October 25, 2011
By: Chris Kramer
Consumers and businesses struggling with debt have a few options if they decide to turn to the bankruptcy court. Far and away the most common in Chapter 7 bankruptcy, which can wipe out unsecured debts and provide a fresh start in as little as a few months.
But the process can be complicated. In many cases, what you do before filing is just as important as what happens after. Check out the Chapter 7 timeline below to see what a bankruptcy filer can expect.Speak to a Bankruptcy Lawyer Today
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Attempting to delay payments of defraud creditors, such as through hiding, transferring, or destroying property or assets, in the year before filing for bankruptcy could be considered bankruptcy fraud and could result in an unfavorable outcome in your case and criminal penalties.
Paying back a relative or business partner ("insiders") during the year before filing could be deemed an unlawful preference by the court and it may seek to recover those payments and distribute them to your other creditors. You may want to talk to a bankruptcy attorney if you have questions about this.
In the 6 months before filing you must have a meeting with an approved nonprofit budget and credit counseling agency.
If you take out credit of $500 or more for luxuries in the 3 months before filing that luxury debt may not be dischargeable.
As soon as you file your bankruptcy petition, the court will order an injunction called an "Automatic Stay" that will prevent creditors from taking most legal or collection actions against you during your case or until it is lifted by the court.
You are appointed a trustee, a federal employee who will meet with you and oversee your case.
Certain papers declaring your assets, liabilities, expenses and income must be filed within 15 days of your petition, but are typically included with your filing.
15 days after filing your petition the court will schedule the meeting between you, your trustee, and creditors.
Papers declaring your intention to keep property that serves as collateral, or hand it over to creditors, must be filed and served to the trustee and creditors within 30 days of your petition or by the date of the meeting of creditors, whichever occurs first.
The meeting between you, your trustee, and creditors typically happens 20 to 40 days after filing. If you do not attend the meeting your case will be dismissed.
Withing 6 weeks you must file a certificate from an attorney that you have been advised on your bankruptcy options, and file a statement of any increased income or expenditures you can foresee in the near future.
A successful Chapter 7 bankruptcy case typically leads to a debt discharge within 4 to 6 months of filing.
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