Chapter 7 Bankruptcy Timeline
“How long is a Chapter 7 bankruptcy?” “What can I expect in my Chapter 7 bankruptcy?” These are just some of the questions that I am often asked when I meet with a potential client for a free consultation at The Law Offices of Peter G. Macaluso. A Chapter 7 bankruptcy is a relatively quick process. However, there are very important aspects of a Chapter 7 case that everyone should know before they file. Below, I have provided a detailed timeline of a Chapter 7 bankruptcy and the types of things you can expect during your case.
Before You File
Complete Pre-Filing Paperwork
Before a bankruptcy case can be filed, your attorney must collect a great deal of personal and financial information to effectively build your bankruptcy Petition and Schedules. This includes gathering documents such as:
Income statements
Tax returns
Bank statements
Mortgage statements and statements from other financed property such as vehicles or furniture
Retirement Account statements
Given the proper amount of information and documentation, your attorney can build a strong petition that will not require revisions or amendments which can cost you time, energy, and money.
Complete Credit Counseling
The first credit counseling course must be completed within 180 days before the filing of your bankruptcy petition from a government-approved institution. These courses cost about $20 on average and take approximately 2 hours to complete either online or over the phone. This course will walk you through the options available to you in dealing with your creditors and debts.
Signing Your Petition
Before you file your Chapter 7 case you must sit with your attorney to review your bankruptcy forms to ensure that all the information within these documents are true and correct. Once corrections and edits are made you will sign the documents to certify their accuracy.
Filing Your Chapter 7 Case
After you have reviewed and signed your bankruptcy forms as well as completed credit counseling, your case can be filed! At this time, the Chapter 7 filing fee of $310.00 will be due to the Bankruptcy Court unless you opted to pay your filing fee in installments. In special circumstances the court filing fee may be waived.
As soon as the bankruptcy petition is filed with the court the automatic stay goes into effect which prevents collection actions from creditors as well as actions such as garnishments, foreclosure, and repossessions. Additionally, a Bankruptcy Trustee will be assigned to your case.
You will also receive a notice of filing your case from the court (also referred to as the 341 Notice). This document includes the date you filed, date of your 341 Meeting of Creditors, and deadlines for creditors to object to the discharge of your case.
Post-Filing
521 Documents – Within 21 days of filing the Chapter 7 Case
Debtors are required to provide the Chapter 7 Trustee with documents including, but not limited to, income statements, bank statements, tax returns, as well as any checklists/forms required by the Court. These documents are due to the Trustee no later 7 days before the 341 meeting of creditors.
341 Meeting of Creditors – Approximately 30 Days After Filing
The 341 Meeting of Creditors is a required meeting with your designated Trustee and any creditors who wish to attend to ask questions regarding the information you provided in your bankruptcy forms that you will testify to under oath. As intimidating as this meeting may sound, it is relatively pain-free and lasts only about 10-20 minutes.
Notice of No Distribution or Notice to File a Proof of Claim – Approximately 40-50 days after filing
After the 341 Meeting, the Trustee will continue to assess your bankruptcy documents to determine whether assets can be liquidated for the benefit of creditors. If the Trustee finds that assets cannot be liquidated, they will file a Notice of No Distribution. If they find that assets can be liquidated, a Notice to File A Proof of Claim will be filed by the Trustee, giving creditors the opportunity to file claims with the court in your case. Note, this rarely happens with diligent and detailed pre-bankruptcy planning!
Complete Debtor Education Course – Within 45 After 341 Meeting
Debtor Education course is the second and final course required to be completed before discharge of your case can be processed. You are required to file the course completion certification within 45 days of the 341 Meeting. As with the Credit Counseling course, this course can be taken online or over the phone. You may take this course at any government-approved institution. However, we suggest you take the course at the same institution that you took Credit Counseling.
Discharge of the Chapter 7 Case – Approximately 95 Days After Filing
A Discharge is an Order from the Bankruptcy Court that is granted upon the successful completion of the Chapter 7 case. Once the Order of Discharge has been entered qualifying unsecured debts such as credit card debt, medical bills, and payday loans will be discharged.
Post-Discharge
Final Decree
The final decree from the court is filed once the Order of Discharge has been entered. This decree signals that the case is completed and relieves the Trustee of their duties in your case.
No Asset Case – The Final Decree is typically filed within a few days of the Order of Discharge if the Trustee deemed that there are no assets to liquidate and a Notice of No Distribution was filed.
Asset Case – If the Chapter 7 Trustee found that there were assets available to liquidate, then the Final Decree could take months or even years to be filed due to the following procedural events that must be done:
The deadline for creditors to file proofs of claim will need to pass
The Trustee will need to liquidate all assets
The Trustee will file a Final Report that includes all assets that were liquidated and the amount of funds that will be distributed to creditors. This report also includes a deadline for creditors to object to the final report. If no objections are filed, then the Trustee can distribute funds to those who filed claims.
Once creditors have received funds due to them, the Trustee files a Final Distribution Report. Once again, creditors will have a chance to object to this report. If there are no objections the Final Decree can be filed and the case will be officially complete.