How Does the Chapter 7 Bankruptcy Process Work?
The Chapter 7 Bankruptcy Timeline & You
If you are planning on filing Chapter 7 bankruptcy, you’ll want to know how the Chapter 7 bankruptcy process works. The following section details how Chapter 7 works.
What You Should Expect when Filing Chapter 7 Bankruptcy
When all is said and done, the Chapter 7 bankruptcy process is relatively quick. Your debt may be discharged in just a couple months!
Imagine being free of debt and free of creditor harassment in just a few months!
Below we have detailed the steps in the Chapter 7 process. Should you have any additional questions, don’t hesitate to contact a bankruptcy attorney who may examine your individual case. All you have to do is fill out our free bankruptcy case evaluation form or call 1 (888) 632-0501, and we’ll connect you with a bankruptcy lawyer in your area as soon as possible.
The Steps to Filing Chapter 7 Bankruptcy
When you file Chapter 7 bankruptcy, you are making a legal declaration that you are unable to pay your creditors. There are certain steps in the bankruptcy process that all Chapter 7 bankruptcy filers must take.
Before Filing Bankruptcy: Your Credit Counseling Briefing
Prior to filing bankruptcy under Chapter 7, you must obtain a credit counseling briefing from a UST-Approved agency. In simple terms, the credit counseling briefing helps you examine other possibilities besides filing bankruptcy and makes sure that you understand what you are doing.
To satisfy this aspect of the bankruptcy process, visit Start Fresh Today and purchase an online or telephonic briefing.
Legal Filings
You’ll have to file certain papers with your local bankruptcy court. The forms ask you to describe your financial situation, including information about:
- all of your debts;
- your monthly living expenses and current income;
- money you’ve spent in the last two years;
- your property; and
- your exempt property (things like your car, furniture, clothing, some of your home equity, Social Security payments you haven’t spent and other such living and working necessities).
It’s important to know whether your property is considered exempt or not. For more information on this, please examine these Chapter 7 exemptions.
A bankruptcy attorney can help you make sure you hang on to your property that you may be legally entitled to keep.
Also, keep in mind that when you file Chapter 7, you are technically placing your property and debts in hands of the bankruptcy court. You must have the court’s consent if you want to sell or give away any of your property. You must also have its consent to payoff any pre-filing debts.
Automatic Stay
An automatic stay is entered after you officially file bankruptcy, which means that creditors can no longer contact you about your debts.
That’s right—with the automatic stay, there will be no more annoying phone calls; no more creditor bills stuffed in your mailbox; no more contact, period.
Bankruptcy Trustee
The court will issue you a bankruptcy trustee who will make sure that your creditors are paid as much as possible on what you owe them.
The trustee will make sure your filing papers are complete and look for all your non-exempt property that they may sell to the creditors. He or she will also examine your financial transactions during the past year to see if any can be undone and given to the creditors.
You should know that the more the trustee recovers for the creditors’ pocketbooks, the more you may lose; which is just one more reason why it may be a good move to have a bankruptcy lawyer look out for you.
With that said, most Chapter 7 petitioners do not have any non-exempt assets, and there is usually no liquidation of their property.
Creditor’s Meeting
About two weeks after your bankruptcy filing, you and your creditors will receive a notice advising you of an upcoming creditors meeting. Your bankruptcy trustee will run this meeting and will ask you questions about your bankruptcy and your financial records.
You are sworn in at this meeting, so it’s legally required of you to tell the truth. A bankruptcy attorney can help you prepare for this courthouse meeting and will be by your side during the process.
After the meeting, you will find out if the bankruptcy trustee has decided if any of your property should be sold to benefit the creditors.
Sometimes the bankruptcy trustee determines that a debtor’s property isn’t worth much so the trustee might “abandon” the property and let the debtor keep it.
Debtor Education Course
Before receiving your bankruptcy discharge, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires that you complete a debtor education course.
The debtor education course is a personal financial management course intended to help you plan for your new financial future and avoid post-bankruptcy pitfalls.
Your bankruptcy attorney may refer you to a course, which you can take in person, online or over the phone, or you can purchase an approved debtor education course at Start Fresh Today.
Your Bankruptcy Discharge
The bankruptcy process ends at bankruptcy discharge, where most or all of your listed debts may be cleared by the bankruptcy court.
However, you should know that there are some exceptions, such as:
- tax debt;
- student loans;
- debts the bankruptcy court determines were incurred by fraud; and
- child support.
Your bankruptcy discharge provides not only an end to your previous debts, but it also represents a financial fresh start.
As you can see, the Chapter 7 bankruptcy process can be confusing. If you are considering filing Chapter 7 bankruptcy, it may be a good idea to consider contacting a bankruptcy attorney.
Connect to a local bankruptcy lawyer by filling out our free bankruptcy evaluation form or by calling 1 (888) 632-0501.