Bankruptcy Process

What Is the Bankruptcy Process?

The thought of filing bankruptcy can be daunting and even overwhelming. But understanding the steps involved in the bankruptcy process and how the system works can help you feel more confident as you get started on creating a better financial future for yourself.

Below, we explain the bankruptcy process step-by-step for both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. At The Sweeney Law Firm, P.C. we strive to provide our clients with compassionate and efficient legal help.

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What to Know Before Filing Bankruptcy

Each bankruptcy case is different, and we understand that your circumstances, needs, and goals are unique. An experienced bankruptcy lawyer can help you assess whether bankruptcy will work for you, as well as which type of bankruptcy best suits your situation.

You will need to disclose to your lawyer whether you have filed for bankruptcy before. This is because those who have received a bankruptcy discharge in the past must wait to file again.

Also, be prepared to participate in a credit counseling course from an approved counselor. You will need to do this 180 days prior to filing for bankruptcy.

Chapter 7 Bankruptcy Process

Chapter 7 bankruptcy is faster and less complicated than Chapter 13. This is because Chapter 7 typically involves those who don’t have many non-exempt assets. The process typically involves the following steps:

File a Petition

Your bankruptcy case starts with the filing of a petition with the bankruptcy court. You will also need to complete forms where you will list your finances and any exemptions you will claim. Filing a petition prompts the court to issue an “automatic stay”. This stops all creditor collection actions against you during your bankruptcy. Once you file, the bankruptcy court will name a trustee to manage your case.

Meeting of Creditors

You must attend a meeting of creditors with the trustee and creditors scheduled within 60 days of filing. More often than not, creditors will not attend the meeting. The trustee and creditors will ask about your finances and what you reported on your petition.

Confirmation of Eligibility

If the information reviewed by the trustee justifies it, they will confirm your eligibility to file for Chapter 7 bankruptcy. The trustee will not confirm your eligibility if you do not pass the means test, or earn too much. Even if the court denies your eligibility, you could still be eligible to file for Chapter 13 bankruptcy.

Take a Course

Before your debts are discharged, you must complete a debtor’s education course.

Discharge

Typically within four to six months from the date of your filing, you will receive a notice in the mail. The notice will state that your debts are discharged and your automatic stay is lifted. After your discharge, your bankruptcy case is officially closed.

Chapter 13 Bankruptcy Process

A Chapter 13 bankruptcy usually takes longer than a Chapter 7. In a Chapter 13 bankruptcy, your debts are discharged after completion of a three to five year repayment plan. The process for Chapter 13 is typically as follows:

File a Petition

The process starts with filing your petition and forms with the court. The filing will trigger an automatic stay that stops all collection actions. At this time, the bankruptcy court will appoint a trustee to handle your case.

File a Chapter 13 Repayment Plan

You will have to file a Chapter 13 repayment plan within two weeks of filing your petition. The plan will provide which debts will be paid over the following three to five years.

Meeting of Creditors

A meeting of creditors will be scheduled within two months after filing your petition. The meeting will be an opportunity for the trustee and any creditors who show up to ask you questions. They will ask about your finances and repayment plan.

Chapter 13 Confirmation Hearing

Within 45 days of the meeting of the creditors, you and your lawyer will participate in a confirmation hearing. The trustee and creditors can object to your repayment plan at the hearing. If there are no objections, your plan will be confirmed.

Make Payments

Unlike Chapter 7, a Chapter 13 case stays open until you have met your repayment plan commitments. Within 30 days of filing your repayment plan, you must start making payments. It does not matter whether your repayment plan has been approved.

Take a Course

During your bankruptcy, you must participate in a financial management course, which can be taken online.

Discharge

Your Chapter 13 bankruptcy ends at the end of your repayment period. At that point, your debts are discharged.

Learn More About the Bankruptcy Process

Bankruptcy can give you the financial fresh start you need. But it’s best handled with the help of an experienced Memphis bankruptcy attorney. At The Sweeney Law Firm, P.C. we can help you before, during, and after the bankruptcy process. Contact us today for a free consultation.