Much of the fear associated with bankruptcy arises from debtors not knowing or understanding what to expect and how the bankruptcy process will unfold. Generally speaking, a debtor can reasonably expect the following steps in a Chapter 7 bankruptcy case:
Pre-filing Process
Most of the work in a bankruptcy case is handled prior to the petition being filed with the bankruptcy court. At the Southern California Legal Group, an office consultation will be conducted to discuss the debtor’s financial situation and to determine whether bankruptcy is in their best interests and whether a Chapter 7 or Chapter 13 bankruptcy would be advisable.
After the consultation, the client is provided a questionnaire requesting all debts, income, assets, and financial history. In filling out the questionnaire, it is important for clients to disclose their assets and debts accurately and provide our office with documentation such as tax returns, bank statements, and pay stubs.
After the documentation and questionnaire has been returned to our office, we will begin preparing the bankruptcy petition and schedules. Prior to the petition being filed, the debtor is required to take a credit counseling class. Our firm works with credit counseling providers to assist clients complete this requirement, which can be completed online or over the telephone.
Once the client’s bankruptcy documents and credit counseling course have been completed, the case is filed, and the “automatic stay” goes into effect. The automatic stay bars any collection efforts against your or any of your property. The case will be assigned a trustee to review the filing who may request items such as bank statements, copies of titles to vehicles, and tax returns. It is important to gather all requested documents and return them to the trustee in the requested time as failure to do so may delay the case or possibly result in dismissal.
Meeting of Creditors
After a case has been filed, the debtor will be required to go to the Bankruptcy Court to attend the Meeting of Creditors. While it is rare that a creditor will actually make an appearance at the Meeting of Creditors, the trustee will examine the debtor under oath about the bankruptcy filing and the documents provided, and an attorney from our firm will be present with the client to ease any concerns they have about the process.
Discharge
The goal of the bankruptcy case is to obtain a discharge, which will occur approximately 90 days after your meeting of creditors. Upon discharge, the debtor is no longer liable for the debts set forth in their bankruptcy schedules. Prior to receiving the discharge, the debtor must complete a financial management course. This course may be completed online, in our office, or in the comfort of your home.
While not every case is the same, understanding the basic process of filing bankruptcy can reduce a great amount of stress and give you greater insight into how your case is being handled by the court.