Bankruptcy Blog: Eight Easy StepsTthrough Chapter 7 Bankruptcy
What is Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy was enacted to allow persons who are hopelessly burdened by debt to have an opportunity for a new beginning by wiping out unsecured debts (debts that aren’t tied to any specific item of property, most commonly credit cards). Chapter 7 is designed for persons who cannot afford to pay a significant portion of their debt back to lenders. Chapter 7 is available to individuals, couples and businesses. The process is often referred to as "liquidation." In theory, you are surrendering your assets to the court in exchange for a discharge (elimination) from all of your debts. However, individuals and couples are allowed to keep certain "exempt" property that varies by category and value.
Step 1: Before You Can File
At the initial consultation your Second Start attorney will give you a list of documents that you need in order to prepare your Bankruptcy Petition and schedules. Second Start will also provide you with an intake form to complete. Once the listed documents have been assembled and the intake form is completed, a second appointment with Second Start will be scheduled where the documentation and intake form is reviewed.
Step 2: Credit Counseling Commences
After the second appointment and the documents are ready, you will attend Credit Counseling and obtain a Credit Counseling certificate. While Credit Counseling is sought, Second Start will prepare your court papers. We will then have a final in-office appointment, where a Second Start attorney will completely review your bankruptcy petition and schedules with you, and you will sign your petition and schedules.
Step 3: Bankruptcy Papers are Filed
Second Start files your case with the court. Your papers are filed electronically with the Bankruptcy Court, and immediately you will receive lawful protection from harassing creditors. Immediately after filing, Second Start will provide you with your bankruptcy case number. If you continue to receive phone calls from bill collectors, you can give the creditor your case number and the Second Start telephone number. Debt collectors, after your Bankruptcy is filed, should then deal with your attorney directly. If you have creditors who are garnishing, foreclosing or repossessing property, Second Start will notify that creditor immediately a bankruptcy is filed and the debtor is protected from this kind of harassment.
Step 4: Financial Management Course
After your case is filed, you will need to attend “The Financial Management Course” approved by the United States Trustee's office — www.usdoj.gov/ust). After completion, you will bring this certificate to your Second Start attorney for the Meeting of Creditors.
Step 5: Attend Meeting of Creditors
Approximately 30 days after your case is filed, Second Start will attend a hearing with you that is called a 341 Meeting of Creditors. At this meeting, a U.S. Trustee, who is appointed to your case, will interview you for approximately 5-10 minutes and ask you some basic questions about your case. This meeting is mandatory, and you must appear with proper identification (current picture identification and Social Security Card). You must also bring a copy of your most recent statements for all financial accounts and the pay stub(s) that you receive after your case is filed. The meeting is called the Meeting of Creditors because this is also an opportunity for the creditors to come and ask you questions. However, in most cases creditors do not appear.
Step 6: 60 Days Later
In each case, the Trustee and Creditors are given time to object to various aspects of the filer’s petition and schedules. Although objections are rare, in some cases, they do occur. All objections are due within 60 days after the Meeting of Creditors. Quality preparation of your petition, schedules, and statements will help prevent most unnecessary objections.
Step 7: Receive Discharge
If no party files an objection in your case, you should receive a discharge shortly after the 60-day waiting period expires.
Step 8: Post-Discharge Asset Administration
In some cases, where non-exempt assets are turned over to the bankruptcy estate, your case may remain open until all of the assets are received and distributed.
