What happens at a 341 Hearing?
June 3rd, 2016
Many of my clients are intimidated by the idea of having a court hearing in connection with their bankruptcy filing. However, after the hearing is over, their most typical reaction is "That's it?" The reason for this underwhelming reaction to their interaction with the federal court system is because of the level of time and effort that we put into the preparation of each bankruptcy case. When a case is well-prepared and all required documents are gathered before the case is filed, the hearing is more of a formality than anything else.
The hearing will be with a trustee that is appointed to administer the case. The trustee is a private attorney (just like us) but they wear a different hat. Their job is two-fold: to make sure that all of the documents filed with the Bankruptcy Court are accurate and supported by the documents we have gathered prior to filing and to ensure that there are no assets available to be sold for the benefit of creditors. In the vast majority of cases, any assets that the debtor has are exempt from execution by the trustee. If there is an exposed asset, we have already identified this issue before we ever file the case and are prepared to address it at the hearing together with our clients.
At the hearing itself, the Trustee will ask our clients questions about their assets, debts, income and expenses. However, during the preparation of the case we have already reviewed far more with our clients than what the Trustee will ever review at the hearing. It's kind of like studying for a test. If you do the correct level of preparation, the studying is more challenging and time consuming than the final exam. Our firm prides itself on always being ready for the test of the hearing, which makes a difficult process like bankruptcy so much easier for our clients.