Chapter 7 Bankruptcy Process

When filing a chapter 7 bankruptcy, you have to follow the Chapter 7 Bankruptcy process. The Chapter 7 bankruptcy process is as follows.

Credit Counseling

This is mandatory in the new Chapter 7 Bankruptcy laws. You need the certificate from credit counseling to file with the Chapter 7 bankruptcy court.

Filing a Petition for Chapter 7 bankruptcy

Filing a petition is the start of your Chapter 7 bankruptcy process. The petition will trigger the automatic stay and stops creditors from harassing you further for debt repayment.

Chapter 7 bankruptcy trustee takes over

About a week or two into the Chapter 7 Bankruptcy process, the Bankruptcy court will appoint a trustee to take over your financial affairs. You effectively surrender all your properties to the trustee.

Meeting with Creditors

About a month into the Chapter 7 Bankruptcy process, after filing Chapter 7 bankruptcy petition, you will attend a short meeting with the trustees and the creditors. Creditors, if present, will ask questions about your financial situation. The creditor meeting can last just a few minutes and most of the time the creditors may not even be present.

The Court decides your eligibility of filing for Chapter 7 bankruptcy

By examining your assets, income and all the paperwork, the Bankruptcy court decides if you are eligible for a Chapter 7 bankruptcy or if you should be filing a Chapter 13 bankruptcy. If you are eligible for filing a Chapter 7 bankruptcy, then your filing status is confirmed.

Sale of Nonexempt property

Your Chapter 7 bankruptcy trustee may sell your nonexempt properties and use the money to pay your creditors as much as possible.

Handing over collateral

About 45 days after you file for the Chapter 7 bankruptcy, you will hand over any properties you used as collateral for secured debts. This is stated in the Statement of Intention.

Attend Personal Financial Management Course

Under the new bankruptcy law, you may be required to attend a personal financial management course to ensure that you know how to better manage your finances.

Final hearing for the Chapter 7 Bankruptcy

The chapter 7 bankruptcy hearing is usually set about 3-6 months after filing Chapter 7 bankruptcy. The final hearing grants you the discharge of your debts. You may be required to appear in court. Sometimes, the bankruptcy court will send you a letter informing you of the discharge.

Chapter 7 Bankruptcy Case Closed

A few weeks after the discharge of your debts, the bankruptcy trustee distributes any left over properties to your creditors and you are then free from any remaining debts. There are, however, some exemptions for the Chapter 7 bankruptcy discharges.