Step by Step Chapter 7 Bankruptcy Guide
Filing a Chapter 7 bankruptcy seems intimidating and daunting to many people facing financial difficulties because they are not familiar with the process and are unsure of exactly what to expect.
The best way to combat that fear is to understand exactly what should be anticipated through each step from the filing of a Chapter 7 bankruptcy to the discharge.
Below is a brief step-by-step guide and timeline of what should be expected in a chapter 7 bankruptcy.
This should only be used as an educational example as exact times and events can vary on a case by case basis.
If you are considering bankruptcy, you should contact a bankruptcy attorney to help you through the process.
Pre Bankruptcy • The debtor meets with his or her bankruptcy attorney.
The attorney will collect financial documentation from the debtor to be able to fill out the bankruptcy papers that will be filed with the court.
The documents requested from the attorney may vary but will usually include past tax returns, proof of income, and a list of everyone the debtor owes money to including their addresses and the amount that is owed.
• Also, the debtor will need to complete a credit counseling course.
This is most commonly completed on-line and must be completed in the 6 month period before filing bankruptcy.
The attorney will have information about this course and can assist you in signing up.
Filing and Bankruptcy Process • On Day 1 of a Chapter 7 bankruptcy, the attorney will file the bankruptcy papers in the bankruptcy court.
When the petition and paperwork is filed, an automatic Stay of Proceedings begins.
What this means is that almost all collections efforts towards the debtor must stop immediately.
The collections phone calls are required to stop and no more garnishments or other legal actions are allowed.
• Also beginning on Day 1, a Trustee will be assigned to the case and all of the debtors' non-exempt property will be put into an estate to be later distributed to the creditors.
Some of the debtor's property will be exempt which means the debtor will be allowed to keep some property.
The property that the debtor is allowed to keep may vary from state to state and case to case but can include the debtor's home, car, and some personal items.
• On Day 14, the creditors that were listed in the bankruptcy petitions will be notified of the bankruptcy by the Court Clerk.
• Between Day 20 and 40, a meeting with the Bankruptcy Trustee, the attorney, the debtor, and any of the creditors who wish to attend will be held.
This is known as a 341 Creditors' Meeting.
At the meeting, the Trustee will review the bankruptcy papers, talk to the debtor about the papers that were filed, and ask the debtor if the papers are accurate.
• During days 20-30 and after, the Trustee will sell any non-exempt assets that are available and distribute the money to the creditors.
• 90 days after the Creditors' Meeting is the deadline when all of the unsecured creditors must have filed their claims.
• Next before the discharge can be received, an instructional course about personal financial management must be completed.
This course will be set up for the debtor by his bankruptcy attorney.
• Between 60 and 90 days after the Creditors' Meeting, the debtor will receive his discharge.
This means all of his debts that are dis-chargeable under bankruptcy will no longer exist.
The above step-by-step process and timeline is designed to educate about the bankruptcy process and hopefully help relieve some anxiety felt by debtors when deciding whether or not to file a Chapter 7 bankruptcy.
If you are considering filing a Chapter 7 bankruptcy, an attorney should be contacted, and he or she can help you through each step to make sure the process goes smoothly.
The best way to combat that fear is to understand exactly what should be anticipated through each step from the filing of a Chapter 7 bankruptcy to the discharge.
Below is a brief step-by-step guide and timeline of what should be expected in a chapter 7 bankruptcy.
This should only be used as an educational example as exact times and events can vary on a case by case basis.
If you are considering bankruptcy, you should contact a bankruptcy attorney to help you through the process.
Pre Bankruptcy • The debtor meets with his or her bankruptcy attorney.
The attorney will collect financial documentation from the debtor to be able to fill out the bankruptcy papers that will be filed with the court.
The documents requested from the attorney may vary but will usually include past tax returns, proof of income, and a list of everyone the debtor owes money to including their addresses and the amount that is owed.
• Also, the debtor will need to complete a credit counseling course.
This is most commonly completed on-line and must be completed in the 6 month period before filing bankruptcy.
The attorney will have information about this course and can assist you in signing up.
Filing and Bankruptcy Process • On Day 1 of a Chapter 7 bankruptcy, the attorney will file the bankruptcy papers in the bankruptcy court.
When the petition and paperwork is filed, an automatic Stay of Proceedings begins.
What this means is that almost all collections efforts towards the debtor must stop immediately.
The collections phone calls are required to stop and no more garnishments or other legal actions are allowed.
• Also beginning on Day 1, a Trustee will be assigned to the case and all of the debtors' non-exempt property will be put into an estate to be later distributed to the creditors.
Some of the debtor's property will be exempt which means the debtor will be allowed to keep some property.
The property that the debtor is allowed to keep may vary from state to state and case to case but can include the debtor's home, car, and some personal items.
• On Day 14, the creditors that were listed in the bankruptcy petitions will be notified of the bankruptcy by the Court Clerk.
• Between Day 20 and 40, a meeting with the Bankruptcy Trustee, the attorney, the debtor, and any of the creditors who wish to attend will be held.
This is known as a 341 Creditors' Meeting.
At the meeting, the Trustee will review the bankruptcy papers, talk to the debtor about the papers that were filed, and ask the debtor if the papers are accurate.
• During days 20-30 and after, the Trustee will sell any non-exempt assets that are available and distribute the money to the creditors.
• 90 days after the Creditors' Meeting is the deadline when all of the unsecured creditors must have filed their claims.
• Next before the discharge can be received, an instructional course about personal financial management must be completed.
This course will be set up for the debtor by his bankruptcy attorney.
• Between 60 and 90 days after the Creditors' Meeting, the debtor will receive his discharge.
This means all of his debts that are dis-chargeable under bankruptcy will no longer exist.
The above step-by-step process and timeline is designed to educate about the bankruptcy process and hopefully help relieve some anxiety felt by debtors when deciding whether or not to file a Chapter 7 bankruptcy.
If you are considering filing a Chapter 7 bankruptcy, an attorney should be contacted, and he or she can help you through each step to make sure the process goes smoothly.
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