People ask, “what’s involved in chapter 7 personal bankruptcy case?” Here’s a practical answer:
- Recognize the problem
- Investigate professionals
- Interview professionals
- Chose and retain professional
- Chose a course of problem-solving – alternatives to bankruptcy may be preferable
- Decide to file
- Determine the best time to file
- Prepare petition, schedules and statements
- Take mandatory pre-petition counseling
- File petition
- If an incomplete “emergency” petition was filed, finish and file schedules and statements (within 14 days of filing)
- Provide trustee with required documents (e.g. tax returns, pay stubs, bank records)
- Attend meeting of creditors (usually around 45 days after filing) – the Trustee asks questions under oath about your assets, liabilities, financial affairs, what’s in your filed schedules and statements. Creditors may also ask questions.
- Take 2nd required course within 45 days of creditors meeting
- Wait —within the 60-day period following the creditors’ meeting, the trustee and creditors can challenge you: a.) receiving a discharge of all and specific claims; b.) property claimed to be exempt from creditors.
- Creditors and the trustee can do additional examination under oath to determine whether and how they would make those challenges
- If a challenge is asserted, you get to defend it
- If there are no challenges within that 60 days and the period is not extended You get your discharge
- It may take a while before the trustee files a final report and the clerk’s office issues the discharge. Don’t worry.
- Discharge issued
- Estate administration – If the case has no assets, it will usually be closed when the discharge is granted. If the case has assets, the trustee will liquidate them and use the proceeds to pay creditors. The trustee may have claim to recover estate assets and voidable transfers. That will involve litigation and delay the distribution to creditors and closing of the case.
- Final report and distribution to creditors
- Case closes
This may seem like a lot. It isn’t. We’ve broken it down, so you can see details. When you look at a person you don’t notice the billions of cells, the skeleton, and organs. Same thing here. It’s the bankruptcy edition of the “visible man.”
Each case may have its own peculiarities affecting its course. Proper analysis and planning can reduce the consequences of those peculiarities. That’s one more reason to not be self-represented and to hire a lawyer. You probably don’t know what you don’t know.
With an experienced lawyer, the process will feel probably feel like: prepare – petition- creditors meeting- wait – discharge. However, these are the details . . . since you all asked for them.
Any questions? We’re here to answer them, too.