Ok, so you've decided you need to file for bankruptcy and you're
hoping this decision is going to lead to you becoming debt free and able
to breathe easy again. The effect of a discharge certainly sounds good.
However, what happens in between beginning the process and getting to
the final result of obtaining a discharge is a gray area for many people
who come to see me. So, I'm going to devote this post to explaining the
Chapter 7 bankruptcy process further and perhaps this will also answer some of your questions.
At my office, after a client retains me and provides me with certain documents,
they must take a credit counseling course. In the mean time, I prepare
a client's case and request the client come into the office to review
and sign their petition and schedules before it is filed (this is a simplified
version of the process which usually involves a lot more analysis and
review before a case is filed). It is important to emphasize that bankruptcy
relief does not begin until a case is filed. Furthermore, your case cannot
be filed until you complete the credit counseling course so don't delay!
Once your case is filed, you are entitled to protection of the "Automatic
Stay". This protection basically means that creditors are not permitted
to collect pre-filing debts from you by calling you or communicating with
you, garnishment of your paycheck stops and freezes on your bank account
are lifted, and lawsuits come to a halt. Creditors may petition the court
to continue certain lawsuits, such as foreclosure actions, however they
must obtain permission to lift the Automatic Stay before they can continue
So, the most immediate effect you will notice when your case is filed is
that phone calls and harassing creditors should stop contacting you. Get
ready for those "1-800" phone calls to stop.
A lot of behind the scenes work also begins at this point. The most typical
example is that your attorney will communicate with the Trustee's
office and provide him or her with certain documents such as a copy of
your signed petition, pay stubs, tax returns, appraisals of assets and
other documents that Trustee may specifically request. Your attorney may
also engage in communications with certain creditors regarding your filing.
The next step in the process that you will experience is what is known
as the Meeting of Creditors or "341a Hearing". This is a hearing
you must attend and typically occurs about a month after your case is
filed. At this hearing, you meet the Trustee who is assigned to your case
and that Trustee may ask you a wide range of questions regarding your
assets, income, expenses, financial history and how your difficulties
arose. What happens at your hearing depends on the complexity of your
case, whether you have assets that could be distributed for the benefit
of your creditors and whether the Trustee has any additional questions
or requests additional information. If your hearing is "closed",
you are one step closer to obtaining your discharge.
After your hearing is over, you should make sure you take the second required
course, known as the Financial Management course. You cannot obtain your
discharge without taking this class. There are many other events that
could happen between the 341a Hearing and obtaining your discharge. For
example, creditors technically have until 60 days from the date of your
hearing to object to your discharge or the dischargeability of any particular
debt. The Notice of Meeting of Creditors that you receive in the mail
will state what date the is last day for anyone to object.
Other events may also need to happen prior to discharge. A common example
is where a debtor wishes to reaffirm a particular debt, such as a car
loan. This must be done within a certain window of time since an individual
cannot reaffirm a discharged debt. So, although the Trustee may have "closed"
your hearing or ended further inquiry into your case, this does not mean
all the work in your case is done. It is very important you discuss what
additional requests or supplemental services you may want your attorney
to provide you with ahead of time so that important deadlines do not pass
you by. In our court, for example, if you wish to participate in the Loss
Mitigation Program, you must request this before your case closes. The
same goes for stripping a judgment lien. It must be done before your case
is closed or you may find yourself in a difficult predicament later when
the only way to try to strip a lien is to go through the expense and time
of re-opening your case (which is at the court's discretion).
Typically, a person is eligible to receive a discharge 60 days after their
341a hearing and many courts will close a case the same day or within
a few days of entry of the discharge. Once your case is closed by the
Court, your case is officially over.
Questions or interested in a consultation about your case? Email Natasha
Meruelo, Esq. at firstname.lastname@example.org or call me at (914) 517-7565. The
first consultation is always free of charge.
Natasha Meruelo, Esq. is located at 445 Hamilton Avenue, Suite 1102, White
Plains, NY 10601.
*Natasha Meruelo, Esq., designated as a Federal Debt Relief Agent by an
Act of Congress and the President of the United States, proudly assists
consumers seeking relief under the US Bankruptcy Code.
Prior results do not guarantee a similar outcome.