Question: A creditors’ meeting has been called and I wonder what questions they can and cannot ask. Can they only ask about the past and where the money was spent before bankruptcy? Can they ask about personal expenses such as medical expenses and what drugs I am paying for? Do I need to take any documents to the meeting?
About Creditors’ Meetings in a Bankruptcy
Before answering your specific concerns, allow me to provide some basic background for anyone unfamiliar with the bankruptcy process and what creditors’ meetings are all about.
If your realizable assets in a bankruptcy are less than $15,000, your bankruptcy is considered to be a ‘summary administration’. In a summary administration bankruptcy a creditors’ meeting is not automatically required. The vast majority of bankruptcies fall under this category and as such a meeting of creditors does not even happen.
A Meeting of Creditors is held if:
- In the case of a summary administration, at least 25% of your creditors based on the value of their claims or the OSB requests a meeting;
- Your bankruptcy is an ordinary administration (that is it does not meet the terms of a summary administration)
A creditors’ meeting is designed to allow the creditors to review a bankrupt’s situation, including asking the bankrupt questions about their financial dealings that lead to their trouble. Of equal importance, the creditors’ meeting allows the creditors to provide the trustee handling the bankruptcy with instructions on how to deal with issues that may arise in the file including the disposal of assets.
Creditors’ meetings are quite rare in personal bankruptcy filings. Our firm will process in excess of 1,500 personal bankruptcies this year and we will likely have fewer than 12 creditors’ meetings. For most people, a creditors’ meeting should not be a concern.
When A Creditors’ Meeting Is Called
When a meeting is called, either at the request of the creditors, or because of the value and complexity of the bankrupt’s situation, it is usually to deal with a very specific concern or issue. For example, the bankrupt may have an ownership interest in a piece of real property that has environmental or other legal constraints. A meeting is called as a way to exchange information between the bankrupt, the creditors and the trustee handling the bankruptcy.
Your creditors have the right to ask whatever questions they like that relate to the bankrupt’s finances, past, present and future. If a question has no relevance to a person’s finances the bankrupt could refuse to answer.
Bankrupt’s have the right to be represented by council (a lawyer) at a creditors’ meeting. Again, it is not usually done, but in cases with significant concerns about the bankrupt’s financial conduct prior to filing it might make sense.
An important note I should make is that your trustee is not a lawyer and does not represent you. You should not rely on your trustee for legal representation – it is not something a trustee can or should do. If you are concerned, you should consider seeking outside legal advice.
In regards to specific expenses like medications, you have the right to decline to answer at the creditors’ meeting, but that may complicate matters. Creditors expect you to co-operate and if you decline to answer reasonable questions they may take a harder line towards your bankruptcy. In most cases it is possible to provide enough of an answer to satisfy the creditors concerns without disclosing unnecessary personal information about your condition.
Finally, if you are required to bring any documents to the creditors’ meeting you will be given a description or a formal request before the meeting. If during the meeting an additional document is requested, arrangements will be made that allow you to provide then documents to the trustee at some future time. In some cases, the meeting might be adjourned and reconvened at a later date to allow for more information to be gathered.
Allow me to re-iterate, creditors’ meetings for personal bankruptcies are quite rare. If one has been requested for your bankruptcy, you should discuss the matter with your trustee. They may be able to provide you with insight as to why the meeting has been called and anything you may be able to do to prepare yourself.