As I have previously discussed on the O’Connor, DeGrazia, Tamm & O’Connor website, Section 341 hearings (also known as meetings of the creditors or meetings with the trustee) are mandatory meetings of creditors and equity security holders held pursuant to 11 U.S.C. Section 341 of the Bankruptcy Code.  The law requires that this meeting occur within a reasonable time and it is the Bankruptcy Trustee (rather than a federal bankruptcy judge) who presides over the meeting. The debtor must attend the meeting and should be prepared to establish his or her identity to the trustee. To accomplish this, many Detroit bankruptcy trustees require debtors to bring one form of photo identification (usually a driver’s license) as well as a social security card.  In the Eastern District of Michigan, various additional documents are required by local court rule as discussed here.

At one recent Section 341 hearing I observed in Detroit, a debtor misplaced his driver’s license just before the meeting and was unable to obtain a new license from the state quickly enough to present it to the trustee.  Instead, the debtor offered to the trustee the only other government-issued picture identification he possessed – his passport.   While a debtor is not required to present their passport at a Section 341 hearing, this seemed to me like a perfectly acceptable substitute for the driver’s license.  The trustee did accept the passport as proof of the debtor’s identity, but only after scrutinizing each page for several minutes.  It was then that I realized the trustee was looking to see where the debtor had traveled! This makes sense, since the primary role of a Chapter 7 trustee is to liquidate the debtor’s nonexempt assets in a manner that maximizes the return to the debtor’s unsecured creditors (as I discussed here).  One of the purposes of the Section 341 hearing is to determine whether nonexempt assets exist and the potential value of those assets.  Travels to foreign countries shortly before or after filing for bankruptcy could raise a number of red flags in the eyes of the trustee, as they could suggest undisclosed assets or sources of income, among other things.

Fortunately for this debtor, he had not been anywhere of note and the trustee proceeded without any questions about the passport.  However, the fact that the trustee took such a long look at the document raises an important point:  passports should be presented to the trustee with caution, as they contain much more information than a driver’s license or other more common forms of picture identification.  They are usually not among the documents a debtor is required to bring to the Section 341 hearing; if you are thinking about presenting it for any reason, talk to your attorney first.  (The importance of full disclosure to your bankruptcy attorney in every aspect of the bankruptcy process has been discussed here).

-Drew Broaddus