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If you've filed Chapter 7 or Chapter 13, one of the first things you'll do is attend something called a 341 Meeting of Creditors. It usually happens about 3-6 weeks after you file. The name sounds scarier than it actually is. It is a brief, straightforward meeting run by the bankruptcy trustee to review your case and ask a few standard questions.
We have several blogs discussing 341 Meetings, including:
10 Things You Need to Know About Your 341 Meeting (click here)
341 Meeting Question the Bankruptcy Trustee Asks (click here)
Once the meeting is over, most people have the same question: "Okay... now what?" In most cases, you need to have your second required Credit Counseling and Debtor Education completed. If you have not done it yet, now may be the time.
Bankruptcy Tip: Try to complete the second course before your 341 meeting. It keeps everything moving smoothly and helps you avoid missing any deadlines.
If you're in a Chapter 13 case, your job is simple: keep making your monthly plan payments. Your attorney handles any objections and works to get your repayment plan approved. Once it is confirmed, you'll continue making payments for 3-5 years. When you've completed them all, the trustee does a final review. Shortly after the final review, you receive your bankruptcy discharge. Typically, within two to three months.
In most Chapter 7 cases, there is actually nothing else you need to do after the 341 meeting (as long as you have completed your course). From there, it is just a waiting game while the court processes your discharge and closes the case.
Below are a few of the frequently asked questions about what happens after the 341 Meeting in a bankruptcy case:
Most Chapter 7 cases are no-asset cases. That means that the trustee isn't taking any property to sell to pay back unsecured creditors. Bankruptcy exemptions protect what you own, so in many situations, there is nothing further for the trustee to complete.
Try our Free Bankruptcy Exemptions Calculator.
If the trustee identifies an asset with equity, the trustee may sell it. The proceeds are used to pay your unsecured creditors. The trustee must file a motion to auction or sell the asset. They must also file numerous documents related to claims, disbursements, and accountings.
Typically, there is nothing for you to do. You receive copies of all the documents filed with the court. You should also receive your bankruptcy discharge. However, the bankruptcy case remains open until the trustee completes all of their work and files a final accounting.
If the Chapter 7 trustee abandons all assets at the 341 hearing, your money and income are yours to spend however you desire if you are unsure of the outcome of your Chapter 7 case, as a bankruptcy lawyer or the Chapter 7 trustee.
However, do not spend money you have before the Chapter 7 341 hearing if a bankruptcy exemption does not protect it. The trustee may require you to turn that money over to the trustee’s office as an asset of the bankruptcy estate.
Chapter 13 debtors can typically spend their money however they choose, provided they make their Chapter 13 payments each month. The Chapter 13 trustee is more interested in receiving your bankruptcy payments than in how you spend the rest of your money.
Bankruptcy Tip: It is generally best to wait until after receiving the Order Closing Bankruptcy Case before making large purchases, paying off debts to family members, or making luxury purchases.
You do not want to give creditors any reason to object to your bankruptcy discharge. The creditor may not be successful in having their debt protected from discharge, but objections trigger hearings. You may not receive your discharge, and your case remains open until the objection is resolved.
When you receive your bankruptcy discharge depends on several factors:
Chapter 7 Case With No Objections to Discharge
In a typical Chapter 7 case, most people receive their bankruptcy discharge 4 to 6 months after filing. Therefore, you can expect your discharge order 60 to 90 days after the 341 Meeting of Creditors.
Chapter 7 Case with Objection to Discharge
A creditor could object to your discharge. If so, it takes longer to receive a discharge.
The court must hold a hearing to determine whether the creditor has a valid legal reason to object. If the creditor wins, your other debts may be discharged, but you would owe the creditor whose debt was not discharged.
The Chapter 7 trustee could object to your discharge. If so, the trustee asks the court to deny your entire discharge. If the trustee wins, you owe all your debts as if you never filed a Chapter 7 bankruptcy case. You need a bankruptcy attorney immediately if you filed for bankruptcy without a lawyer.
Chapter 13 Bankruptcy Discharge
You do not receive your bankruptcy discharge in a Chapter 13 case until you make all Chapter 13 plan payments. Therefore, it could take another three to five years after the 341 hearing before you receive your discharge.
NOTE: Your bankruptcy discharge does not mean the court closed your bankruptcy case.
A discharge is not the same as the order closing the case. You could receive the Order of Discharge before the Order Closing Bankruptcy Case.
The bankruptcy discharge eliminates eligible debts, including most unsecured debts. It may or may not be included with the order closing the bankruptcy case. Therefore, read all orders carefully and ask a bankruptcy lawyer if you do not understand the order.
Chapter 13 debtors are prohibited from obtaining credit without court approval. A Chapter 7 debtor could apply for credit after the 341 Meeting. However, it is generally best to wait until your case is closed before applying for a credit card, loan, or new line of credit. Most creditors will not extend credit while your bankruptcy case is open.
In a Chapter 13 case, you must have court approval to purchase a vehicle if you intend to borrow money to buy a car. However, if you purchase a car with cash, you do not need court approval in a Chapter 13 case.
NOTE: Check with your bankruptcy lawyer to ensure that the equity in the vehicle does not impact your Chapter 13 payment.
If you must purchase a car during your Chapter 7 case, wait until after the 341 hearing. Remember, your assets are subject to the bankruptcy estate. Therefore, the Chapter 7 trustee could sell the car to pay your debts.
BEST CHOICE: Most Chapter 7 cases can be filed and closed within four to six months. Therefore, if possible, wait until the court closes the Chapter 7 case before you purchase a car.
Yes, you can get a new job after your bankruptcy hearing. However, in a Chapter 13 case, getting a new job could increase your Chapter 13 plan payment. Therefore, always discuss this matter with your bankruptcy attorney.
In a Chapter 7 case, getting a new job after the 341 Meeting of Creditors should not impact your case unless you commit bankruptcy fraud. The income used to determine Chapter 7 eligibility is the income earned six months before filing the Chapter 7 case.
Try our Free Chapter 7 Bankruptcy Calculator.
Ascend is here to help. We provide a variety of free services to help you get the debt relief you need. If you have debts you cannot pay, call or text us at (833) 272-3631 or contact us online for a free case evaluation.
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