Steps involved in a Chapter 7 Bankruptcy

Filing for bankruptcy is a nerve-wracking process but knowing how the process works can make bankruptcy a little less intimidating.

Below are three basic steps involved in discharging a successful petition:

  • File a petition with a bankruptcy court: A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets.  Filing can be done electronically. File all required documents along with the petition. These may include a statement detailing the petitioner’s financial condition, expense reports, tax documents, and a list of assets and liabilities. Pay the required fees involved in filing a petition.  The courts charge a $245 case filing fee, a $46 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing. With the court’s permission, however, individual debtors may pay in installments. If the debtor is unable to pay the chapter 7 fees even in installments, the court may waive the requirement that the fees be paid. Married individuals must gather all information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing.

  • Attend the 341a meeting of creditors: After the filing of the bankruptcy petition, a document called “Notice of Commencement of Case” is sent out from the court to all creditors to whom the debtor owes money. All these creditors are stopped by the automatic stay from suing or pursuing the debtor in any way. Between 21 and 40 days after the petition is filed, the case trustee who is appointed to administer the case and liquidate the debtor’s nonexempt assets will hold a meeting of creditors known as the 341a meeting. During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property.

 

  • Obtaining Discharge Order: After this 341a meeting, creditors or the trustee have 60 days within which to file a complaint objecting to the discharge of the debtor. If no one objects within these 60 days, the debtor would receive a discharge. The discharge is the final order entered by the court that wipes out the outstanding debt of the individual filing the bankruptcy. A creditor may no longer initiate or continue any legal or other action against the debtor to collect a discharged debt.  The court may revoke a chapter 7 discharge on the request of the trustee, a creditor, or the U.S. trustee if the discharge was obtained through fraud by the debtor.

Inside Steps involved in a Chapter 7 Bankruptcy