How Does the Bankruptcy Process Work?

Before filing for bankruptcy, it’s important to know some basics regarding the bankruptcy process. It’s not an easy decision to file for bankruptcy but knowing what to expect, how long it takes, and what it does and does not do, are all important considerations. Before filing for bankruptcy, schedule a visit with a bankruptcy attorney. This is the best way to ensure that you obtain accurate and timely information to help you make the right decision.

Key components to the bankruptcy process

Depending on case-by-case scenarios, filing for bankruptcy and the process itself is typically straightforward. It’s important to work with an attorney to ensure that the process goes smoothly and that you remain compliant with federal regulations, as bankruptcies are overseen by federal bankruptcy courts.

Qualifying. The first part of the bankruptcy process determines whether you qualify to file for bankruptcy. The majority of individuals filing for bankruptcy do so under a Chapter 7 filing, which typically eliminates unsecured debts while at the same time allowing the individual to maintain property. Some examples of unsecured debt include medical bills, credit card debt, lease payments, unpaid rent, and so forth. Keep in mind that some types of debt are not forgiven, such as child support, alimony, student loans, and government fines, penalties, or federal tax liens.

Credit counseling. Your attorney might tell you that you need to take mandatory credit counseling before you file for bankruptcy. In most cases, this counseling is done prior to filing for bankruptcy. The bankruptcy code states that you are required to complete a credit counseling course prior to filing. In many cases, these courses can be taken in person, online, or over the phone. Upon completion, you receive a certificate which your attorney must file with the court. Extenuating circumstances might apply but in such cases, your bankruptcy attorney will advise you.

Forms. Numerous official bankruptcy forms are required for filing. Your bankruptcy attorney will prepare forms for you to review and sign, and then file them with the court. It is recommended that anyone going through bankruptcy filing use a bankruptcy attorney to ensure that all forms and requirements are met and to ensure that the forms are filed in the right bankruptcy court and judicial district.

Filing the petition. After the bankruptcy petition has been filed with the court, you will be assigned a bankruptcy trustee. In a majority of individual bankruptcy filings, the court generally appoints a bankruptcy trustee to administer the case. The trustee is responsible for reviewing the bankruptcy petition and taking a close look at your financial documents. In addition, the trustee examines the overall status of your financial affairs.

Creditor’s meeting. Another key component in the bankruptcy process is called ‘the examination of the debtor’. It’s called a meeting of creditors, although creditors rarely attend such meetings in person. It is the job of the bankruptcy trustee to conduct the ‘examination’, which involves asking you questions regarding the information found in your bankruptcy documents while you are under oath.

Debtor or financial education class. The final step before a bankruptcy is discharged is to take a financial education course. This, like the credit counseling, can be done online or over the phone. Afterward, you will be given a certificate stating that you have completed the terms of the class, which your attorney must file with the court.

Discharge. Your bankruptcy process is officially over when all the requirements of the court have been met. The court will grant you a discharge.

On average, a bankruptcy case can take anywhere from 4 to 6 months before you obtain the discharge, depending on case-by-case scenarios. For more information regarding bankruptcy procedures, call our office today at 817-335-4003 to schedule a free consultation.