Straw Loans

Straw loans are what happens when someone purchases a product (such as a vehicle) or otherwise incurs debt for the benefit of someone else.  This is pretty common among family members.  Someone with bad credit or no credit may rely on a friend or relative to get the vehicle or loan on their behalf, and make payments to the lender.

There are a few issues with straw loans – and some that are specifically problematic in bankruptcy, so let’s discuss some of these.

Problem #1 – The Loan Might Be Illegal

Notwithstanding state laws designed to curtail fraud, individual contracts may prohibit the incursion of a straw loan.  Many mortgages and auto loans are granted with the condition that the borrower be the homeowner or primary driver. If the home or vehicle is purchased for someone else’s use, that could violate the terms of the contract.

Problem #2 – The Person Whom the Loan Benefits Isn’t Improving Their Credit by Payments Made on a Straw Loan

Although the beneficiary of a straw loan gets the immediate benefit of the vehicle or cash borrowed, the payments they make on the loan is not doing anything to help out their credit, since they are not on the loan.  In contrast to loans with cosigners, only the person who legally incurred the debt is being affected credit-wise. To the extent payments are being made, that will help their creditworthiness, but the actual incursion of the debt (plus – god forbid the loan go into default) will damage their creditworthiness.

Problem #3 – Insider Preference Issues in Bankruptcy

If you are the beneficiary of a straw loan (meaning someone bought a home or vehicle or something else for you), and you’re making payments on that loan, these payments are either insider preferences (if payments are made to the person who got the loan for you) or preferences benefiting an insider (if payments are made directly to the lender).  Either way, the trustee in your bankruptcy case may be able to sue the insider (the person who got the loan for you) to recover that preference payment you’ve made to them or on their behalf.  In essence, you are paying on someone else’s debt.  Whether you reaped the benefit of the loan is immaterial – legally, on paper, it is not your debt.  From the bankruptcy court’s perspective, you should be paying your own debts before you attempt to pay someone else’s debt.

As always – WORDS ON PAPER MATTER.  The informal agreements that commonly exist between family members do not trump what appears in black-and-white on a credit agreement.

Problem #4 – Household Contribution Income

Let’s take problem #3 and switch the roles.  Instead of it being the beneficiary of a straw loan filing for bankruptcy, let’s say it’s the person who got the straw loan who needs to file for bankruptcy.  If that’s you, and your family member is paying you to pay a debt that is – ON PAPER – legally YOUR DEBT, then you are receiving what we refer to as “household contribution income”.  For people who are near or above median, this can result in you having to pay more to unsecured creditors than you would otherwise be required to pay.

Exemption Planning and the Conversion of Non-Exempt Assets to Exempt Assets

Hypothetical:
John Doe has $50,000 locked up in stocks.  John Doe needs to file for bankruptcy, but given his available exemptions, the stocks are wholly non-exempt.  John Doe’s attorney advises John Doe to sell his stocks and use the cash to pay down his mortgage, because even with the increase in equity, John Doe would still have enough exemptions to protect his home.
This sort of “exemption planning” and conversion of assets from one form to another happens all the time.  The question is whether such conversions are permissible under the bankruptcy code.
11 U.S.C. § 522(o) / Relevant Parts:

[…] The value of an interest in […] real or personal property that the debtor or a dependent of the debtor claims as a homestead shall be reduced to the extent that such value is attributable to any portion of any property that the debtor disposed of in the 10-year period ending on the date of the filing of the petition with the intent to hinder, delay, or defraud a creditor and that the debtor could not exempt, or that portion that the debtor could not exempt […] if on such date the debtor had held the property so disposed of.

Here again, whether such conversions will be permitted is going to depend on the facts of the case and the court where such an objection to exemptions is brought.
In re Lacounte, 342 B.R. 809 (Bankr. D. Mont. 2005) – involved a conversion of $42,500 and the exemption was partially denied.
In re Anderson, 386 B.R. 315 (Bankr. D. Kan. 2008) – involved a conversion of $240,000 and the exemption was permitted.  The court noted that this was a “close case”, but pointed out that it was unable to find that the debtor acted with intent to hinder, delay, or defraud his creditors, and that he apparently “did nothing more than take advantage of an exemption to which he is entitled.”

Scam Alert – Posing as IRS Agents

This an extension of my earlier post on debt collection scare tactics.  There has been increased activity recently of groups of scammers posing as IRS agents.

ALWAYS BE SUSPICIOUS
of anyone who threatens to have you arrested unless you make an immediate payment


This is an excerpt from the IRS alert

People have reported a particularly aggressive phone scam in the last several months. Immigrants are frequently targeted. Potential victims are threatened with deportation, arrest, having their utilities shut off, or having their driver’s licenses revoked. Callers are frequently insulting or hostile – apparently to scare their potential victims.

Potential victims may be told they are entitled to big refunds, or that they owe money that must be paid immediately to the IRS. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy.

Other characteristics of this scam include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

Debt Collection Scams

This brochure is now available at my office.
Characteristics of Scams
  • Caller asks you for personal information, such as your address, phone number, social security number, bank account information, credit card numbers, birth dates, or your employer’s name. (If they’re a legitimate creditor, they already have this information.  Nor should they need to verify your identity; they called you and they’re asking you for confidential information, not the other way around.)
  • You ask the caller to contact your attorney, but the caller refuses to.
  • The caller claims to be collecting a debt you do not recognize.
  • The caller threatens you with arrest, criminal charges, license revocation, etc., but claims that they won’t take those actions if you make an immediate payment over the phone or online. (Such threats constitute
  • Be careful to not trust a debt collector too easily.  It is not difficult for them to obtain basic information about you, including the last 4 digits of your SSN. Others are able to spoof phone numbers and create false Caller IDs.

Legal Debt Collection Efforts
If you’ve filed for bankruptcy or are planning to file for bankruptcy, your protections depend on where you are in the process.  There are several laws that protect consumers.  Some of them are always in effect, others are triggered by certain events.  Here are some of the more common relevant laws…
  • Wisconsin Consumer Act
  • Fair Debt Collections & Practices Act
  • Automatic Stay & Discharge (Bankruptcy)
  • Criminal Extortion Statutes

Prior to filing for bankruptcy, creditors may attempt to collect debts (third party debt collection agencies are restricted in their efforts under the FDCPA) and file civil lawsuits.  Once your bankruptcy case is filed, civil litigation that hasn’t begun is prevented and civil litigation that is pending is terminated. Judgments arising from those lawsuits are dischargeable in bankruptcy.

(The intent elements necessary for the two actions listed below are extremely difficult to prove, which makes them extremely rare…)

Creditors who believe they can make a criminal case against you may press charges (as opposed to threatening to press charges).  Bankruptcy does not prevent that. If charges are filed, you should consult an attorney who specializes in criminal defense.
Creditors may claim that bankruptcy does not affect their debt. Only certain debts cannot be discharged (e.g. taxes, domestic support, student loans). Creditors must otherwise get a determination of fraud, misrepresentation,  embezzlement, or willful or malicious injury to have a debt declared non-dischargeable from the Bankruptcy Court.
How to Protect Yourself
Unfortunately, many of these scams go unprosecuted because
  • the perpetrators are difficult to identify and apprehend,
  • there are often questions of which agency has jurisdiction, and
  • prosecuting drug charges, rapes, and murders are more politically attractive.

The best way to defend yourself is to educate yourself on common tactics and motivations of con artists.

Films like The Sting (1973) and TV series like Leverage (2008-2012) are extremely informative.

If you wish to report a scam, contact any of the following:
  • Local Police
  • State Attorney General
  • Federal Trade Commission
  • Federal Bureau of Investigation
  • Consumer Financial Protection Bureau
  • http://www.stopfraud.gov/

Note:
This brochure discusses debt collection scams perpetrated by individuals with no legal claim against you – grifters attempting to con you into paying them money. These are criminal matters that fall within the purview of law enforcement.
However, you may also receive threatening calls from your actual, bona-fide creditors.  Some of these threats may be an attempt to intimidate you from filing bankruptcy (including criminal extortion and FDCPA violations) or attempts to collect debts despite the bankruptcy (violations of the automatic stay and/or discharge).  If you are being threatened by one of your actual creditors, please notify me.

Debt Collector Threats / Scaring People Away from Bankruptcy

I’ve written previously on the topic of debt collectors who threaten people with criminal charges if they don’t pay their bills.  That post is just over three years old, and so I wanted to update that post and also talk about another common threat – that your debt can’t be included in your bankruptcy case.
First and foremost, what CAN debt collectors do?

  1. Prior to filing for bankruptcy, any creditor has the right to file a lawsuit and obtain a judgment against you for the debt you owe.  Once your bankruptcy case is filed, any civil litigation that hasn’t begun is prevented and any civil litigation that is pending is terminated.
  2. Creditors who believe that they can make a criminal case for fraud can press charges with the appropriate prosecuting agency.  Bankruptcy does not stop these proceedings.
  3. If a creditor believes they can make a case for fraud or misrepresentation (523(a)(2)), fraud or embezzlement in a fiduciary capacity (523(a)(4)), or willful or malicious injury (523(a)(6)), then they can file an adversary proceeding to have the debt declared non-dischargeable.

But here’s what a debt collector can NOT do.

  1. Enforce a civil judgment that is discharged in bankruptcy.  Civil lawsuits and judgments – in and of themselves – are not special debts.  Just because a judgment has been entered against you does not mean that the debt cannot be discharged in bankruptcy.
  2. Creditors cannot seek to collect a debt by threatening criminal prosecution.  What does that mean?  It means that if they think they have a criminal case, then they should just press charges.  They cannot try to strike a deal with you where they drop the charges in exchange for payment from you.  If they do, then they are potentially guilty of two things…
    1. If a bankruptcy case has been filed and they make these threats, then they are in violation of the automatic stay.  Acts of criminal prosecution are distinguishable from threats of criminal prosecution.  The former is not stayed by bankruptcy, but the latter is stayed.  Desert Palace, Inc. v. Baumblit (In re Baumblit), 15 Fed. Appx. 30, 35-36 (2d Cir. N.Y. 2001) and Batt v. Am. Rent-All (In re Batt), 322 B.R. 776, 779 (Bankr. N.D. Ohio 2005).
    2. Even if a bankruptcy case is not filed, they would be guilty of criminal extortion in Wisconsin, under Wis. Stat. sec. 943.30.

Here are some other important things to remember…
Just because a creditor has the right to file an adversary proceeding under 523(a)(2, 4, or 6), and just because a creditor has the right to press criminal charges, that doesn’t mean that they’re going to.  The intent element to showing fraud is extremely difficult to prove.
99% of the time, the debt collector is blowing smoke – trying to scare you into paying the debt rather than filing for bankruptcy.  It’s an incredibly successful tactic, but also an illegal one.

Beware of Tax Refund Fraud

Last week’s news about HeartBleed, identity theft has been a topic on everyone’s mind.  But internet hacking software isn’t the only way thieves can harm you.  A few weeks ago, one of my pending Chapter 13 cases encountered a slight snag.
Among other things, the debtor in this particular case had a modest amount of tax debt owed to the Internal Revenue Service.  As a below-median debtor, she would be required to turn over one half of her tax refunds each year for the benefit of unsecured creditors.
The Internal Revenue Service filed a motion to use my client’s 2013 tax refund to offset her tax debt.  In a case like this, there’s no point in objecting.  We want this to happen.  Better that the IRS take the entire refund than unsecured creditors get paid half of it.  The IRS is required to be paid on its priority claim – unsecured creditors are not.  Although the decrease in IRS liability does not automatically trigger a modification under 11 USC 1329, it certainly gives us wiggle room in the future if the debtor needs such a modification and has a qualifying event to trigger it.
Accordingly, I had no plans to object.  Until I received an e-mail from my client, who asserted that she hadn’t filed her 2013 tax returns yet.  Initially, I assumed there was a misunderstanding or mistake.  I alerted the IRS to my client’s statement, and they flagged the return on which they based their motion to offset as a potential fraudulent return.
A few days later, the IRS notified me that a partial refund check had been sent to my client, and they asked me to warn my client not to cash it.  I did so immediately, but unfortunately, my client had already received, cashed, and spent the check.  A few days later still, my client sent me her actual tax returns, which I then forwarded to the IRS.
You might ask yourself why – with a motion to offset pending and with the return flagged as fraudulent – the IRS issued a refund check to my client.  Well, the answer to the first part is that the fraudulent return made a claim for a refund that exceeded my client’s tax debt – so the IRS refunded the difference while retaining the amount needed to satisfy her debt while the motion was pending.  The answer to the second part – the refund was issued before the return was flagged as fraudulent.
The story had one more interesting twist.  The purpose of filing a fraudulent tax return is for the thief to receive the refund money while using a different taxpayer’s identity.  How then, did the refund check wind up in my client’s possession?
Upon close inspection of the transcript of the fraudulent return, I noticed that although the thief used my client’s name and social security number, the thief had used a different routing and account number – directed at a bank in New Jersey.  Unfortunately for the thief (and my client), the IRS sent a check by mail rather than wire the money (presumably because of the pending bankruptcy and motion to offset).
The lesson of the story is, of course, to not cash a refund check for a return you haven’t filed yet.  If something seems too good to be true, it probably is.
In this case, the IRS will still intercept my client’s refunds, but it will be used to pay for the improper refund check.  And since her actual refund is less than the errant refund, there will be additional liability by the time all of this is sorted out.
Remember that under 11 USC 1305, the IRS can file a claim in your Chapter 13 bankruptcy case for a tax debt that arises after you file for bankruptcy.  This is a power that is reserved for only a few creditors.If you believe you have been the victim of tax refund fraud, visit the IRS at http://www.irs.gov/uac/Identity-Protection.

Spotting fraud (and how literacy can help).

The other day, I received an e-mail from a a woman who works for a local bank.  She was concerned because one of my clients had taken to writing threatening e-mails to the bank, stating that the bank held no valid mortgages, that by accepting payment from the client, they were committing fraud, and demanding documents that (quite frankly) don’t exist.
It’s interesting to note that this bank is the creditor that I have sued more times than any other creditor for artificially pumping up appraisal values in order to give out home equity loans to homeowners who are already underwater with their first mortgage.  Why is that interesting?  I’ll get to that in a minute.
The banker asked me to investigate and reach out to my client to figure out what was wrong.  And so I did.  My client responded with two lengthy e-mails and two forms (eight pages in total) attached that I had to parse through.
Apparently, my client had been targeted by a group that I am going to refer to as “PT76”.  There isn’t a whole lot of information (and even less reputable information) available on this group.  But from what I could gather, this is an ultra-nationalist, quasi-anarchist, anti-corporate organization.  That’s the polite version.  A more apt description would be an ultra-radical gang of tinfoil hat wearing thugs.
The forms were nothing more than gibberish. Someone strung together a long mess of legal-sounding words in the apparent hope of sounding smart, tough, and ultimately – legitimate.  It’s not even fair for me to say that they were misstating the law.  More accurately,they weren’t saying much of anything.  Their intent appears to be to incite and rile up victimized American consumers.
Here’s the crazy part.  I *should* be with these people.  Anti big bank?  Hell yeah!  I’ve been working in bankruptcy too long not to have developed a vitriolic hatred for the big banks.  Pro government reform? Absolutely!  I’m tired of listening to Congressmen behave like spoiled brats on a school playground.
That forced me intro a little Cartesian bout with existentialism.  For those of you who haven’t had a class in Philosophy, think: Matrix.  I can only be aware of my own existence.  Everything else could be an illusion.  So, for all I know – I’m living in a fantasy world, and these people whom I have dubbed ‘tinfoil hat people’ are the only ones with their heads screwed on straight.
But I got over it, and here’s why.  My beef with PT76 is NOT that they are stupid or uninformed.  I do not think that a person has to be highly educated in order to express an opinion.  I do not think that a person must be wealthy enough to hire an attorney to be active in politics or government.
My problem with PT76 is that they are too emotional not to be involved, but also too lazy to be involved properly. It’s one thing to be stupid.  It’s quite another thing to be stupid, but try to pretend that you’re smart.  When you string a bunch of nonsensical and incoherent legalese together in order to feign legitimacy, intelligence, and strength, then you are no better than the ‘bank cartels’ you claim to be rising up against.  How can you call the bank’s conduct fraud when you yourself are engaged in fraud?
One of the dead giveaways that PT76 is a group of morons were the forms they supplied to my client.  A fifth grader could have composed better forms.
Cell phones and Twitter have been the biggest enemies of literacy – forcing people to abandon years of formal English training in favor of absurdly long acronyms and abbreviations.  People have a tendency to mock those of us who are sticklers for good grammar and spelling.  Some might call me a literary snob.  You know what?  I am.
You could argue that presentation is’superficial’ and unimportant relative to the content of the words.  But I disagree.  The use of good grammar and style – particularly in this case -had a much bigger impact on the forms presented by PT76 than the words did(which were meaningless drivel).
The forms offered by PT76 were riddled with misspelled words, poor grammar, faulty capitalization, faulty punctuation, poor spacing, poor alignment, and poor formatting.  Anyone who was educated enough to speak intelligently enough about the laws that PT76 was referring to would have had the basic composition skills necessary to churn out a decently formatted document.
Does that mean that all properly formatted documents are legitimate?  Of course not.
Does that mean that a document with a single type-o is not legitimate?  Of course not.
A document that reads like it was prepared by a fifth grader is, however, pretty indicative that its content is equally specious.
Grammar and style are important.  Using words properly goes a long way at effectively communicating your ideas with other people.  But more importantly – people who have to read your poorly-formatted documents will become fatigued when they have to spend half their energy trying to translate your poor grammar into actual English, and they are more likely to disregard what you have to say.

Tri-Annual Statutory Inflation Adjustments

On April 1, 2013, certain dollar amounts contained in the U.S. Code will undergo their three year adjustment.  The full adjustments can be found here, but I want to highlight the numbers that will impact clients of Holbus Law Office, LLC the most.
11 U.S.C. § 109(e).  Although almost any individual is eligible to file Chapter 13 (even if you’re not eligible for a discharge), there are debt limitations to Chapter 13.  That maximum amount of secured debt allowable in Chapter 13 is being raised from $1,081.400 to $1,149,525.  The maximum amount of unsecured debt allowable in Chapter 13 is being raised from $,360,475 to $383,175.
11 U.S.C. § 507(a).  Some debts that are owed to creditors are entitled to priority treatment.  Certain dollar amount restrictions placed on creditors have been increased.  Specifically, wages earned within 180 days of the petition or cessation of business have been increased from $11,725 to $12,475.  Allowable security deposits are being increased from $2,600 to $2,775.
11 U.S.C. § 522(d).  Federal exemption limits are increasing – always good news for the debtors.  The homestead exemption is increasing from $21,625 to $22,975.  The vehicle exemption from $3,450 to $3,675.  The household good exemptions are increasing from $11,525 to $12,250.  Jewelry from $1,450 to $1,550.  Wildcard from $1,150 (+ $10,825 in unused homestead exemption) to $1,225 (+ $11,500 in unused homestead exemption).  Tools of the trade from $2,175 to $2,300.  Life insurance policies with cash value, from $11,525 to $12,250.  Personal injury from $21,625 to $22,975.
11 U.S.C. § 523(a)(2)(C)(i).  Presumption of non-dischargeability on debts incurred just prior to filing for bankruptcy.  The dollar threshold being increased from $600 to $650 for consumer debts incurred within 90 days of filing, and from $875 to $925 for cash advances incurred within 70 days of filing.
11 U.S.C. § 707. Deductions and allowances on the Means Test.  I’m not going to go through each number here, but there are 8 provisions that have been increased anywhere from 5.6% to 8%.
It’s also worth noting that there have also been suggested changes to the bankruptcy forms, which you can read more about here.

Holiday Reminder and the Presumption of Non-Dischargeability

‘Tis the season to spend copious amounts of money at the mall for decorations, food, and presents.  While we, at Holbus Law Office, wish for everyone to enjoy a Merry Christmas, we also feel obligated to remind those who are contemplating bankruptcy to not overdo it with credit card spending.
Consumer debts in excess of $875 in the 70 days leading up to filing bankruptcy are presumed to be non-dischargeable under 11 U.S.C. sec. 523(a)(2)(C)(i)(II).  Now, denial of discharge of such a debt is not automatic – it requires the filing of an adversary proceeding.  But if your credit card company does so and you fall within these parameters, the debt is presumed non-dischargeable and the burden of proof falls on you to show otherwise.
Falling outside of these parameters doesn’t necessarily mean you get off, either.  For example, someone who racks up $10k in debt outside of 70 days but within 90 days should certainly expect a challenge.  The burden of proof is on the creditors, and it’s a tough burden to overcome.  But it’s hardly impossible.
Exercise common sense this holiday season.  Racking up tons of credit card debt in a frenzied shopping spree on the eve of bankruptcy is not a good idea.  It’s gaming the system, and judges tend not to look favorably on such behavior.

Answers for Creditors

Someone who owes me money filed for bankruptcy.  What should I do?
So, you received an official letter from the Bankruptcy Court informing you that someone – who presumably owes you money – has filed for bankruptcy.  The notice also states that you may appear at the meeting of creditors.  What should you do?
First of all, STOP.  If you are taking any actions to collect the debt (be it a lawsuit, phone calls, collection letters, etc.), those actions need to terminate immediately.  99.9% of the time, the debtor is protected by an automatic stay that prohibits you from taking any actions to collect a debt outside of formal bankruptcy procedures.  If you do so anyway, you could be sued for violating the automatic stay.
The next thing you should do is contact an attorney experienced in bankruptcy law to determine your rights and responsibilities.  This way, you don’t waste your time and money, nor will you waste the bankruptcy court’s time chasing down something you can’t get anyway.  But assuming you can’t afford to hire an attorney, here are some general principles that you should know…
Most people want to know one thing above all else: “Will I get paid?”
First, look to see if the debtor has filed a Chapter 7 or Chapter 13 Bankruptcy.  If they filed a Chapter 13 Bankruptcy, there will be a 3-5 year repayment plan.  You can file a proof of claim in this case in order to be paid out of the bankruptcy estate.  No creditor gets paid if they don’t file a proof of claim on-time, and you will have a limited amount of time to file a claim.  Only certain types of creditors are entitled to be paid in full.  The majority of creditors fall within a class of creditors referred to as “general unsecured”.  These creditors are typically paid a percentage of their claim based on the debtor’s income and other factors.  These creditors are also paid last, after any priority and secured creditors.
If the debtor filed Chapter 7 Bankruptcy, chances are that you are not going to get paid – at least not through the bankruptcy.  The only time creditors get paid in a Chapter 7 Bankruptcy is if the trustee finds assets that he can liquidate for the benefit of creditors.  If the trustee finds assets, you will be sent a separate notice informing you to file a proof of claim.
If you do not get paid in the bankruptcy, can you collect outside of bankruptcy?  Generally not.  If the debtor receives a discharge, you cannot pursue him for the debt unless the debt falls within one of the types of non-dischargeable debts.  You should consult an attorney to determine if your debt meets the criteria for an exception to discharge.  If the debt is discharged but you try to collect anyway, you could be sued for violating the discharge injunction.
“But I have a judgment in state court!”
Sorry, but that doesn’t matter.  Most civil judgments are no different than a credit card or personal loan.  They are dischargeable.  Of course, there are exceptions, but having a judgment doesn’t automatically entitle you to get paid.  To find out if your judgment is non-dischargeable, speak to an attorney.
Remember that if you choose not to hire an attorney, that doesn’t mean the judge or the trustee can give you legal advice.  If you choose to act alone and without seeking legal advice, you are responsible for the consequences.
“Should I attend the meeting of creditors?”
You certainly have the right to.  But most people show up thinking that they’re going to get something out of it, and wind up walking away empty handed and irritated that they wasted a trip.  Here are some pointers for the sec. 341 meeting of creditors…
The purpose of the meeting of creditors is not to determine whether your debt is dischargeable, and the trustee doesn’t have the authority to make that determination anyway.
The purpose of the meeting of creditors is not to file a claim or to get paid.  At best, the trustee can tell you if he thinks there will be funds available for your claim, but he won’t be able to say that with absolute certainty.
Don’t go to the hearing just for the purpose of humiliating or berating the debtor.  At best, you’re wasting your time.  You’re probably going to piss off the trustee for wasting his time.  And if you go overboard, you could wind up in trouble.
The best reason to go to the meeting of creditors is if you believe the debtor has concealed income or assets.  You don’t have to have proof, but it would certainly help if you do.  Without proof, the trustee may assume you’re trying to stir up trouble and waste time.  You may also ask questions of the debtor if you believe it may have some impact on dischargeability or your claim.  Again, it’s best to speak to an attorney before doing this.