The Chapter 7 Bankruptcy Process
Individuals are frightened by the bankruptcy process and often will not even consult a lawyer. This is why we are providing this information here.
Once you retain us, you are then free to inform your creditors of your intentions. After filing papers in the court, they cannot continue collection actions against you.
The first court hearing is held about a month after your case is filed. Since Covid, the hearings are conducted via a conference call, usually from the attorney’s office. On the line may be about 10-15 other people like you. The trustee will be at a desk in the front of the room. Each person in the room will have an opportunity to be questioned by the trustee for about five to 10 minutes. One of our attorneys will accompany and assist you.
The trustee (a bankruptcy attorney appointed by the Court to review your file) will have a copy of your papers. First, he will ask you to confirm that you signed the papers and that they are accurate. Then he will ask you about your answers. He will want to know if you have ever owned any real estate. He will ask for the highest balance in any bank account within the past two years, whether you have the right to sue anyone, and will want documentation of the value of any real estate. And he will ask about recent financial transactions. He will review the amount of your total debts, and ask questions about any unusual answers on your schedules.
Creditors have the right to appear and ask questions, but don’t usually appear. Recent unusual credit card activity, however, may prompt a creditor’s appearance. Sometimes a department store may have a representative present to ask if you want to keep your card, in exchange for paying back a portion of your old bill.
If the trustee requests further documentation about a particular transaction, the hearing may be adjourned for a second date, but usually the trustee is finished after the first meeting.
Creditors then have two months to object to their specific debts from being discharged. This could happen if you recently used large amounts of credit, or transferred balances to their card, or if you owe certain debts in a divorce case, if you obtained a loan based on a false financial statement, and in certain other limited and specific situations.
During this two-month period, creditors also have a right to object to your discharge of all debts. This would occur if it was discovered that you lied on your bankruptcy papers, and had recently transferred assets, or were concealing assets that you owned.
Usually, however, no objections are filed. About six months after your case is filed, you will receive in the mail a document entitled “Discharge of Debtor.” This should be saved, along with a copy of the papers you filed, to provide to creditors who bother you in the future.
If the trustee collects assets that you can’t keep as exempt, then he will distribute them to your unsecured creditors (e.g., credit card companies); but the creditors are prevented from pursuing you for those debts.
If you have accurately provided us with all relevant information, our lawyers will carefully prepare your bankruptcy papers, and we will be at your side throughout the entire process, to enable it to be painless, and to allow you to start your life anew, without the burdens of past misfortunes always following you.
Although Chapter 7 bankruptcy stays on your credit report for 10 years, as soon as your case is filed, we can show you how to start building a new credit record. You should be able to buy or lease a new car in about a year. After Chapter 7, you can get a mortgage for a new home, under certain lending programs, after three years. Most importantly, starting the day after your petition is filed, you can start saving money without worrying about your old creditors taking it away. Finally, the bankruptcy process will bring you a keen awareness of your current living expenses, and what income you have available to meet these payments, once your old debt is wiped away. Instead of using all your free earnings to pay never-ending credit card interest and late charges, you will be able to pay all your current living expenses with your current earnings.
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