Typical Chapter 7 Timeline

The entire length of a typical Chapter 7 bankruptcy case is usually six months.

A Chapter 7 filing begins with the debtor gathering all his/her financial information, including tax returns, paystubs, and 1099s. The debtor lists the assets and liabilities. A debtor can represent him/herself in bankruptcy, but it may be better to have an experienced bankruptcy attorney as a rope to
navigate through the process.

After filing the bankruptcy petition, the bankruptcy court lets the creditors know about the bankruptcy. The federal government uses a computer system that allows for automatic notification of parties. The debtor or the attorney working on a case does not need to send out notices to parties by mail whenever a document is filed in the electronic system

All bankruptcy filings are viewable in an electronic system. Once the court notifies the creditors of a bankruptcy filing, the creditors halt collections. The automatic stay stops all lawsuits against the debtor, and all foreclosure proceedings. The stay can be lifted if the creditor or the trustee files a motion for relief from stay.

A trustee gets assigned the case, and reviews the petition. The trustee works for the creditors, but may dismiss a case if s/he sees the debtor is not properly represented by the attorney who accepted the job. When an attorney takes a fee and does not properly represent a debtor, like not show up for a hearing, the trustee may ask the attorney to disgorge fees so the client can find another lawyer.

It is the debtor’s responsibility to claim property as exempt so the trustee will not take it to sell to creditors. When the debtor runs out of exemptions and wants to keep property, the debtor may need to pay the trustee some money.

After the trustee reviews the petition, the debtor attends a 341 hearing. The trustee questions the debtor about the documents filed and any particular change in the bankruptcy estate from the time of filing to the time of discharge. For example, if the debtor gets an inheritance, the debtor has to tell the trustee.

After the 341 hearing, if the trustee believes a debtor owns non-exempt property or property covered only partially by a statutory exemption, the trustee or a creditor may object to a discharge. While a bankruptcy case is pending, a debtor should try not to use credit cards or transfer property to relatives.