Filing for bankruptcy can be a daunting prospect, but understanding the bankruptcy process can alleviate some of the uncertainties and anxieties.
This guide aims to walk you through the step-by-step bankruptcy timeline, shedding light on what to expect at each stage. Whether you are considering Chapter 7 or Chapter 13 bankruptcy, this article will help you gain a clearer understanding of the process ahead.
The bankruptcy process begins with careful preparation. First and foremost, you should consult with an experienced bankruptcy attorney who can assess your financial situation, advise on the best course of action, and guide you through the process.
Gathering all relevant financial documents, such as income records, tax returns, debts, and asset information, will be essential for your attorney to evaluate your case accurately.
Before you can file for bankruptcy, federal law requires you to attend a credit counseling session.
This session aims to provide valuable information about bankruptcy alternatives, budgeting, and credit management. The credit counseling must be conducted by an approved credit counseling agency, and your attorney can help you find an agency that meets the legal requirements.
Once you have completed credit counseling, your bankruptcy attorney will help you prepare and file the bankruptcy petition.
This is a critical document that outlines your financial situation, including a list of all your debts, assets, income, and expenses.
Your attorney will also submit the necessary schedules, statements, and other required forms.
Upon filing your bankruptcy petition, an “automatic stay” goes into effect immediately.
This is a powerful provision that halts all collection actions by creditors, including lawsuits, wage garnishments, foreclosure proceedings, and harassing phone calls. The automatic stay offers you a reprieve, providing some much-needed breathing room to navigate the bankruptcy process.
Approximately 20 to 40 days after filing your bankruptcy petition, you and your attorney will attend the Meeting of Creditors, also known as the 341 Meeting. During this meeting, you’ll meet with the bankruptcy trustee assigned to your case and any creditors who choose to attend.
The trustee will verify the accuracy of your bankruptcy petition, ask you questions about your financial affairs, and ensure you understand the consequences of bankruptcy.
For Chapter 7 bankruptcy, the means test will be conducted during the Meeting of Creditors to determine your eligibility. This test evaluates your income and expenses to determine if you qualify for Chapter 7 or if Chapter 13 might be a more suitable option.
After attending the Meeting of Creditors, you must complete a financial management course from an approved agency. Similar to the credit counseling session, this course aims to provide you with essential financial management skills to help you rebuild your financial life post-bankruptcy.
If you file for Chapter 7 bankruptcy, the liquidation process begins after the Meeting of Creditors. The bankruptcy trustee will assess your non-exempt assets, which may be sold to repay your creditors. It is essential to work closely with your attorney to claim all applicable exemptions and protect as many assets as possible.
If you file for Chapter 13 bankruptcy, you and your attorney will develop a bankruptcy repayment plan that outlines how you will repay your debts over a three to five-year period. The plan must be submitted to the court for approval, and once approved, you will begin making regular payments to the bankruptcy trustee.
For Chapter 13 bankruptcy, a confirmation hearing will be scheduled where the court will review and approve your repayment plan. Creditors have the opportunity to object to the plan during this hearing, and your attorney will defend the plan’s feasibility and fairness.
In Chapter 7 bankruptcy, the discharge typically occurs around 60 to 90 days after the Meeting of Creditors. This means wiping out your qualifying debts, giving you a fresh financial start. In Chapter 13 bankruptcy, the discharge occurs after successfully completing the repayment plan.
The bankruptcy process can be complex and emotionally challenging, but it offers a lifeline to individuals overwhelmed by debt.
Understanding the bankruptcy timeline is crucial for navigating the process with confidence. With the help of an experienced bankruptcy attorney, you can ensure that your case proceeds smoothly, allowing you to focus on rebuilding your financial future.
Remember, bankruptcy is not a dead end, but a fresh start to regain control of your finances and move towards a brighter financial future.
It’s important to hire an experienced bankruptcy attorney as one of the steps to take when you’re facing bankruptcy and you need solid guidance and representation.
This is because there are many different types of bankruptcy. Only an experienced lawyer will know which one would work best for your specific situation.
It might seem like it makes sense to do this yourself. But most people don’t have the time or patience to understand all of the intricate details involved in bankruptcy.
That means they make mistakes by not choosing the right type, or by not filling out paperwork correctly. Both things could lead to delays and ultimately hurt your chances of getting any debt relief at all.
This is not a journey to take lightly, but it is also not one to take alone. If you need to file for bankruptcy, reach out to us today to start your journey with us.
If you want to learn more about the options you have and the steps to take, call us for a free consultation.
Parker and DuFresne