After sitting down with your bankruptcy attorney and discussing the pros and cons of filing either a Chapter 7 or Chapter 13, you have decided that it is in your best interest to file a Chapter 7 bankruptcy. You have given your attorneys all the information they need, and you have reviewed and signed your bankruptcy petition. What should you expect after that petition is filed?
The Automatic Stay
First, with the filing of your bankruptcy, the automatic stay comes into effect. The automatic stay has been discussed previously in this blog, but basically the automatic stay prevents creditors from trying to collect against you.
Chapter 7 Trustee
After you file for a Chapter 7 bankruptcy, you will be assigned a chapter 7 trustee. After you file bankruptcy, all of your property is technically part of a bankruptcy estate and the bankruptcy trustee is in charge of administering the estate. It is the bankruptcy trustee’s job to examine all of the paperwork you filed with the court and make sure it is complete and to determine if there is any non-exempt equity in property that can be sold for the benefit of your creditors.
Meeting of Creditors
The trustee will conduct a meeting of creditors, also called a 341 meeting. Shortly after filing, you should receive notice of the time and place of this meeting. At the meeting, the trustee will swear you in and ask you a series of questions about your property and your bankruptcy paperwork. Creditors are also allowed to come to these meetings and ask any questions they might have. In most Chapter 7 cases, this is the only time a debtor will have to take a trip to the courthouse. Additionally, you will need to complete a financial management course within 60 days of the first date set for this meeting.
After the creditors meeting, the trustee will decide whether there are assets in your estate that need to be administered or sold for the benefit of creditors. If there are, the trustee will work to get the property sold. Sometimes property is sold or auctioned off to a third party, and sometimes you can pay the trustee the cash value of the property. If there is no non-exempt equity in your property, the trustee will report to the court that there are no assets in the case. There are also times the trustee might need time to investigate or receive more documentation from you to try to determine if there are assets available. In that case, the trustee will report to the court that there might be assets to administer.
If no one has objected, about 3-4 months after filing you will receive your discharge. The discharge wipes out all of your debt except in a few instances, such as child support, taxes and student loans. After the whole process is over, you can begin to work to rebuild your credit and start fresh!
If you are interested in speaking with one of our attorneys about filing bankruptcy, please set up a free consultation today.