While every bankruptcy case is different and dependent on specific circumstances, there is a general progression for most Chapter 7 bankruptcies. For most individuals and couples who have legal representation, the process should be relatively straightforward and lack any surprises. The majority of cases do not last, from the filing of the bankruptcy petition to the final discharge, more than four months.
Filing the Chapter 7 Petition
As soon as you or your attorney files your Chapter 7 petition with the bankruptcy court, federal law takes effect. You should expect the following to happen:
The bankruptcy estate for your case is created;
Your property is transferred to the bankruptcy estate legally;
The automatic stay begins and all collection actions and lawsuits pertaining to your debts stop;
A trustee is appointed to your case;
The trustee meeting is scheduled;
Your bankruptcy petition becomes available to the United States Trustee, the trustee appointed to your case, your creditors, and the public for review.
Notification of Bankruptcy Petition
The court where you file your bankruptcy petition will send notices to all of the creditors you listed on your bankruptcy schedule. By law, you must include every single creditor you owe money to in your bankruptcy schedule. Most of the larger creditors on your schedule, such as major banks and credit cards, will receive the notice of your bankruptcy case from the court electronically, which typically only takes 24 hours.
The three credit reporting bureaus, Experian, Equifax, and TransUnion, should also receive notice of your bankruptcy. This usually happens within 24 to 48 hours. You can expect your bankruptcy case to be noted on your credit reports once they receive notice.
Any other creditors on your bankruptcy schedule are typically notified by U.S. mail. Most of them will receive that notification within 7 to 10 days. You might be contacted by a creditor attempting to collect on a debt after you file the petition, which usually means they have not received the notification of your bankruptcy petition yet. Feel free to let them know that you filed a bankruptcy petition and they should be receiving notice about it within the next couple of weeks. If you have a lawyer, this would be the perfect time to refer the creditor to your lawyer.
You should also receive a copy of the notice in the mail. It will contain your name and address, your bankruptcy case number, your lawyer’s contact information, the bankruptcy trustee’s contact information, the date that you filed the petition, pertinent deadlines, and the location, date, and time of the upcoming trustee meeting.
Attending the Trustee Meeting
The next important step of the bankruptcy process that you will be required to take part in is a meeting with the trustee who was assigned to your case. All Chapter 7 bankruptcy filers must do this. This meeting goes by many different names, including the “341,” the “341 meeting,” the “meeting of creditors,” or the “trustee meeting.” It usually takes place about three or four weeks after the petition has been filed.
Your lawyer should have already provided your tax and income information to the trustee appointed to your bankruptcy case. Prior to the meeting, your creditors, the U.S. Trustee, and the bankruptcy trustee should all take the time to look over your bankruptcy petition. Your creditors are welcome to attend this meeting, hence the name “meeting of creditors,” although most of the time, creditors do not show up. This is when any creditors that show up or the trustee can ask you questions while you are under oath.
Your lawyer should attend your 341 meeting with you. Be advised that there are attorneys who elect to send another lawyer to this meeting in their place, rather than attend it with you. Be sure to ask your lawyer if they will be at the 341 meeting or if they plan to send someone else. Many bankruptcy filers find the meeting to be stressful, so it is important to be prepared ahead of time and know who will be there to legally represent you.
The trustee will record the meeting. The main purpose of this meeting is to create a record of your testimony regarding your bankruptcy. The meeting also provides other parties (U.S. Trustee, the trustee, and creditors) the chance to ask you questions. If they want to inquire about your financial situation or circumstances, any assets that you own, transactions that you have made, your income or expenses, or any other pertinent information, this is their opportunity.
If you are not physically at this meeting, your case may get dismissed. If it is not dismissed, The U.S. Trustee and the trustee appointed to your case may audit your case. In no-asset cases, this meeting is usually fairly cut-and-dry, because there are no assets to discuss. Most of the questions, if any, will be related to your income and expenses and your debts. The meeting can run from a few minutes long to approximately 20 minutes.
As long as you are truthful and provide complete disclosures, the trustee typically concludes this meeting and this part of your bankruptcy procedure is considered fulfilled. If the trustee feels like there are discrepancies in your testimony, the meeting might be continued to a new date. Sometimes, the trustee wants to further investigate transactions or assets.
The 60-Day Wait
Once you attend the trustee meeting, you start your mandatory 60-day waiting period. Your bankruptcy cannot be discharged until 60 days after the 341 meeting. During this time, the parties involved make decisions, complete tasks, and file objections and motions. While the 60-day period can be extended, there is no way to shorten it. You will be expected to complete your second Credit Counseling Course, execute reaffirmation agreements, and avoid any liens throughout the 60 day period.
Generally speaking, once this 60-day waiting period has concluded, creditors no longer have the ability to object to the dischargeability of debts or your bankruptcy. The only exception to this rule is if you commit fraud when listing your debts on your bankruptcy schedule. If you do not list an asset intentionally because you do not want to lose it, then you are committing fraud, and it could jeopardize your entire bankruptcy. Additionally, you can face consequences for perjury.
Your Bankruptcy Discharge is Entered
At the end of the 60-day period, if all of the parties engaging in your bankruptcy have finished all of their required tasks and as long as nobody has filed an extension or objection, the court will enter your discharge order. The automatic stay will terminate once the discharge is entered. Since your bankruptcy discharge order permanently terminates collection activity on any of your discharged debts, the stay is no longer necessary.
You and your creditors will receive a copy of the discharge order. The credit bureaus - Experian, Equifax, and TransUnion - should acknowledge the discharge and update your credit reports to reflect all pertinent information on your debts. You should see a notation stating “chapter 7 discharge” or “discharged in Chapter 7” or similar wording attached to debts that were discharged. You will also find the discharge order listed under the public records section on your credit reports, just like any judgments you may have had.
Your Case is Closed
Your bankruptcy case will be closed just a few days after you receive the discharge order. The entire process should take about four months, from petition date to discharge date. Remember, once your bankruptcy case closes, you will not be eligible to file Chapter 7 again until eight years from the date you filed your initial Chapter 7 bankruptcy petition. If you want to file a Chapter 13 bankruptcy, you will have to wait four years after your Chapter 7 bankruptcy petition date.Are You Considering Filing For Bankruptcy? If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.