For anyone in bankruptcy, the First Meeting of Creditors is important. It is where the Trustee places the debtors under oath and asks questions to verify their bankruptcy disclosures, and sometimes to pursue a further investigation. What many people do not realize is that closing that hearing is just as important. For the most part, the trustee has the discretion to keep the hearing open as long as he or she needs to continue investigating, but there are limits and procedures that must be followed.
Closing the hearing is important because it starts the clock running on the time for the trustee or creditors to object to a debtor’s claim of exemptions. One of the important protections available to individuals in bankruptcy is their right to claim certain types and amounts of property as “exempt”. The exemptions define what property the debtor gets to keep free of claims of most creditors. These exemptions become unchallengeable 30 days after the First Meeting of Creditors is closed, unless there is a written agreement or court order otherwise. F.R.Bankr.P. 4003
So establishing when the hearing is closed is very important. There was a time when trustees had the ability to keep the hearing open for an indefinite time, simply by announcing that the hearing was being kept open without setting a new date. This left the debtor in limbo. Several courts then held that trustees could not keep the hearing open for an unreasonably long time. In December 2011, bankruptcy rule 2003(e) was amended to require that the notice of adjournment at the hearing include a specified date and time for the hearing. It also required the prompt court filing of a statement specifying the date and time to which the meeting is adjourned. .
So at the First Meeting of Creditors, it is important to ask the Trustee to advise on the record whether the hearing is closed, and if not when the new hearing date will be. Insist that the rule be complied with.
For help with your bankruptcy case, contact an experienced bankruptcy attorney in New Jersey at Neuner & Ventura LLP.