you're following the rules, are you doing everything that you're supposed to? Now the beauty of that is your attorney will have you prepared. So for the most part, I mean, you'll go into that knowing how it's going to go and how it's going to play out. And we want to make sure we take away this unknown aspect of it that most clients have that creates stress. And we want to take that out of the equation so that when you go in to the meeting of creditors, you're ready for it. You don't have that additional unknown in your mind.

Steve Altishin  2:15  
I like that, that the less unknowns, the better. So is this going to be in a courthouse, is it in a judge's place, I mean, where is it held?

Darin Wisehart  2:27  
Pre-COVID, it would have been in a building in a downtown area around where you're at in the United States, all across the United States, most of the big cities, they house them in a lot of different locations in relation to where the people are gonna go to the hearing. And that's how they've always done it. Post COVID, once COVID started, we had a major positive from that. And that allowed trustees then to do those hearings on the phone, and at times with video, so that you could do them from anywhere, you could do them from your front room and have that comfort of knowing that you don't have to go into the the old 1960s room with a really bad lighting. Now you can do that in the comfort of your house. A lot of times for clients here in Oregon, what I try to do is I try to bring into the office so that you're sitting across the desk from me, and we can put my phone on speakerphone, and we can do the hearing together where they can't see us. But at the same time, we have some communication that we can have. And it gives the client comfort of knowing that I'm sitting right there listening to everything and really just making sure that we're protecting the interests of the client, and making sure that the hearing goes the way that it should. So most of the time now it's on the telephone. And that allows us to be really flexible with how we schedule it and how we make it work.

Steve Altishin  3:43  
I think you mentioned that it gets scheduled shortly after your you file. So I have a couple questions that would be like, you know, how do I prepare for it? How far off is it going to be? And you know, how long is it going to take?

Darin Wisehart  4:00  
A couple of really good questions. So the the big one on how to prepare for it is if you tell the truth in your documents, and you review them before you sign them, before your attorney files them, then you've done relatively everything you need to do for the hearing. Okay, so the beauty of this hearing is if you go through those doors or you get on the phone, and your goal is to tell the truth, which is something I counsel every client to do, it's a no brainer in bankruptcy, if you're telling the truth, it will set you free. It's the path to not having to remember anything. You can just do the hearing in your sleep if you're telling the truth because these are facts and pieces of information that you have in your, you know, in your quiver well before you go into the thing. And if you've filed and signed correct documents and they're all accurate, that's part of what the trustee is doing is making sure that your documents are accurate. Is the material reflective of the truth? And maybe there's some bank accounts, one of the questions they asked, it's very common, do you have any other bank accounts other than this bank account, and that bank account, the ones that are listed in your documents? And so that allows the trustee to then double check to make sure that you don't have things that might not be listed in there. You know, sometimes, clients accidentally omit things. And that gives us a chance to check those documents.

Steve Altishin  5:20  
I'm guessing I'm not really allowed to plead the fifth?

Darin Wisehart  5:29  
Well, you're allowed, yes. But they can continue to ask the question. I mean, it doesn't really come into play all that much in bankruptcy, because in bankruptcy, bankruptcy is a shine the light on the process. And when you file documents, you're under oath. So you've got to tell the truth. And now you, you have to work your way through making sure that that these documents are reflective of everything, that's true in your estate, which is, all of your assets, all of the things that Joan things like that. And that's, that's what the documents are all about. So when you sign those, you're signing them, just like you saw assign your taxes every year, you're signing them under oath, and that they're true. And when you go to the hearing, you're, you know, reasonably supposed to be saying the same stuff. If you're not, then your documents should be different. So there's no element of pleading the fifth, but, you know, obviously, if you're down that direction, then you need to make sure that that's discussed at length with your attorney.

Steve Altishin  6:27  
So you talked about answering questions and talking, who am I answering questions from? I mean, who runs a meeting of creditors?

Darin Wisehart  6:38  
The day you get filed, you will, you will schedule that and you will be assigned a trustee. And the trustee is it sounds like a very scary position. Oh, the trustee. I don't know who the trustee is. The trustee is. In Oregon, we have extremely professional, very good trustees, they're there all the way across the board. And across the United States. Most trustees are very good, they're very professional, they're they're very straightforward. They're looking for the facts, give me the facts. And that's that's what they're looking to get. And that person is the overseer of the case. And their job is to make sure that your schedules, your documents are all where they should be, they have all the document the information in them, and that you're telling the truth about everything. And if there is anything then to liquidate or sell or you know, any anything that is going to go to the creditors, then it's their job to collect it, sell it, do whatever needs to happen, of course, you're going to talk with your attorney about that to see if that is in your case. But it's their job then to distribute that out to the creditors, by the way that the statute says so they're kind of that over overseeing referee, that is not on your side, their job is to protect all of the interests creditor and individuals and sort of see a middle ground, but also make sure that they're doing everything by the law that they're supposed to do. They're kind of they're kind of a referee in the case, that they've made sure that everything happens the way that it's supposed to happen. And they conduct that hearing, they ask all the questions for the most part, they asked the same questions for every hearing, with a little deviation depending on what your case, what's specific to your case, and that that's the person that will conduct it. They're not all the people that will show up. Sometimes you have creditors it is called the meeting of creditors. And when they show up, you have the same type of they'll ask you questions, you have to tell the truth, all of that type of thing. But usually, you know, if a creditor is going to show up, you'll have a heads up on when that's going to happen that nine times out of 10 for the hearings, it really is just the trustee, the individual and the individuals attorney. And that's really the people that are on the horn for the meeting of the creditors.

Steve Altishin  8:47  
Got it. So it's just people asking me questions, and it sounds like it's something we can get through. So is the trustee like, is it like a judge? I mean, can they legally tell me I have to do something? Or do I have to even, you know, answer these questions under oath there?

Darin Wisehart  8:59  
You have to answer under oath. If you don't answer under oath, then you're going to get an additional examination. And that's going to be further work for everybody. The easiest way is to answer the questions under oath. The trustee is not a judge. They do have every once in awhile, have a client finish their statement with Yes, Your Honor. And and they're not a Your Honor, even though they're an honorable position. They're not. You don't have to address them as Your Honor. But they are they're a person that's just assigned to a case, their job is to oversee the case, to be that middle person so that the judge doesn't have to get their hands dirty on the case, except for if there's a dispute. And there are situations where a trustee will ask a question or a line of questions. And the attorney will step in and say we don't we don't choose to answer those or we're going to you know the Sometimes there are some situations where you don't answer questions for the trustee. And sometimes you have to go to the judge and say, you know, go to the court and ask them, if you need to answer these questions or if you need to submit documents, or, or do things like that, I mean, it's the it's the trustees job to pour into these things sometimes. And every once in a while, they pour in a little deeper than they should. So it's, it's sometimes necessary to go before the judge, if you have a dispute. They're not they're not the end of the trustee is not the end all be all, that's the judge. And if then the appeals court after that, if it ends up going away that you don't think it should, but but they are just an individual, that that are very professional, they're very good at doing what they do. And their job is to just get everything in line, and make sure everything's happening the way that the the statutes, the laws say that it should be working.

Steve Altishin  10:51  
So let's talk just a little bit about what happens when you're at the meeting of creditors. Do I need to prove who I am? I mean, are there questions that I know I'm gonna get asked, so I better be ready for?

Darin Wisehart  11:07  
Yes to both of those. So you have identification requirements to make sure that you're you and that you're filing the case for the person that it says on the documents. And the trustee always wants to validate those pieces of information, driver's license does the job real well, for ID for picture identification, and, and usually, a social security card will confirm the social security number matches the person so that, you know, that's the first part of every hearing is to make sure that those pieces of information are in line, so that we are dealing with the person we're supposed to be dealing with. And sometimes it's a little trickier on the phone, because you know they're on the phone, they're not in the in the room with them. So sometimes it can be a little bit tricky. But your attorney will have all that iron for you. And that's something you don't have to worry about. If you've hired an attorney that that is good. Those are things that you can take off your shoulders and say the attorney will handle those those types of things. As far as questions, they ask relatively the same questions, every hearing, they will have some deviation, and it depends on what type of case you have chapter seven or chapter 13. The chapter seven, you know, once you get to a certain spot, they're really just asking questions, to follow up on information that they've seen in the documents and making sure that everything is listed properly, and everything is where it needs to be. And in a 13, they might delve in more on your budget, they might delve more in on what assets you have and how you value them. Things like that, it's, it tends to be a little bit different. But the beauty of hiring a good office, a good attorney that does this for a living, is that they will have a mean, not necessarily the script, but your your you'll have a really good idea what questions you're going to see when you get into the hearing. And you'll be prepared. I tell every client, if you stress one minute about that hearing, when we get done, you're gonna look at me. And you're gonna say Darren, I don't know why I stressed about that. It's not that big a deal. It was just that unknown factor that was stressing me. 

Steve Altishin  13:08  
Oh, well that's a good thing. Let's go back again, really kind of quickly, to the creditors themselves. You said they normally don't come but they might. Should I be prepared for, what kind of question is a creditor going to ask that, you know, maybe the trustee wouldn't or already would?

Darin Wisehart  13:27  
Yeah, the creditors. So when they show up, usually they they're asking obviously, they're they're always going to ask about their credit card or about the car that you have, that they have leaned. These are these are the types of questions that they want to know when did you get it to do what did you intend? When you bought it? Did you falsify a document? Maybe? Did you put a lot of money on a credit card, within a year of filing the case? These are the types of questions that they might want to know because these are the things that they might be able to tie to you so that they go through the discharge, they don't get discharged when the case finishes. And that's usually what they're getting at is they're trying to get that extra information. And that's why they don't show up very often because these things don't happen very often. The beauty of that is though, as you get into the the pre file stage of your case with your attorney, they're going to ask you all of these questions. And if you're making sure that you focus on telling the truth and focus on giving your attorney information so that the attorney can kind of go through what are the chances of something happening that's going to stave off any worry with with this hearing? Because the last thing any attorney that does this for a living wants is to get into that hearing, and have somebody show up that they did not expect you don't want unexpected in my business. You want to know exactly where you're going. And the best way that the client that the individual can can help is by giving all the information when when there's a question asked in a packet or from a from a staff member, you answer it completely. And every once in a while you go well, I don't know if it comes in, but let me tell you about this. Okay. And then the attorney can cut you off sometimes, you know, to say, Okay, we don't need any of that. That's okay. That doesn't play in, or, Hey, wait a second, we need to chat about that, you know, trip to Europe that you put on your American Express card three months ago, that was $7,000. And now you're filing bankruptcy? We need to chat about that, because that can be a very real issue in a in a meeting of creditors.

Steve Altishin  15:32  
Got it. Got it. Well, we just blasted through the time. And once again, Darin, thank you. Meeting of creditors sounds scary as heck and I liked the way you talk about that, you know, it doesn't have to be, especially with a good attorney. So thanks so much for joining us today.

Darin Wisehart  15:51  
Yeah, no problem. And the takeaway really is it is not is not a scary event. It is a it's a straightforward, you know, get the facts and move forward. And that's that's how everybody wants to look at it. And if you're prepared, if you've hired a good attorney, you're you're going to be ready for that hearing.

Steve Altishin  16:07  
I love it. Well, thanks again. And thanks, everybody, for joining us today. Anyone has any further questions on today's topic, you can post it here we'll get you connected with Darin. And until next time, stay safe, stay happy and be well.

Outro:
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Landerholm Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at landerholmlaw.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.