The chapter 7 trustee’s preparation for the Meeting of Creditors Hearing 341(a) Hearing
Please note that it is unusual for a chapter 7 trustee to sell a debtor’s asset.
A chapter 7 trustee’s job is to review and investigate the debtor’s total financial picture to determine if the debtor is entitled to a discharge and/or whether the debtor owns substantial assets that may be liquidated, with the funds to be paid to the creditors. If the trustee believes that the debtor is entitled to a discharge, the trustee will recommend to the judge that an order of discharge be entered. If the trustee believes that the debtor should not be entitled to a discharge, the trustee should advise the court accordingly. However, under this scenario, the debtor may contest the trustee’s objection.
The issue of selling property is not mutually exclusive to an entry of discharge. In other words, a debtor may be entitled to a discharge and the trustee may sell the debtor’s assets if possible. Typically, if the trustee sells an asset and the debtor is entitled to a discharge, the discharge will be entered in the normal time period with the sale of the asset at a much later date.
Prior to the Meeting of Creditors, the debtor’s attorney forwards all of their financial documents to the trustee for his review. This includes: six months of the debtor’s and household members’ paystubs; six months of all bank statements; all relevant income tax returns; professional valuations for real estate and other property; estimated mortgage and auto finance payoff statements; alimony and support orders, etc. Typically, if their expenses are reasonable, the trustee will not require proof of the reasonable and necessary expenses, such as food and clothing. In the event that a debtor operates a business, the debtor must provide proof of the business’ income and expenses, such as a profit and loss statement, receipts, business bank statements, etc.
Prior to the meeting, the trustee will prepare for the bankruptcy hearing by reviewing all of these documents. If the documents appear to the trustee to be contradictory to each other or the bankruptcy petition information, the trustee will make a note of these issues.
You may call NJ bankruptcy attorney Robert Manchel at (866) 503-5655 to discuss your chapter 7 bankruptcy questions and the potential for receiving bankruptcy protection.