You’ve decided that bankruptcy is the best way for you get rid of debt you cannot pay and stop collection hassles and harassment. How exactly, does a chapter 7 case unfold and how long will the process take?
Although chapter 7 of the Bankruptcy Code is a powerful tool with a lot of important moving parts and consequences, from a “thirty-thousand foot” view, the process can be broken down into the following 7 steps.
Step One; Pre-Bankruptcy Planning. You’ve decided to file for bankruptcy. Assemble your bills, creditor letters, lawsuits, check stubs, and other papers related to your financial situation and go see an attorney who has experience helping people, like yourself, navigate through chapter 7. The consultation will include an assessment of your financial situation, whether bankruptcy is right for you, and if so, when would be the best time to file and other pre-bankruptcy planning topics to enable you to take full advantage of your chapter 7 case.
Step Two; Pre-Bankruptcy Credit Counseling. Take a credit counseling briefing from an agency approved by the Office of the US Trustee. The Bankruptcy Code requires that individual debtors take a briefing from an approved credit counseling agency sometime within the 180 day period ending on the date you file for bankruptcy. The counseling can take place over the phone or Internet or in person. The agency will charge between $25 and $50 for the course, but most agencies will waive the fee for debtors who cannot afford to pay. During the session, the credit counseling agency may, or may not, prepare a budget for you. At the completion of the briefing, the agency will give you a certificate of completion, which, in most jurisdictions, will have to be filed along with your bankruptcy petition.
Step Three; Prepare the Necessary Paperwork. Work with your bankruptcy attorney’s office to prepare your bankruptcy petition, schedules of assets and liabilities, statement of financial affairs and other papers. It is vitally important that the papers you file to start your bankruptcy case are complete, accurate and truthful. Serious punitive consequences can happen if you are less than forthright in preparing schedules, your statement of financial affairs and other bankruptcy papers.
Step Four; The Actual Filing Itself. File your petition, credit counseling certificate of completion, schedules, statements and filing fee. This kicks off your case, creates an automatic stay of creditor enforcement activity, and starts a process that hopefully leads to a discharge of all debts that can be discharged in your bankruptcy case.
Step Five; The Section 341 Creditors’ Meeting. Assemble information to take to, and prepare for, your section 341 creditors’ meeting. All debtors must submit to questioning by a chapter 7 trustee at the “341 meeting” or “meeting of creditors.” At the meeting, the trustee will ask a series of questions regarding your assets and liabilities and pre-bankruptcy financial transactions. Most meetings last no longer than 7 to 10 minutes and although creditors are invited to attend and ask you questions, most creditors do not show up at the 341 meeting.
Step Six; Post-Petition Financial Management Course. Take a personal financial management course from an agency approved by the US Trustee’s Office. This course is different and separate from the credit counseling course you took before you filed your bankruptcy case. The course takes about an hour and is available on the phone, over the Internet or can be done in person. At the conclusion of the course, the agency will give you a certificate of completion that you will be required to file with the bankruptcy court.
Step Seven; Receipt of Your Discharge Order. Await the arrival, usually about four months after you filed your bankruptcy petition, of an order of the bankruptcy court granting you a discharge. The discharge wipes away the debt that can be discharged in bankruptcy, prevents creditors from trying to recover against you for debts that were discharged, and is your ticket to a “fresh start” in your financial life.
There you have it: chapter 7 in 7 steps.
If you think bankruptcy might be the right solution to your financial problems, please contact my office for a consultation. 914-385-1032.
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