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Reading a letter from a lawyer regarding a meeting of the creditors (2)

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Jim Riley, Attorney at Law
3262 N.W. Woodlawn Avenue
Seattle, WA 98104

March 17, 2008

William Jordan
572 Cascade Drive
Bay Ridge, WA 98107

Dear Bill,

I am writing to confirm our telephone conversation today and to remind you of the upcoming meeting of creditors, which is scheduled for one week from today at 2:00 p.m. in Room 203 at the U.S. Bankruptcy Court. This is the “341 meeting” named after the applicable section of the Bankruptcy Code. As I explained, you are required to appear at this meeting, which takes place before the trustee, and you should be prepared to answer questions under oath about your assets and liabilities.

All those included on our list of creditors are invited to the meeting. Creditors do not often attend. Nevertheless, I am expecting that Neighborhood Savings Bank may send someone. As I mentioned on the phone, the bank’s attorney called me this morning, and said that the bank had just filed its proof of claim with the Bankruptcy Court. Before the bank knew about our bankruptcy filing, it filed an enforcement action in state court, seeking payment in full of the arrears they claim you owe. The bank’s state court action cannot proceed unless the bank gets the Bankruptcy Court’s permission to go forward, in the form of a “relief from stay,” which is difficult to obtain.

Alternatively, the bank could file suit in the Bankruptcy Court itself, in what is called an adversary proceeding related to our Chapter 7 case, although so far, the attorney has made no mention of filing such an action. He did say, however, that the bank may well challenge your qualification for Chapter 7 protection and seek conversion of the case to a Chapter 13 case. As I explained, if this were to happen, the case would continue in the Bankruptcy Court but under a different section of the Code. As I advised you when we met Chapter 13 does not allow immediate liquidation of assets and elimination of debts, as Chapter 7 does. However, because the bank has yet to make a strong case for why such a conversion is justified in your case, there is no need to worry about that at the moment.

I look forward to meeting you on Monday at 10:00 a.m. in my office to prepare for the 341 meeting.

Sincerely,

Jim Riley

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