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What happens in a Chapter 7 Bankruptcy?

What happens in a Chapter 7 Bankruptcy?

When someone is thinking about filing Chapter 7 bankruptcy one of the first questions they usually ask is "what will happen during the bankruptcy?"  When you file a Chapter 7 bankruptcy you must list all of your debts and all of your assets.  You must also take a pre-filing credit counseling course.  You can take the course either online or in person.  I give my clients a link that can be used to take the course.  The course takes about 45 minutes to complete and you can take it right at home. 

Shortly after you file Chapter 7 bankruptcy a trustee will be appointed to the case.  The bankruptcy trustee's job is to oversee the bankruptcy case and to administer the case.  The trustee reviews the documents that were filed in a case and additional documents (such as tax returns, pay stubs, etc.) to learn more about your assets.  About 1-3 weeks after we file the bankruptcy you will receive a Notice of Bankruptcy Filing.  The notice will tell you when your meeting of creditors is scheduled and where to attend the meeting.  But don't worry!  If you are my client then I will also let you know when the meeting is and where we will meet so you don't have to try to figure out the Notice.  Usually, the meeting of creditors is scheduled about 1 month after the bankruptcy is filed.  At the meeting of creditors, the bankruptcy trustee will have you take a short oath or affirmation and then he will ask you some questions.  Normally, the bankruptcy trustee asks questions like the following:

1)  "Did you review your bankruptcy schedules before you signed them?"  You will be able to say yes because we will have reviewed them in detail before you sign them.

2) "Did you receive the notice required by the Bankruptcy Code?"  You will be able to say yes because I make sure all of my clients receive the notices they are entitled to under the Bankruptcy Code.

3) The Trustee may ask questions specific to your case.  Generally, he/she may ask you about a house or a car you sold in the past.  There's usually no reason to worry just make sure your answers are truthful.

Creditors also have a chance to appear at the meeting of creditors but they usually do not come. 

After the meeting of creditors you will be required to take a post-filing bankruptcy course (or 2nd course).  You can take it right online from the comfort of your own home.  The course takes about 45 minutes to complete.  Once you complete the course you will receive a1-800 number to call.  You will call the 1-800 number and answer a few questions.  After the call, you will receive a certificate that will need to be filed in your bankruptcy case so you can get your discharge.

In most cases, after the meeting of creditors the Chapter 7 bankruptcy trustee will file a Report of No Distribution with the court.  Then you just sit back and wait for your discharge (order erasing your debts).  I let my clients know once the discharge has been entered so they know when the case is over. 

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