In Chapter 7 or Chapter 13, the bankruptcy or panel trustee conducts the 341 hearing. Although we call it a hearing, it is far more like a deposition. The bankruptcy trustee asks questions about the accuracy of the petition, requests documents, and reviews assets and income. Most people think the bankruptcy trustee is a judge but, that’s incorrect. Rather, he is normally another attorney with an accounting background or a CPA license. Remembering that you are under oath in a federal court proceeding, click here for the questions the Chapter 7 Trustee asks during the 341 hearing.
Chapter 7 & Chapter 13 Bankruptcy or Panel Trustees & the 341 Hearing
The Chapter 7 trustee receives pay of about $60–$70 dollars per petition review. Additionally, if he finds assets and sells them he gets about a 25% commission on the first $5,000 on a sliding scale. If the petition is accurate and the documentation supports it, the bankruptcy trustee quickly does his job and goes on to the next case.
His duty is to ensure that the petition is accurate and to pay creditors from any available assets. Even if he takes a $10,000 dollar car—for some richer clients it may be worth it to destroy $25 million in debt. Sort of like sacrificing a pawn to win the game. But, there are rarely any assets for the trustee to take after exemptions.
However, if your petition is not accurate it causes him additional work. Moreover, an inaccurate petition may result in a second hearing, cause you to lose property, or may result in an audit similar to an IRS audit called a 2004 deposition which may last hours. Therefore, it is very important that all the information you give to us is accurate.
⎆ Your US bankruptcy trustee.
Chapter 7 debtor has a responsibility to use his best efforts to repay debt. Occasionally, some debtors attempt to hide income in order to file a Chapter 7. This rarely works and debtors must avoid this at all costs. Of course, the US trustee reviews every petition for accuracy. However, sloppy petitions and debtors with high incomes over $100,000 per year receive more intensive audits.
Additionally, petitions are also audited for abuse. This means that people with high incomes who Chapter 7 petitions that include luxury expenses that abuse the system will be required to convert to Chapter 13. Moreover, if the petition is inaccurate or does not supply the required documentation the petition may be dismissed.
⎆ The bottom line.
Avoid filing errors and sloppy petitions by seeking out a bankruptcy attorney with the experience you need. Doing so ensures a smoother experience with the bankruptcy trustee. So, always make sure the information you give to your lawyer is accurate. Moreover, do not hide income, assets, or transfer assets just before filing bankruptcy. If you do, it might lead to delays and excessive legal and personal costs.
Other Related Information
If you are facing bankruptcy, don’t delay. Contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905