The Process of Filing Chapter 7 Bankruptcy

Chapter 7 bankruptcy is by far one of the most popular chapters of bankruptcies filed everyday. For most people, the process from filing the petition to the time of discharge can last anywhere between four to five months. These four to five months can be one of the toughest times in your life, which is where the bankruptcy attorney enters the picture in order to provide invaluable guidance through an otherwise stressful process.

The first step for those who are interested in filing for Chapter 7 bankruptcy is to take part in the mandatory credit counseling. The mandatory credit counseling requires the client to obtain a certificate through an approved credit counseling agency before the case can be filed with the bankruptcy court. The counseling session must be completed within 180 days before filing the bankruptcy petition. Once the bankruptcy petition is prepared the credit counseling certificate will be included in this paperwork and filed with the court. Once the paperwork is filed, a case number and trustee will be assigned to the case.

A mandatory meeting with the trustee is also required where the applicant must personally appear and bring proper identification and his or her social security card. This meeting is known as the 341(a) Meeting of Creditors. Depending on which bankruptcy cour the paperwork has been filed in, the meeting may take place within three to seven weeks after the filing of the case. The trustee in the applicant’s case must agree to liquidate any non-exempt assets, distribute the funds to creditors, and help monitor the case and report fraud cases to the F.B.I. before the process can move forward. The step allows creditors and trustees to object to the discharge of the applicant’s debt. After the first meeting, creditors have 60 days to file a complaint with the trustee whereas trustees have 30 days to file complaints. When filing a complaint, there must be some evidence of fraud, false statements on credit card applications, fraud while acting in a fiduciary capacity, and/or willful or malicious harm and injury to a person or property present.

Financial Management Course

Completing a financial management course is the next requirement in the Chapter 7 bankruptcy process. The second round of credit counseling lasts for about two hours. Along with the certificate, the applicant must prepare and sign Form B23 and have these documents filed with the court before a discharge can be entered. The applicant must file these documents with the court within 45 days after the date for the first meeting with the Trustee has been set. If any clients fail to do this step within the time period, a court may not allow a discharge. So, time is of the essence!

If the Creditors don't object to your Chapter 7 Bankruptcy Filing

If all goes well and nobody objects to the discharge of the applicant’s debts within the 60 days and all of the requirements have been completed, the applicant will receive a Notice of Discharge in the mail within four to five months after the case has been filed. The Notice of Discharge states that the client is officially discharged from all of the dischargeable debts. Although the notice applies to all dischargeable debts, it generally excludes cases involving child support, alimony, and student loans. The dischargeable debts in this case would apply only to the debts that were filed in the bankruptcy papers and notice.

Many applicants seeking bankruptcy relief have a common misconception that filing for Chapter 7 bankruptcy will be a long and winding path. In actuality, it the documents are properly prepared and there are no objections, the process can run quite smoothly. The bankruptcy attorney’s goal is primarily to manage a timely, smooth, and thorough bankruptcy process, whereby the applicant walks away with some or most of their stressful debts discharged. The bankruptcy attorney can also inform the applicant of potential problems and help to protect the applicant’s assets throughout the bankruptcy process.