Our Competitors: Sample Chapter 7 Bankruptcy Meeting of Creditors Transcript

Every Chapter 7 bankruptcy case has an initial court date called a First Meeting of Creditors (or 341 hearing) that is conducted by the Chapter 7 Trustee assigned to the case. The transcript below was produced by the Office of the United States Trustee (a component of the US Department of Justice).

This is a transcript of a hearing of one of our competitors. The “special appearance” referenced by the attorney means that she does not work for the law firm that the Debtor hired. She has been contracted by that office only to appear at the court date. She met the Debtor for the first time on his court date. Please notice the silence from the Debtor’s attorney at the hearing. The only things she says are “I’m sorry,” her name and “Thank you,” despite the fact that the Trustee is very aggressively examining her client.

What you cannot see in the transcript is that this case was actually called 3 times over 1 hour before the Debtor’s attorney arrived. The Trustee had to repeatedly send the Debtor outside to search for his attorney and expressed his frustration off the record. Additionally, the Trustee filed a motion almost immediately after this court date, challenging the relief the Debtor was seeking.

All bankruptcy attorneys must disclose their fee agreements in writing with the Court. I checked out this law firm’s fee agreement. Although the initial upfront costs appear low, per the fee agreement the law firm will be charging the Debtor significant additional fees for these additional court appearances that could have been avoided.

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF MICHIGAN

Case No. 13-48156

BEFORE KENNETH NATHAN, CHAPTER 7 TRUSTEE

341 hearing

Detroit, Michigan

Thursday, May 30, 2013

11:00 A.M. Call

THE TRUSTEE: Case number 13-48156, (Debtor). Raise your right hand, please.

 (NAME CENSORED), DEBTOR, SWORN

 THE TRUSTEE: Where’s my questionnaire?

 MS. NIFOROS: I’m sorry.

 THE TRUSTEE: You can have a seat.

EXAMINATION

BY THE TRUSTEE: Q. Did you review and understand the bankruptcy information sheet?

 A. Yes.

 Q. State your name for the record.

 A. (CENSORED).

 THE TRUSTEE: Counsel, put your name on the record.

MS. NIFOROS: Thank you. Elaine Niforos by special appearance for Gudeman & Associates on behalf of (Debtor).

BY THE TRUSTEE: Q. Your attorney has placed in front of you some documents. Can you identify those as your bankruptcy petition, schedules and other related bankruptcy pleadings?

A. Yes.

Q. And is that your signature that appears in each place you’re required to have signed them?

A. Yes, sir.

Q. And did you review them before you signed them?

A. Yes.

Q. And at the time of signature were you satisfied it was all a truthful and accurate statement?

A. Yes, sir.

Q. Is it still that way today?

A. Yes, it is.

Q. Are there any changes you need to make to any of those documents today?

A. No.

Q. Have you ever filed for bankruptcy before?

A. No, never.

Q. And why are you filing now?

A. Just no income.

Q. When did that stop?

A. About four years ago.

Q. So you haven’t had any income in four years?

A. No. I was in school, then graduated, and haven’t been able to find a job.

Q. So you haven’t worked — when is the last time you worked?

A. 2007.

Q. Okay. Let’s take a look at your Schedule F. Spend a little time on that. So you haven’t worked since 2007. You have an open credit card with American Express. When is the last time you used that?

A. Over — over three, four years. Haven’t used it.

Q. So have you used it since 2007?

A. I don’t believe so, no.

Q. It says last active in 2008.

A. Could be.

Q. Could be, huh?

A. Yeah.

Q. You ran up $30,000 with American Express. How were you ever going to pay them back?

A. At that time I was working for real estate and —

Q. What’s the most you ever earned in one year?

A. (indiscernible)

Q. Most money you ever earned in one year working?

A. About 15,000.

Q. 15,000?

A. (No audible response.)

Q. Okay. You have $200,000 of unsecured debt. The most you ever earned in one year is $15,000. How did you ever think any chance you were paying this back?

A. It just got out of control.

Q. How did you get the credit? What did you tell them your income was to get 15 — to get credit making $15,000 a year? When they asked you what your income was, what did you tell them?

A. You know, I showed them tax return.

Q. No, you didn’t. You didn’t give your creditor – you gave American Express a tax return?

A. No, not American Express, no. It was a car lease.

Q. Okay. What about American Express? What did you tell them your income was to get credit? What did you tell Discover your income is?

A. I think recent — that was open in early on.

Q. What did you get at Flagstar Bank?

A. A loan.

Q. What kind of loan?

A. A motorcycle loan.

Q. How many years did you work before you stopped working in 2007?

A. I’d been working, you know, restaurant jobs and —

Q. And what was —

A. — part time while I was in school.

Q. But you — but you never had really a full-time job that paid any significant amount of money?

A. During summer I worked.

Q. Okay. Summer, a summer job?

A. (No audible response.)

Q. And what’s the — again, in one year, what’s the most you’ve ever earned?

A. I would say around that amount, 15,000.

Q. 15,000. Where did you get the money to pay your attorney?

A. My parents.

Q. Where did you get the money to live?

A. I just live with my parents.

Q. They pay for everything?

A. Essentially.

Q. Do you have student loans that you have — don’t — can’t pay back either?

A. Yeah. They’re all in default, and I filed for consolidation.

Q. Have you looked for work?

A. Yes.

Q. Can’t get any job at all?

A. For what I went to school for, I — I’ve applied and it seems they look at my credit and we just never speak again.

Q. Have you sold, transferred or given away an property of any type in the last couple years?

A. No.

Q. Sued anybody in the last five years?

A. Never, no.

Q. Anyone owe you any money for any reason?

A. No.

Q. Paid any monies to any family members or close friends in the last year?

A. No, never.

THE TRUSTEE: I don’t have anything further at this time. You’re all set.

MS. NIFOROS: Thank you.

(Hearing concluded.)

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