Chapter 7 and Chapter 13 bankruptcy cases usually follow a very straightforward path. Litigation in other areas of the law can be extremely time-consuming and expensive. Bankruptcy matters, on the other hand, follow a regular timeline and are usually paid for on a flat-fee basis. This certainty in the progress and cost of your case can be reassuring.
This article will examine the steps involved in a typical case and when these steps occur.
Once your petition is filed, the bankruptcy court will mail a notice to your creditors. This notice informs your creditors you filed for bankruptcy (invoking the automatic stay) and sets the date for the meeting of creditors. A trustee (the person who oversees your case) is also assigned at this time.
The meeting of creditors takes place three to six weeks after you file your petition. Please refer to last week's article for more information on this important meeting.
After the creditors' meeting the trustee will conduct the means test. The means test compares your income to the state average and the fate of your case largely hinges upon the result. If your income exceeds the state average, you may have to convert to a Chapter 13 plan. This involves entering into a repayment plan designed to pay your creditors off over time.
There are two additional steps in a bankruptcy case that involve your property. The first relates to non-exempt property. If you have property that doesn't qualify for an exemption, the trustee will likely give you an option to buy the items back (typically on a discounted basis). The second step relates to secured property. If you own property that is secured by a mortgage, you'll be asked if you wish to reaffirm this debt and keep your property. These two steps occur within the two months following the creditors' meeting.
One additional step involves completing a counseling session in financial management. This must be completed within six weeks of the meeting of creditors.
If all goes well, the court will send you a notice of discharge about three months after you file your petition.
In the days or weeks that follow the trustee will allocate your non-exempt property to the creditors and your case will be closed.
I am a bankruptcy attorney with offices in Walnut Creek, Sacramento, and Fairfield. I offer free consultations to people considering bankruptcy. Please call today for your free consultation: 925-932-7086.
