Bankruptcy

The process for filing a Chapter 7 bankruptcy and receiving a discharge is normally very simple. The debtor must file a petition, bankruptcy schedules, a statement of financial affairs, a list of creditors, and a statement of intent concerning personal property subject to security interests, among other documents. The schedules include a list of all debts, a list of all real and personal property, a disclosure of the debtor’s monthly income, and a disclosure of the debtor’s monthly expenses. The statement of financial affairs requires disclosure of the debtor’s gross income in the previous two years, any businesses owned by the debtor, and other recent financial information such as foreclosures and repossessions that occurred within a year of filing.

Approximately 20 to 40 days after the petition is filed, the debtor must appear at a 341(a) creditors’ meeting. There, the debtor and attorney meet with the Chapter 7 trustee. The trustee goes over the bankruptcy filing and asks if everything is true and correct. If the trustee has any other questions, he or she will usually ask right there. Creditors are allowed to attend these meetings in order to ask the debtor questions. However, this is a fairly rare occurrence. Normally, the debtor receives a discharge about 3 to 4 months after the 341(a) meeting.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added requirements for a debtor to be eligible to file bankruptcy and to receive a discharge. Within 180 days before filing bankruptcy, the debtor must have received from an approved, nonprofit credit counseling agency an individual or group briefing that outlined the opportunities for available credit counseling and assisted the debtor in performing a related budget analysis. The briefing may be conducted by telephone or on the Internet. The debtor must obtain a certificate from the course and file it with the court. Also, 45 days after the first date set for the 341(a) meeting, the debtor must complete an instructional course on personal financial management approved by the United States Trustee and file a statement that shows that the course was completed. Please contact our office for more information about these credit counseling and financial management courses.

The process for filing a Chapter 13 bankruptcy includes all of the elements listed above for a chapter 7. Additionally, though, the debtor must also file a Chapter 13 plan that details the amount that the debtor is going to commit each month to paying off the debtor’s creditors. The debtor makes these monthly payments directly to the Chapter 13 trustee, who then disburses them to the debtor’s creditors. Chapter 13 plans last between 3 and 5 years. In addition to attending the 341(a) meeting, the debtor’s attorney must also attend a plan confirmation hearing. The statement proving that the debtor has completed a financial management course does not have to be filed until the last payment made by the debtor under the Chapter 13 plan. The debtor receives a discharge at the end of the duration of the plan.