As a Park Forest bankruptcy attorney, I believe that the overwhelming majority of Chapter 7 bankruptcy cases filed throughout the country are done by honest debtors who need a fresh start. There was not fraud running rampant in the bankruptcy system. We did not need a bankruptcy law change is to prevent fraud from happening.
The truth is, credit card companies who have a very strong lobby and support Congress tremendously wanted to see if they could curtail the rising bankruptcies that were going on throughout the country. Actually, credit card companies were leading to the amount of people claiming bankruptcy by offering credit to people who were not entitled to credit, should not have had credit, and did not have the ability to repay the credit. The recent bankruptcy filing increases also had to do with the economy in general, the lack of jobs, the lack of incomes and the rising costs of everything. So to think that bankruptcy needed reform because people were taking advantage of the system and filing fraudulent cases was actually a misnomer. The truth was, the credit card industry had put enough credit in people’s hands who couldn’t afford it that they would wound up having to resort to the US Bankruptcy Code, Chapter 7 in particular to get a fresh start and get out of debt.
Once the bankruptcy case is actually filed, the clerk of the U.S. Bankruptcy Court will send notice to the debtor, the debtor’s attorney and to all creditors listed on the debtor’s petition and schedules. The notice will say that the debtor has filed for bankruptcy, the creditors are prohibited from taking certain actions to try to collect the debt and the date will be set for the 341 meeting of creditors. The meeting of creditors is required under the United States Bankruptcy Code under Section 341.
At the 341 meeting of creditors, you will have a Chapter 7 panel trustee who will take information, questions under oath of a debtor. The debtor will be present along with his attorney and the trustee will ask a series of yes/no questions basically to verify the information obtained in the petition and schedules. Some sample questions are please state your name, where do you live, did you sign the documents, did you list all your assets and liabilities? Did you give away or sell anything for less than its fair market value in the last six months? Did you take any recent cash advances? Where are you working? Do you expect to inherit any money? Can you sue anybody for any reason, personal injury or workers compensation?
Those in a nutshell are the types of questions that are going to be asked of the 341 meeting of creditors. Do not fear the meeting. Your bankruptcy lawyer will be with you at your side.