What is the procedure and timeline for chapter 7 bankruptcy?
Here’s a step-by-step description of a routine chapter 7 bankruptcy case handled by my office.
1. Contact me. You don’t have to prepare and there’s no obligation. I’m a friendly, down to earth attorney, licensed for 18 years, and have personally and fully handled over 750 bankruptcies. I’m here to help and everything is confidential.
2. I’ll do a brief interview with a series of financial questions. If you appear to be a good candidate for chapter 7 bankruptcy, we’ll set a time for a more detailed consultation (via Zoom or Facetime and still free of charge). I may ask you to send me some basic paperwork in advance, which you can e-mail me (like your recent paystubs, tax return and credit report, which you can order for free at annualcreditreport.com).
3. During your free consultation, I’ll review your financial situation in detail, including your debts, your property, your income and expenses. After taking the time to answer your questions, I’ll make a recommendation as to whether chapter 7 bankruptcy would be in your best interest. You can then take your time to decide whether you’d like to retain my services. I have a simple, clear fee agreement.
4. You can retain me with a $300 down payment. I can’t file your case until the balance of fees is paid in full (because you can’t bill a client after she’s filed bankruptcy), but we’ll start getting your bankruptcy case prepared for filing. Once retained, I’m available to quickly answer all questions, big or small. If creditors are calling you, you can give them my number to ease the burden until your case is ready for submission to the bankruptcy court.
5. I’ll need you to e-mail me (or mail if not able to submit electronically) supporting documentation. This serves two purposes. One, the paperwork collected is the basis to accurately populate the fields of your bankruptcy petition, a very large set of forms, statements and declarations. Two, some of the documents must be later sent to a case trustee who reviews your petition after its filing with the bankruptcy court. The documents required include your last two tax returns, pay stubs (LES statements for men and women in the military), vehicle registrations and bank statements. Copies of most of the required documents should already be available to you online or in electronic format, or you can simply snap a photo with your phone (like for your auto registration).
6. I don’t like to assign homework or give long questionnaires. So once I’ve created a framework of the petition (based on your paperwork), we set a Zoom, Facetime or telephonic conference to clarify your financials and list your property so that I can complete the bankruptcy petition. I’m adaptable to your schedule, so we can find a convenient time to do a thorough and accurate job together.
7. The bankruptcy court requires that before filing, you complete an online credit counseling class that takes about an hour.
8. Upon its completion, I’ll send you a complete draft of the bankruptcy petition to review. We’ll go over it together, page by page and make any appropriate updates. Upon approval, you’ll sign and date it.
9. I then file the case and the bankruptcy court will immediately issue an automatic stay. This is a federal court order that compels creditors to stay (stop) all collections, repossessions and foreclosures. Although the case will take about 3 months to finalize, the phone calls, the pressure, the burden of debt will be lifted right away. You may breathe a sigh of relief.
10. When your chapter 7 bankruptcy case is filed, your property becomes an “estate” that’s technically assigned to a case trustee. If an estate includes “non-exempt” property, then some property can be sold by the trustee to pay back debts. But in almost all chapter 7 bankruptcies that we file, there is no such non-exempt property available. California law allows most chapter 7 bankruptcy filers to keep all their property.
11. After your case is filed, the bankruptcy court requires you to do one more online class on personal financial management. It takes an hour or two.
12. About a month after the bankruptcy filing, a “meeting of creditors” is held by phone or Zoom. Creditors usually don’t appear, but I’ll be there. The meeting is a typically brief interview by the trustee. He or she has you swear under oath that the info in the petition is true and correct, then answer a series of routine and relevant questions. It can feel pretty anti-climactic and surprisingly quick. I’ll fully prepare you to respond at ease to the mostly “yes or no” type questions.
13. About 61 days after the above meeting of creditors (or about 3 months from the filing date), the bankruptcy court will issue your discharge order. It certifies the cancellation of all debts (subject to cancellation).