Perhaps the proper question is who. In both Chapter 7 and Chapter 13 bankruptcy, the bankruptcy trustee represents your creditors in the bankruptcy court. It is a trustee’s job to look out for the interests of the creditors.

That doesn’t mean the bankruptcy trustee is your enemy, the bankruptcy trustee is your friend, kind of like the friend who tells you that you had too much to drink and you shouldn’t drive home.

With the number of cases currently in front of the bankruptcy court, it would take years before a bankruptcy case would be processed if it were the sole responsibility of a bankruptcy judge, and that is where the trustee comes into play.  The trustee is there at your 341 meeting.  The trustee reviews all proofs of claim in your bankruptcy case for errors.  The trustee reviews of bankruptcy documents for errors as well, and generally speaking if your bankruptcy attorney follows the trustees request, your bankruptcy case should sail through.

The trustees also truth detector.  When you order 341 meeting the trustee puts you under oath makes you swear that you’ll tell the truth, and they’re very good at detecting when you’re telling a lie.

Bottom line is this, tell the trustee the truth and do what the trustee asks, and you’ll much better chance of getting your case confirmed.

It seems like it should be an easy question, however because of the exemeptions in Chapter 13 bankruptcy, it is important to have an accurate valuation of your home and be able to justify it.  This is also where preparation can prevent disaster.

I have a client who refused to prepare for the 341 meeting of creditors.  Because they refused this 15-20 minute preparation phone call with me, my client may well lose his home because he gave the wrong answer to the property valuation question.  It stinks, because the property valuation question is a subjective question, and therefore there is no correct answer.

The trustee asked “If you put your house on the market today, what could you sell it for?”

I took a Zillow valuation of the property and valued it at $123,000.  I used another online valuation of the property, and it was valued at $127,000.  I even pulled comparable sales of property and they were in the $100,000 to $120,000 range.

So how did my client answer the trustee when asked what the home could sell for?  $170,000!

I’m sorry, even if a row house in Easton is built like the Taj Mahal, it isn’t selling for $170,000 in this market.

This could have been prevented if the client had bothered to respond to my phone calls or my letters.  After filing this client was unable to be reached.  He refused to take my calls.  When I finally got him on the phone, he refused to prepare for the 341 meeting.

His answer to me was “Well I’ll tell the truth.”  Telling the truth is good, knowing the truth is better, and the reality is that every homeowner would like to believe that their house is worth more than it actually is.

Because my client gabe the trustee this answer, the trustee is now working with $170,000 as the value of the house, and since he only owes $90,000 on it, he has $60,000 in equity (less the exemptions) that he needs to pay to the trustee.  That translates to about a $1300 per month chapter 13 payment when his payment should not really be more than $400 per month.

I believe that this chapter 13 plan will fail, and if it does he will be the first 2009 client I have had not be able to work with a Chapter 13 plan, and that is because we are now forced to work outside the parameters that  I filed it in.  The Chapter 13 plan was based on the property value of $120,000, which was a valuation I took before filing.  I used the full real estate exemption and the wild card exemption and rather than $60,000 in equity that needed to be paid to the trustee, the plan called for $4,000 in equity.

The bottom line is this, my client had every opportunity to prepare for the 341 meeting and simply chose not to.  When your attorney calls and wants to prepare you for a hearing, the love of all that is good please take their call and spend the 30 or 45 minutes necessary to prepare for it, if not it might cost you your home.

To fix this, my client is probably going to have to pursue mortgage modification, which in his case may not be so bad, but once you start down the Chapter 13 Bankruptcy road, it is in your best interest to finish.  The wrong answer at the 341 meeting may indeed cost my client his home, and the only person responsible for that is him.

If you’re having debt troubles or behind on your mortgage and you don’t want to cooperate with your attorney, please don’t call me, there are plenty of other people who want and need my help and are going to cooperate with what we need to do.  However if you’re part of the 99% of people who will listen to their bankruptcy attorney, and you’re ready to find your way out of the debt maze, call me at 484-661-2891 or e-mail me at jim@padebt911.com for your free, no obligation consultation.

Preparation is the key to a successful 341 meeting of creditors, in fact proper preparation is the key to successful bankruptcy case.  It is important be ready for any question that the bankruptcy trustee throws at you.  Fortunately, these questions are generally the same in all bankruptcy cases and the oddball question can be anticipated if your attorney is familiar with the documents in the case… more on that in another post.

The third question the trustee will ask you for 341 meeting of creditors is: “Are all of your assets identified on the schedules?”  This is a straight forward question, but it is one that is fraught with peril.  Lying to the bankruptcy trustee is very bad, you can do prison time if you are caught in a severe enough lie, and the temptation to lower the dollar amout of your assets is quite strong with this question.

You shouldn’t even be tempted to do this.  If your attorney has prepared for your case (its all about preparation folks–they are going to put that on my headstone!), he or she should have identified the values of important property and determined how to handle it with the trustee.

One case I handled involved a man who had recently been divorce.  She got everything except his baseball card collection.  Me, being the card geek I am, was interested, and I learned that he had a 1952 Topps Mickey Mantle card among other valuable cards that were worth around $60,000.  When we discussed this, he wanted to say they were worth $50 because in the end they were just pieces of cardboard with no intrisnic value.  I couldn’t let him do that.  I’m not going to lie to the trustee nor offend the baseball gods on the same page and he decided not to go forward with the bankruptcy case.

Do not lie!  Often times even non-exempt property (property that the trustee can take and sell to pay creditors) can be resolved in the Chapter 13 plan.

The second part of this question is where attorneys get themselves in trouble.  The trustee will ask: “Have you listed all of your creditors on the schedules?”  For some reason, my clients tend to foul this question up, and when I figure out why I’ll fix it.  The answer to this question is yes, but most of the time they give me and or the trustee a dumbfounded look.  My answer always is “Yes, we pulled a credit report prior to filing this case and all creditors on the credit report and on the bankruptcy documents.  If there is a creditor out there that we don’t know about and is not on the credit report who files a proof of claim, we will deal with it accordingly.”

If your attorney has done his or her preparation prior to filing the case by pulling a credit report, you can confidently answer yes.

This is one of the few questions that I can bail a client out of if they start digging a hole with their tongue, but they shouldn’t have any problems.  It should go:

Trustee:  Are all of your assets identified on the schedules?

Client:  Yes.

Trustee:  Have you listed all of your creditors on the schedules?

Client:  Yes.

Next question.

If you have debt problems and you think you need bankruptcy but are terrified of the 341 meeting of creditors, don’t be.  A well prepared attorney will make sure your meeting goes smoothly.  When you are ready to discuss your financial worries with the most well prepared bankruptcy attorney  you have ever met, please email me at jim@padebt911.com or call me at 484-221-8014 to set up a free, no-obligation consultation and you and I can prepare you for whatever the financial future may hold.

The first question you will be asked after stating your name for the record and showing your drivers license and Social Security card is: “Did you sign the petition, schedules, statements, and related documents and is the signature your own?”

Essentially, the trustee is asking you did you read the documents and is this your signature.  They will ask your attorney to show you the signature on the third page of the bankruptcy filing.  The answer to this question is yes.  Your attorney should have gone over these documents with you before you sign them, answered any questions that you had, and if they didn’t witness the document being signed, they should have at least had the signed pages in their possession before they filed the case.

I have never once had a client answer no.  I had one say once that he wasn’t sure the trustee treated him like an idiot for the rest of the meeting.  Most people sign their name and the signature changes a little bit but you should at least be able recognize their own handwriting.  Your attorney should give you a copy of the bankruptcy filing on the day that you sign it, so you should have your own copy at the 341 meeting and there should be no doubt that that your signature is on it.

The next part of this question is more important.  “Did you read the petition, schedules, statements, and related documents before you signed them?”  The trustee is basically asking did your attorney go over the documents with you.  There are some trustees that like to single out attorneys that have moved into the electronic age and don’t acquire their clients to drive to their office in order to sign documents by saying: “Did you meet with your attorney at his or her office. “  This will put the attorney in the awkward position of explaining that he runs a modern office and can do things like electronically because we have things called computers and the internet now.  That isn’t your problem but it’s something you should be aware of in case we run to one of these curmudgeons at 341 meeting.

The reality is that you better be sure what you are signing on what you are doing before your Chapter 13 or Chapter 7 bankruptcy attorney files your case.  You also better make sure that the information in these documents are correct.  While it’s true that you have hired your attorney to guide you through the bankruptcy process, and your attorney will do the lion’s share of the work, only you will know the personal data that should go on these documents and it’s your responsibility to make sure that it is correct.

I have never had a client say that they did not understand what they were signing.  I like to think that’s because I’m good at explaining what each document means and because I go through page by page line by line and require my client to initial the lower right-hand corner of each page of the bankruptcy filing before the cases filed

If you find yourself at the point where you’re ready to file your case and you’re speaking to your attorney and you’re going over the documents and you don’t understand something it is up to you to bring it up.  Ask your attorney to question and keep asking until you have a satisfactory answer, remember your attorney is there to make sure your bankruptcy goes smoothly, and if it requires a little extra time at the beginning of the case to avoid problems as the case proceeds, you should both appreciate it.  If your attorney doesn’t appreciate this you may want toconsider getting other representation before you file the case.

Normally this question takes 30 seconds or less and is one of the easier questions to deal with, but I can see where an unprepared attorney or unprepared client could make this question one with hair-raising.

The whole theme of this site is better results because of better preparation. It starts right here with question number one of the 341 meeting.