Chapter 7 Bankruptcy Timeline

The length of a usual Chapter 7 bankruptcy case is about four to six months.

The bankruptcy begins with the bankruptcy petition. When working with an attorney, the attorney or his/her paralegal may prepare the petition. The petition is only as complete as the information the debtor provides. The debtor should have the attorney or paralegal go over each part of the petition prior to signing. Before signing, the debtor should read each page to make sure there are no mistakes.

After filing the bankruptcy petition, the court notifies creditors listed in the petition about the bankruptcy. A debt that is not listed may not get discharged. Once the court notifies the creditors of a bankruptcy, the creditors must halt collections. The bankruptcy filing creates an automatic stay. For example, in foreclosure proceedings, the automatic stay stops any trustee sale. The stay can be lifted upon motion to the court by a creditor or the trustee.

A trustee gets assigned the case, and examines the petition to see how much non-exempt assets s/he can liquidate for the benefit of creditors. An experienced New York bankruptcy attorney works with a debtor to allocate the available exemption amounts appropriately to protect all property. It is the debtor’s responsibility to claim property as exempt so the trustee will not sell it. If the debtor does not have enough exemptions, and wants to keep property, the trustee may ask the debtor to pay the trustee something for the property.

Normally there will be a 341 hearing about a month after a bankruptcy petition filing. This a meeting of creditors. The trustee questions the debtor about the documents filed and any transfers made within a certain timeframe before filing bankruptcy. For every asset the trustee recovers, the trustee gets a certain percentage of the asset value as compensation. The trustee usually does not work for the court, and is self-employed so s/he gets motivated to recover as much as possible to increase his/her income.

For most individuals the creditors’ meeting is brief. Normally, creditors do not show up. If creditors appear, they can question the debtor under oath about the debts.

The debtor must bring to the 341 meeting:

• Tax return
• Social security card
• Identification (drivers’ license or passport)
• Bank statements, brokerage account statements
• Paystubs, business profit and loss statements

When contemplating Chapter 7 bankruptcy, look to an experienced New York bankruptcy attorney to advise each step through the timeline.