From Filing to Completion: The Anatomy of a Chapter 7 Bankruptcy
The process of filing a bankruptcy petition can be confusing for a layperson to understand. There are time limits and deadlines to keep in mind and all filings must be made in accordance with court rules.
Before any filing occurs, the Courts require a petitioner to complete a Court approved credit counseling course. The course is easy to complete and is often available online or over the telephone. The cost is about $25.00. The certificate of completion must be attached to every Bankruptcy Petition filed.
To file a claim it is helpful to have an attorney. Attorneys are familiar with the paperwork and terminology involved and can help a Petitioner understand his or her rights. An attorney will file the petition electronically, and the Automatic Stay, which prohibits collection efforts on a debt that is in Bankruptcy, will go into effect.
At this point, a number will be assigned to the case along with a Bankruptcy Trustee. The Trustee’s job is to administer the case and to look for and liquidate any unprotected property in order to pay back creditors.
Within two weeks of filing, the trustee will formally request financial documents from the petitioner including pay stubs, bank statements, tax returns, and more. The request will come through the mail and it is important to respond to the request quickly.
Ten days after the Bankruptcy Petition is filed, a Master List must be filed with the court including the names and addresses of all creditors included in the Bankruptcy. Within days, another filing, called Statements and Schedules, must be submitted to the Court. An error in either of these filings could compromise the Bankruptcy.
About a month and a half after the Bankruptcy filing, the Trustee will hold a meeting of creditors for which the Petitioner’s attendance is mandatory. The meeting gives the Trustee and creditors an opportunity to ask questions about the documents filed with the Court. If there are errors in the filed papers, they may be corrected at the meeting. The meeting should not take more than 15 minutes, but can take a significant amount of time to begin. At this point a Petitioner must take a second credit-counseling course.
If any creditors have a legal argument to prevent a debt included in the bankruptcy from being discharged, that creditor must file a lawsuit within 14 weeks of the filing. If no objections are filed, the Court will usually issue a discharge within 4 to 6 months of the initial filing.