Below is the basic process for a Chapter 7 bankruptcy, and also shows when you need to do your Credit Counseling and Debtor Education/Financial Management course.
*If you are filing Chapter 13, the process will be a little different, mostly involving setting up a repayment plan for your debts.
Steps in a Chapter 7 Bankruptcy
1) Pre-Filing Credit Counseling
Whether you’re filing for Chapter 7 or 13, you are required to receive credit counseling and provide your certificate of completion to your attorney. Enroll Now
2) File Your Paperwork/Petitions
You must file a packet of forms consisting of the bankruptcy petition, schedules (which contain detailed information about your finances), other forms (which calculate your income and expenses, let the court know which property you claim as exempt, and inform the court of various other information).
3) Automatic Stay
Once you file your bankruptcy petition, the automatic stay goes into effect. The automatic stay prohibits almost all of your creditors from continuing collection actions against you.
4) The Bankruptcy Trustee
The court assigns a bankruptcy trustee to administer your case. The trustee will try to maximize assets in the bankruptcy estate to distribute to your unsecured creditors, look for inaccuracies in your paperwork, and check for any possible fraud.
5) The Meeting of Creditors
You must attend the meeting of creditors (341 hearing). This is not a court hearing, but a meeting run by your bankruptcy trustee. The trustee will ask you questions about your petition and finances. Creditors may, but often don’t, appear and ask questions.
6) Eligibility for Chapter 7
The court decides if you are eligible for Chapter 7. One reason that the court might deny eligibility is that you didn’t pass the means test.
7) Your Property
If your property is exempt, you keep it. If you have some nonexempt property, the trustee must decide what to do: seize and sell it to repay your creditors or abandon it.
8) Secured Debts
You must decide what to do about your secured debts – those debts for which you pledged property as collateral, like a mortgage or car loan. Typically you can surrender (give back) the property, redeem (pay for) the property, reaffirm the loan, or do nothing and keep paying the debt.
9) Pre-Discharge Debtor Education/Financial Management Course
Before you get your discharge, you must take a debtor’s education course. This is in addition to credit counseling you received before you filed for bankruptcy (see Step 1). Enroll Now
10) Your Discharge
Somewhere between three and six months after you file for bankruptcy, the court will grant your bankruptcy discharge. When this happens, the automatic stay ends.
11) Case Closed
After the court grants your discharged, it will close your case – usually a few days or weeks later.