What to Expect with Bankruptcy

Filing bankruptcy, whether Chapter 7 bankruptcy or Chapter 13 bankruptcy, involves the same general process.

Once you retain us as your attorneys, we are going to have you complete 3 tasks before we file your case:

1. You will fill out a simple worksheet to give us a clearer picture of your financial life.
2. You will gather documents that will be turned over to your trustee (the person in charge of reviewing the validity of your bankruptcy petition, among other things) to be reviewed. These documents are basic and can be easily obtained with little effort.  These include items such as deeds, mortgages, car titles, tax returns for the most recent two taxes years, 6 months of paystubs/payroll history, award letter if receiving government benefits, driver’s license, social security card, bank statements, proof of car and home owners insurance and any lawsuits in which you may be a party.
3. You will take a required Credit Counseling Course online or by phone and obtain a certificate of completion (this takes about an hour).

(For more about this, see our blog post on The "Credit Counseling" Requirement.)

We take all this information that you provide and craft it into your Bankruptcy Petition.

(We talk about this in more detail in The Petition and Schedules.)

Your case is filed and you are protected under the Bankruptcy Code. Now what?

Now it’s time to go to court with us. This is the scariest part for most of our clients, but it doesn’t need to be because you are not alone and we will prepare you for everything – from where to go and what to bring, to giving you the actual questions you will be asked in Court.

Generally, you only go to court once – about month after your case is filed. This is for your Meeting of Creditors (often called a “341 Meeting,” named after the statute section). This is when you will sit in front of the Trustee and answer his questions, along with any questions your creditors may have if they appear. In the districts where we practice, you do not actually meet in a formal court room. Instead you meet in a hearing room with a table at the front or in the center where you speak with the Trustee. Also, it is pretty rare that a creditor actually appears, so that is nothing to be nervous about.

For more about this hearing about a month after filing, see our blog posts titled The Chapter 7 “Meeting of Creditors” and The Chapter 13 “Meeting of Creditors.”)

At the table will be the Trustee appointed to your case and possible his or her assistant. When it is time for your hearing, you and your attorney will sit at the table. The Trustee will put you under oath and will record the hearing via audio. You answers must be spoken out loud—head nodding doesn’t show up on an audio recording. The questions should be simple to answer because they are all about you: i.e. Where do you live? Where do you work? Did you list everything you own? Did you list everyone you owe? Has your situation changed since the petition was filed? No one is trying to trick you, they are merely confirming your answers on the filed petition. Occasionally one of your creditors may appear to ask questions. Their questions will be straight forward and simple. And if there is an issue, we are there to protect you. Your hearing typically last about 5 minutes.

(For more helpful information see The Trustee in a Chapter 7 Case and Bankruptcy Roles: Debtor, Creditor, Lawyers, Clerk, Trustee, and Judge.)

The most frequent question we get is “Am I going to be yelled at by the Trustee or my creditors during the hearing?” The answer is NO. This is only about information verification, not about blaming, shaming or humiliating you for having financial problems.

Okay, Court is done – now what?

If you are undergoing a Chapter 7 bankruptcy process, you will be participating in the second step of your credit counseling to earn your Debtor Education certificate. This must be filed with the Court within 45 days after your court date. Our office or the credit counseling agency you choose will file it for you when it is completed. If you do not complete this step within the 45 day period in a Chapter 7, your case will get closed without a Discharge of your debt. In other words, you will still be on the hook for every debt you included in the Chapter 7. A Chapter 7 bankruptcy process ends approximately 60 days from the court date.

For more about this see You Can't Finish Your Bankruptcy without "Debtor Education," Simple Debts Discharged in Chapter 7, and Income Taxes that Are Discharged in Bankruptcy.)

If you are undergoing a Chapter 13 bankruptcy process, your payment Plan will be confirmed by the Court and you will continue to make your Chapter 13 bankruptcy payments as agreed. You will also be participating in the second step of your credit counseling to earn your Debtor Education certificate. Our office or the credit counseling agency you choose will file it for you when it is completed. A Chapter 13 bankruptcy process will end approximately 3 to 5 years after you file your case depending on your Plan.

(See What is a Chapter 13 Plan? and Discharge of Debts under Chapter 13.)