What Happens After You File Your Chapter 7 Bankruptcy Case?
You have finally gone into your attorneys office and signed your bankruptcy papers for your chapter 7, so like most debtors you are probably wondering What happens next?
The first thing that happens is your attorney files the case electronically (or if you are filing pro se, meaning without an attorney, then you file the case in person at the courthouse), and you get a case number. As part of your filing fee, the court mails out a notice of your filing to you and all your creditors that you included on the creditor matrix. Therefore, within several days of your filing, everyone associated with your case is put on notice that you have filed.
Although the notice is when creditors officially get notice of your case filing and therefore must stop all collection activity against you because of the automatic stay provided to debtors, the automatic stay actually kicks in when the case is filed, not when the creditor receives notice of your filing. Therefore, as soon as you file, creditors cannot: garnish your wages, repossess your car, foreclose on your house, send you letters, call you, etc.. Should they attempt to do any of these, even a second after your filing, you should immediately notify them that you have filed and give them your case number.
The notice contains several things of importance. It contains your private information so that creditors can identify you. It also tells you who is your bankruptcy case trustee, as well as the assigned meeting time for your meeting of creditors.
The meeting of creditors, otherwise known as your debtors exam, or 341 hearing, is a chance for the trustee and any creditors to question you. It is not a particularly long exam, usually around 5 minutes in a Chapter 7, and it is not in front of a judge. The debtor is put under oath and must answer the trustees question, which are for the most part related to the question the debtor answered as part of the petition.
The 341 hearing is usually set for about 4-6 weeks after the debtors filing. The time and date is assigned by the court and the debtor cannot request a specific date or time. Should the debtor be unable to make that date or time, the trustee will set a reset date, which the debtor must appear. If the debtor misses the original date and the reset date, the debtors case might very well be dismissed.
The only thing the debtor must do in between the filing date and the 341 hearing is to send the most recently filed tax return to the trustee a week before the hearing date. The debtor must have picture ID and proof of social security number (a social security card or W-2) present at the meeting. If the debtor does not bring these items, they might not even make it past security (remember, you are probably entering a federal courthouse), and even if the trustee was willing to hold the hearing, the debtor would at a minimum have to reappear to prove social security identity.
Immediately after filing, the debtor should continue to pay on the debts it wishes to keep. FThat means for the items the debtor might be reaffirming (car and house payments), or the ongoing living expenses (utilities), the debtor should be paying on these items even though he/she is in the middle of a bankruptcy case.
After the 341 hearing, the trustee might request the debtor follow up with additional documents or creditors could attempt to depose a debtor through a 2004 examination; however, typically those things do not happen. The only thing the debtor has to do after the 341 hearing (assuming the debtor has not already done so), is to complete the court required financial management course and submit a certificate of completion within 45 days of the originally scheduled hearing date, regardless of when the hearing was actually held.
The debtor might also have some housekeeping matters to take care of after the hearing. The debtor might want to redeem or reaffirm a debt, in which case it must submit paper work to the court. The debtor might also wish to avoid a lien, which requires the debtor to file a motion. Other things could be required or recommended that the debtor do, but they are case specific, which is why it is not recommended to file without an attorney.
For instance, at any point in the case the debtor could face a lift stay motion from a creditor who wishes to repossess its collateral from the debtor, should the debtor not be current on the payments. Frankly, any assortment of fact patterns could emerge during the bankruptcy. Some are likely to occur, others come out of nowhere.
If no issues do emerge, the debtor could receive an Order from the court within a couple months of the debtors court hearing date that the case has been discharged and closed. However, there is no guarantee that the case will not go on for many months, particularly if there are assets for the trustee to administer, so the debtor can never know for sure when that Order might come down.