Appearing At A Creditors Meeting in A Bankruptcy

One duty of a bankruptcy is to attend a meeting with your creditors if one is required.

The statement gives the instant impression that you’d have to go to a board room somewhere and sit in a room with a representative from each of the places you owe money to.  Sounds scary!  However, in actual fact, a creditors meeting in a personal bankruptcy is a very rare occurrence.

They’re perhaps a little more common when big corporations file bankruptcy as there’s a greater chance there’d be a large number of assets and creditors to be dealt with.

Most personal bankruptcies filed in Canada are done so under what’s known as a summary administration, which essentially means it’s a more streamlined and simpler version of an ordinary bankruptcy, so therefore the requirement to have a meeting of creditors is usually not required.  Summary bankruptcies are filed when it’s expected that there will be less than $15,000 available to divide amongst your creditors.

In a summary administration bankruptcy a meetings of creditors could happen if either:

• Creditors holding more than 25% of your debt request one
• The Office of Superintendent of Bankruptcy requests one

The main purpose of a creditors meeting is to allow the creditors an opportunity to review a bankrupts situation and ask questions and the bankrupts finances and caused of financial difficulty.

It also allows the creditors a chance to give information to the trustee handling the bankruptcy on how they’d like certain assets to be disposed of.

If a creditors meeting is to be called, it would usually be because there may be a very specific issue or concern that needs to be addressed.  For example, the bankrupt may own some property that needs to be sold or disposed but there could be legal or environmental issues that need to be addressed first.

The questions asked in a creditors meeting must relate to the bankrupts finances either, past, present or future.  If a question has no relevance to a financial matter the bankrupt is allowed to refuse to answer the question.   As a bankrupt, although you need to attend in person, you also have the right to have your own legal counsel present too.  It’s important to remember that your trustee is not your lawyer and is not there to represent you, so if you have to attend a creditors meeting and are concerned, you’ll need to consider seeking your own outside legal advice if necessary.

You may be required to bring certain pieces of documentation to a meeting.  If you are, you’ll usually be notified in advance as to what you need to bring.  A meeting can also be adjourned to a later date/time if the information is not readily available.

By co-operating and honestly answering the creditors questions, you may avoid any potential complications further into the bankruptcy.  For example,  you cannot be automatically discharged from bankruptcy if you do not attend the meeting and a creditor may exercise the right to oppose your discharge from bankruptcy they have reason to believe a matter warrants further investigation in court or you’ve not answered questions truthfully.

Having said that, it’s worth remembering again that creditor meetings in personal bankruptcies are extremely rare so most people filing bankruptcy would not need to be overly concerned, however if you are called to one, discuss it with your trustee as they’d be able to advise you as to why one has been called as well as inform you of the process of what to expect and what to bring.