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The Chapter 7 Bankruptcy Process: An Overview

Chapter 7 bankruptcy is a very straightforward process. It typically consists of six steps:

Step 1: Before filing, complete a mandatory credit-counseling course by phone or online.

Step 2: File the official bankruptcy forms (available online) listing all your property and creditors and providing information about your financial transactions during the previous two years.

Step 3: Mail the bankruptcy trustee, who handles the case for the court, a copy of your most recently filed income tax return, plus any other documents the trustee asks for.

Step 4: About 30 days after you file, attend a creditors’ meeting, usually the only personal appearance you’ll have to make. The creditors’ meeting occurs in a small hearing room and is conducted by the trustee. Creditors seldom appear. At this meeting, you are required to answer (under oath) any questions the trustee has about the information in your papers, or provide other information the trustee thinks is relevant. A typical meeting lasts five minutes or less. You don’t need a lawyer to represent you at this meeting—you will have to answer the trustee’s questions directly, whether or not you have a lawyer with you.

Step 5: No later than 45 days after the creditors’ meeting, you must attend mandatory budget counseling (by phone or online) and file a simple form telling the court that you have completed it.

Step 6: Remain in a holding pattern (don’t operate a business with inventory or sell or give away any property without the trustee’s permission) until the court sends you a written discharge of your debts. That will come about 60 to 90 days after the creditors’ meeting. During that period, creditors can, but seldom do, object to your getting rid of a debt. The trustee arranges for you to turn over nonexempt property, if you have any. Many people who file for bankruptcy don’t have any nonexempt assets.