When you file for chapter 7 bankruptcy, you need to follow a set of procedures before you get your discharge. To file for bankruptcy under chapter 7, you need to list out all your debts, assets, financial transactions along with filling the petition, schedules, and forms required as per the norms. Once you have completed all the formalities and the paperwork, a bankruptcy trustee will be appointed to head your case. After completing all the paperwork, the next step would be to attend the 341 Meeting or the Meeting of Creditor’s post which you will receive the discharge. The discharge is generally granted after four to six months since you file for bankruptcy.
The Process to File for Bankruptcy Under Chapter 7
- It is mandatory to get a Career Counselling done
This is generally the first step when you decide on filing for bankruptcy. You need to get a credit counseling done 6 months before you file for bankruptcy under chapter 7. It is important to note that this counseling can only be done from an agency approved by the United States Trustee’s Office. You can even find a list of the approved counselors on the website. Failing to get counseling done by an approved agent can get your case dismissed on the first day of filing itself.
- Filing of the Petitions and Bankruptcy Forms
Once you have commenced the filing for bankruptcy, you have to fill out the forms as per the norms. These forms generally include-
- Your Bankruptcy Petition
- Schedules where you have to list out your financial information
- Your Income and expenses
- A proof to entitle your accuracy for the Chapter 7 Means Test (a necessity for filing under this chapter)
- Your claims for exemptions on Property
Once this paperwork is done, an automatic stay will be enabled against all your properties and no creditor will be able to initiate their collection actions during your case.
- The court appoints a Trustee for your case
Once all the paperwork is submitted, a bankruptcy trustee is appointed by the court to handle your case. It is the trustee’s work to review the paperwork submitted by you and distribute your nonexempt property equally between your creditors (if you have any). To do this, it is your duty to submit a recent copy of your tax return to the trustee.
- The 341 Meeting or the Meeting of Creditors
Despite the name stating it to be the Meeting of Creditors, often no creditors attend this meeting leaving only you and the trustee (along with any creditor if present). The date and place of this meeting are finalized by the court and you will be notified of the same through a notice. In this meeting, under oath, you will be required to answer all questions regarding your finances and bankruptcy as put up the creditors (if any) and your trustee.
- Means Test and Eligibility Test
This is a very crucial step while filing for Chapter 7 bankruptcy. After the 341 Meeting, your trustee would have gathered all financial and other information about you. Now, you will need to appear for the means test citing your eligibility for filing under this chapter. This means, if you do not pass the Means Test, you will not be eligible to file for bankruptcy under Chapter 7 (though you will still have the option to file under Chapter 13). A means test is a method to ascertain whether you will be able to pay under the Chapter 13 Repayment Plan. This is done by comparing your income and expenses.
6. Nonexempted Property
If you are the owner of any property that falls under the non-exempted criterion, the trustee holds the power to either seize or sell it to distribute it between your creditors. You will only be in a position to save this non exempted property if you can give a value equal to it in cash to the trustee or willing to forsake any of your exempted property instead of the non-exempted one.
7. Education Course for the Debtor
An education course is compulsory for the debtor as per the 2005 Amendment of the Bankruptcy Law. This needs to be completed and filed by the debtor after he files for bankruptcy and before a discharge is granted. Once the course is completed and you are certified, you must file this under Form 423 – Certification About A Financial Management Course, with the court.
- Discharge of the Debt
You will get the discharge of your debts, after 3-6 months of filing for bankruptcy. This will be intimated to you via mail. Once your debts are discharged, all automatic stay on the property will be lifted.
- Closure of Bankruptcy Case
Your bankruptcy case is generally closed within a week or 2 after you have been granted the discharge. Once the case is closed, you will be free from all liabilities to the creditors and payments.
To know more about how to file for bankruptcy under Chapter 7, you must consult a professional attorney like the Recovery Law Group. Since each case is different and unique, a proper consultation would be the best option before taking such a big step. To contact them, you can either visit their website or call them on – 888-297-6203